Requiem for the Wellington trolley bus

Trolley buses are almost iconic for Wellington.   

Wellington was the city that first had them in New Zealand (1924-1932 on one route, followed by the current system since 1950) and will be the last today.  I grew up with them, with my Mum sometimes taking me into town and back on them, and as a child I was fascinated by these vehicles that got energy from wires, were quiet and emitted no fumes.  I lived on a street on which they operated and regularly became "detached" from the wires as drivers went too quickly around the corner, with the old British made rigid overhead wires unable to cope with more than a snail like cornering.  

Trolley buses are nostalgic, the presence of the wires (visual pollution to some) indicates the permanency of the route (a bus will come eventually), and the mere fact they use pure electric technology means they are user friendly.  I've many fond memories of riding on trolley buses, sitting on Mum's lap while watching a Big Ben's Pies disc ad rolling back and forth above the corridor entrance of the bus.  The ride through the Hataitai trolley bus tunnel, pitch black, one lane, the only real chance the trolley buses got to ride at a decent speed, and then the memory of the obnoxious driver who shouted at me for not taking a seat at the back of the bus (he stopped and walked to the back of the bus to do this).  The prick.

However, that nostalgia is tempered by cost (10% more to operate under current oil prices, without including the cost of capital replacement), and the tendency of trolley buses to be slower than other vehicles on curves (Wellington motorists widely see them as the snails of the roads).  

Trolley buses were in all major New Zealand at one point, and New Plymouth. 

Four other cities in New Zealand had them. Christchurch from 1931 to 1956 was the first to go permanently, as the system needed renewal and there was little interest in expanding the network on this low density city. 

Christchurch trolley bus

New Plymouth was the smallest city with a system, running from 1950 till 1967 as one tram route was replaced with trolley buses, but again the costs of running one route in a small city weren't economy.  

ex. New Plymouth trolley bus restored on special trip on the Wellington system

Auckland started with Farmers setting up its own service, for free for customers, operating a loop from 1938 till 1967, joined from 1949 by the City Council replacing tram lines with trolley bus routes.  However, Auckland's system was plagued by a lack of capital renewal, as it relied almost entirely on the electrical system introduced in the 1900s with the electrical tram network.  So from the 1970s, trolley bus routes were closed until 1980 when the last route was closed.  Yet in parallel a decision had been made to replace the inner city network, including services to Parnell, Newmarket, Ponsonby and Herne Bay, with a brand new trolley bus system.  

Farmers Free trolley bus Auckland, owned by Farmers 1930s

Auckland Regional Authority (which had taken over the system some years before) ordered brand new overhead wires and buses, but in 1982 cancelled the lot and was stuck with a mini-system.   Wellington City Council bought the 20 buses at a discount price to replace some of its older trolley buses, and the new overhead wires were used to replace well worn wires in central Wellington.   Another success for the Auckland Regional Authority in politicised decision making on transport.

Never used in the city they were built for.  Auckland ordered Ansaldo Volvo B11M trolleybus
bought at a bargain price from ARA by Wellington City Transport late 1980s

Dunedin held out for two more years, it introduced trolley buses in 1950 also to replace trams, primarily because its hilly topography was better suited to the superior acceleration of trolley buses, than the diesel bus technology of the time.  However, Dunedin paralleled Auckland, with routes shifting to diesel operation as parts of the network needed repairs and the whole system was to be closed in 1980, deferred by the sudden oil crisis, which persuaded the Council to keep the trolley buses until 1982, before finally closing the system.

Dunedin trolley bus in 1978

Wellington was a bit different.  The 1924-1932 "trackless tram" line was a trial from Thornton to Kaiwharawhara on what is now known as the Hutt Road, it would have been extended further towards Ngaio, but the Railways Department objected to the competition so it wasn't permitted.  The modern system started in 1949 and was designed to replace the tram network.  As in Dunedin, trolley buses were much more suited to the hilly topography of Wellington compared to the underpowered, noisy and slow diesel buses of the time.   However, as with other cities, Wellington faced challenges as to the economics of trolley buses when there was a need for replacement buses (as the first generation of 1950s buses were at the end of their economic lives).  However, the oil crisis saw a decision made to buy new buses and 68 new Volvo B-58 trolley buses were ordered (with NZ made bodies), and not long afterwards the 20 Ansaldo Auckland buses became available, enabling the 1960s era BUT buses to be replaced as well.  With new overhead wires in the central city network, and new buses, the trolleybus system got a new lease of life.    Albeit that there were extensive teething problems, as drivers objected to the design of the bus windscreens, and there were constant breakdowns and complaints about noise and interference with AM car radios.

1950s era British United Traction (BUT) Wellington trolleybuses

The Volvo B-58 Wellington trolleybus, with NZ made bodywork

On top of that, the trolley bus network was expanded.  The Mornington route was extended to Kingston, the Newtown Park/Zoo route was electrified, but when the Northland route was extended it was done with diesels (and the electrified segment removed) and a few years later the original Wadestown to Roseneath trolley bus route was also removed, as Wadestown services routinely continued to Wilton.  Weekend and evening services which had been revived were discontinued, mainly to provide time for wire maintenance, although the central city overhead wire system doubled as infrastructure to carry an overhead suspended fibre optic telecommunications network.

By 2001 the issue of replacement came up again, but it was decided in 2004 to replace the Volvo B-58s, but the bodies were replaced as the electrics were still in good order.   Wellington Regional Council agreed to a ten year contract with Stagecoach to retain the trolley buses with a subsidy, because they cost more to operate with the cost of maintaining the overhead wires.  

Wellington's last type of trolley bus- Designline/Volvo at Lyall Bay terminus 2009

Now they are being scrapped, following advice from consultants (none of which have actually worked on operating trolley bus systems in other countries curiously).  Even though the buses themselves have many years of operating life left and almost 40% of the overhead wires had been replaced by 2014.  The electrical supply system is dated though and needs replacement and would cost over $50m to replace.

Yes, I would like them to have been retained, replaced and upgraded (and no doubt it would cost a fraction of the ludicrous plans for light rail in Auckland).  I would like there to be just one line kept for nostalgic purposes, but my claim for nostalgia doesn't mean taxpayers should have to pay for it.   Could something else have been done to save them?  Could experts with working knowledge of modern systems in other countries known of ways to operate and renew a system more economically than those who advised Wellington Regional Council?  Maybe, but the fundamentals around the electrical supply system wouldn't change.  It just isn't worth it to spend that much money on replacing those systems, for nostalgia, noise or to reduce pollution in a city which has good air quality primarily due to the weather! 

What IS disappointing, is that the system is being dismantled before the replacement vehicles are ready.  

So farewell Wellington trolley buses.  Maybe the enthusiasm to preserve them will reignite the nascent museum in Foxton (which lost momentum with the death of its founder and enthusiast Ian Little).   However, while economics may drive transport policy for Wellington, it's clear it has been completely abandoned by the government for its newfound fetish for trams - in Auckland.

So think this.  Why does it make sense to lay down track, install new overhead wire, for a system which is effectively a guided electric bus system, in Auckland?

Road pricing in Auckland

A simple guide:

1.  The proposal now on the cards is not "road tolls", tolls are when individual roads are subject to an additional fee on top of existing motoring taxes.  

2. The Auckland Mayor's "motorway tolls" proposal has been comprehensively rejected, as it has been before for sound reasons.  Quite simply, the motorways are not Auckland Council's to charge and just charging them diverts traffic onto the local road network which has traditionally been neglected in Auckland.

3. The proposal put forward by the government is to replace fuel tax with what is essentially an updated version of road user charges (which already is provided now by three private companies collected RUC), that varies by vehicle type, location and time of day.  It should be absolutely clear, as are vaguely similar proposals in Oregon and California, that fuel tax must go if roads are to be charged directly. 

4. The Auckland Transport Alignment Project (ATAP) has made it abundantly clear that the current "build lots of rail based public transport" trend beloved of new-urbanist planning enthusiasts (and the Green Party) will have next to no impact on traffic congestion. It's hardly surprising, because the reason traffic congestion exists is because the provision of roads and the pricing of roads is not done under market conditions, but is subject to a political/administrative process that results in demand exceeding supply.  Nowhere in the new world (NZ/Australia/US/Canada) have any cities noticeably eased traffic congestion by building new bespoke passenger rail networks.  Which is why, when questioned, the enthusiasts for highly subsidised (by taxes from road users) urban rail don't talk about addressing the problems of urban transport, but sell how "wonderful" it is for people to have a choice that they pay a fraction of the cost for.

5. There is no need for road pricing to be accompanied by highly subsidised alternatives.  Full market based road pricing has four major effects:

-  Prices go up at peak times, encouraging users to make different choices, such as drive at a different time, use a different (less congested) route if available, use another mode (increasing revenue for that mode), or not take a trip at all (consolidating trips);

- Prices go down at off peak times, encouraging greater use and facilitating more trips at those times;

- Congestion is greatly reduced, providing capacity for more public transport on existing roads at peaks, and making such public transport commercially viable.

- Higher revenues at peak times on busy roads sends a signal to invest in more road capacity when revenue from additional users will pay for the cost of the new capital investment

The primary economic argument for subsidising peak time public transport in cities has always been that roads in cities at peak times are underpriced (and historically the technology did not exist to adequately address this).  Once roads are priced efficiently, the case for subsidising urban public transport is weak indeed.  Notice that intercity bus and airline services are not subsidised, neither are road freight services (in or between cities).  Why should urban public transport be special when roads are subject to market forces?

6.  Market based road pricing inevitably should mean the management of roads is taken away from politicians and bureaucracies and towards a more commercial model.  State highways could be shifted into a state-owned-enterprise that could be privatised by giving away shares to all registered vehicle owners.  Local authority roads could be transferred into similar enterprises, but with shares held by local property owners (as ratepayers currently pay for half of all local road costs).

The price of roads should then be set by these organisations.  They would be owned by those with the greatest interest in their networks being run efficiently and meeting their needs.  

7. The ATAP road pricing proposal can only work nationwide.  It isn't just for Auckland, it's a change in how roads are priced everywhere.

Auckland Council wont like this, because it knows that the only way to address congestion is through road pricing, but it doesn't want to lose control of its large rail vanity projects (now including trams - which are buses on dedicated rights of way for 3-5x the price to taxpayers).  It wants control of the revenue to spend on its politically/central planner driven projects, but it shouldn't get it.

Bearing in mind the government wont do what I say, this is what it could do:

- Move all of the state highways into a new SOE, empower that SOE to charge users but only if it gives them an equivalent refund in fuel tax or RUC

- Tell Auckland Council that if it shifts its roads into a new Council Controlled Organisation, it can be fully funded from fuel tax and RUC (and any road pricing that replaces them), but on condition it gives all Auckland ratepayers an equivalent permanent cut in rates and that it has no political direction at all on its activities.


More background on Auckland road pricing debate in recent years:
Auckland motorway tolls re-emerge as revenue raising option
Auckland transport funding report promotes urban road pricing and tolls
Auckland congestion charging, not happening yet

Farewell Air NZ 737s - the noisy revolutionaries

On the 6th of September, NZ557 from Christchurch to Auckland marked the end of Boeing 737 service for Air New Zealand.  This was barely mentioned by the press, but there is history behind Air NZ (and its predecessor NAC) flying Boeing 737s, because they truly revolutionised travel within the country in the 1960s and in just over 10 years or so they had seen off the end of the Wellington-Lyttelton overnight ferry, the Christchurch-Dunedin-Invercargill overnight train and one of the two Auckland-Wellington overnight train services - despite best efforts by politicians to prop the latter three up with subsidies.

Before aviation enthusiasts jump on me, yes, I know the Boeing 737-300s that have been flying the last decade and a half are not the ones that started flying in 1968.  These were the 3rd generation of the type NAC first flew on the "main trunk" Auckland-Wellington-Christchurch Dunedin", and yes there is now a 4th generation (which are the types flown by the likes of Qantas and Virgin Australia to NZ today), but the basic design retain a lot of commonality.  Besides, I like an excuse for a bit of history, and this one contains a political element that demonstrates, once again, how "democratic control" of a business can so easily sow the seeds of failure.

NAC was wholly owned by the Government and had virtually a statutory monopoly on domestic air services.  Other airlines did provide services, but they had to prove to the bureaucracy that there was demand for the service (heaven forbid a business start up service risking it might not have customers!) and prove it would not interfere with the services provided by existing operators.  So NAC had a legal veto over competition.  Nevertheless, it almost always operated profitably overall, although the reality was that the "main trunk" was gouging passengers and making high profits, whereas services to provincial airports like Kaitaia, Gisborne, Oamaru and Westport were unprofitable, but considered politically important (unlike today, with Air NZ which is profit focused across the network).   Still, NAC, as government businesses were at the time, was run by aviation professionals and as the jet age started in the 1950s, by the early 1960s it was becoming clear that the next revolution in air travel would be pure jet travel.  It gained Government permission to go to tender for jet aircraft to fly domestic services in 1965.

The three main manufacturers at the time, Boeing, Douglas and British Aircraft Corporation all were shortlisted.  Boeing with its, as yet unflown, 737. Douglas with the DC-9, and BAC with its BAC 1-11.  NAC's criteria for the aircraft to choose included speed of turnaround, fuel efficiency and ability to manoeuvre safely and reliably at Wellington Airport (which had a runway even shorter than it has today).  Herein comes the "democratic control" element.  The then Holyoake National Government wasn't impressed by the conclusion of NAC's analysis, that the Boeing 737 was the best aircraft for the job.  It was more interested in international trade diplomacy and winning the support of the British Government in securing favourable trade access when it would eventually enter the EEC.  It insisted that NAC "look again" at its business case, delaying approval for its capital investment in the 737.

NAC did, and once again made it clear that the 737 was the right plane for the job, and so it proved to be.  Over 8,600 Boeing 737s have been built (and are still being built), of the four generations of the original design (and a fifth generation is being developed).  The BAC 1-11? 244 and production ended in 1982, although Romania's Ceausescu regime was licensed by the Callaghan government to produce 22 it struggled to complete 9 by the time the vile regime was overthrown in 1989.  It was not the last attempt by a New Zealand Government to intervene commercially in the decisions of its airlines, but fortunately the airline won and so NAC was one the earliest operators of the Boeing 737 (Lufthansa was the first), the plane that (after some slow years) would be Boeing's biggest selling variant ever.

So what was the result? It cut travel time on the routes it serviced by nearly half, and it was 50% faster than the Vickers Viscounts it was replacing, so one Boeing 737 could fly around twice as many services a day with 50% more passengers, saving them a considerable amount of time, but also enabling airfares to be more affordable, particular for growing business traffic between the main centres.   As a result, the competing modes were increasingly hit hard.

Air NZ creates market opportunity

There has been rather little wailing and gnashing of teeth from some quarters about predominantly state-owned Air New Zealand making an entirely commercial decision to restructure its regional domestic operations.

There has been some focus on it dropping flights altogether to Kaitaia, Whakatane and Westport, but it is also dropping some other services like from Wellington to Taupo (Rotorua isn't that far).  On the other hand it is significantly increasing capacity on other routes as it flies larger ATR72 aircraft into centres like Napier and New Plymouth, then enabling its 50 seat Q300s to fly into smaller airports like Wanganui, Blenheim, Timaru and Hokitika.  More seats mean cheaper fares.  For most of the regional locations this is good news.

The current services are losing money because people aren't prepared to pay the fares necessary to keep services going, at NZ$1 million a month, or NZ$26 per trip.  People aren't prepared to pay that much more, and there is a longer term issue is that the planes that Air New Zealand uses, Beechcraft 1900D (through its subsidiary Eagle Airways) need replacement.  Air New Zealand, to its credit, has been using them intensively, but there simply isn't a 19 seater turboprop airliner available that could replace them economically.

So airports that can handle the much bigger 50 seat Bombardier Q-300, get them, and the airline gets some more of the ATR72s to service larger centres.

What of the airports that are losing services?  It's a market opportunity.  One of the few acts of liberalisation of the Muldoon Government (which curiously, the then Labour Opposition opposed, with one Richard Prebble leading the debate opposing it), was to deregulate domestic air services, removing Air New Zealand's statutory monopoly on domestic services (although it took a lifting of the foreign ownership limit from 15% to 50% and later abolished altogether to see Ansett NZ challenge Air NZ on the main trunk route).   For decades it was thought "normal" for the state to guarantee air services by its own airline providing them, and woe betide any upstart with lower costs competing with the heavily unionised state carrier.  

Not any more.

Already Sunair and SoundAir have been talking about new services as a result, which is exactly how it should be.  Opportunities to shift a dozen or so people by air between small airports give rise to innovation and entrepreneurship.  With a relatively highly valued NZ$ it is also easier to bring in high capital goods like airliners.  We shall see what happens (and of course, it does beg the question as to why the state continues to own the rest of Air NZ).

Contrast that to how Auckland urban transport is treated by politicians and planners.  One of the main tasks in recent years has been to seek to snuff out entrepreneurship and innovation by bus operators running commercially viable services, preferring to dish out ratepayer and fuel/RUC taxpayer subsidies to routes the planners deem best (without even mentioning the billion dollar railway that loses money).

Odd then, if the free market is seen fit to deal with how regional towns and cities get air services (noting in quite a few countries, including Australia and the US, rent-seeking rural lobbies have gained subsidies for uneconomic air services to be operated by state approved monopolies), why not for how people get around cities?  Is it because it wouldn't deliver the planners' answer of passenger rail in lower density cities with dispersed commuter patterns, but rather a more dynamic network of buses and for roads to cost a bit more in the peak, but a lot less off peak?

NZ election 2014 post-mortem

Every election that comes about inevitably has some hacks saying it is “interesting”, “historic” etc, which of course they always are.  Elections always change governments in some way, even if not the ruling party. Psephologists (an area that I am often tempted to drop into) are keen to dissect some greater meaning from a vast range of individual decisions made at the ballot box or to not go to the ballot box, and political parties are even more keen to use that data to inform their future utterings of rhetoric, promises and contortions of fact.

The 2014 New Zealand General Election is, though, a bit more than all that.  For it needs to be seen in the context not only of 20 years of MMP politics, and an vigorous level of campaigning by opposition parties, that saw many pundits thinking the election would be close, either due to wishful thinking on their part, or because governments seeking a third term usually only scrape through (see 2005, 1996, 1981). 

In the height of economic recession, a majority of voters chose to change the electoral system, thanks to sustained campaigning by a coalition on the left, poorly focused counter-campaigning by those on the right (remember Janet Shirtcliffe?) and the feeling by a significant number of voters that they had had enough of radical reforms they neither understood nor felt were helping them.  Bear in mind in that same election in 1993, National won by one seat, with 33% of the vote.  First Past the Post meant that opposition votes were split between Labour, the Alliance and NZ First.

Today, opposition votes are also split between Labour, the Greens (which have succeeded the Alliance as the far-left faction in Parliament) and NZ First, but National has won an election in its own right, with the system many on the left thought would deliver them sustained so-called “progressive” majorities of Labour supported by a leftwing partner, and perhaps a centrist party maintaining a balance.  Not now.  Despite a campaign whereby the left DID campaign on a lot of policy, and dishing up a fair bit of dirt, a majority of New Zealand voters weren’t swayed.   National getting its best ever result since 1951 and Labour its worst since 1922 speaks volumes not of the split on the left (which has not grown, as the Greens are sustaining fairly consistent levels of support), but on a series of factors that should result in some introspection, particularly from the left...

2014 New Zealand voting guide for lovers of liberty

1. Is there a positive candidate to endorse?

2. Is there a likely winner worthy of tactically voting to eject because he or she is so odious??

3. Is there a tolerable "least worst" candidate?

So I list by electorate, the status of the electorate and who I am endorsing, then if you care, an explanation why.  Just search for the name unless you want to have a very long read...  and of course I am happy to see contrary views expressed.  I am updating this as I am on a series of flights in the next couple of days, and it is dependent on the gap between flights, wifi access and access to laptop power...

2014 New Zealand voting guide for lovers of liberty complete

1. Is there a positive candidate to endorse?

2. Is there a likely winner worthy of tactically voting to eject because he or she is so odious??

3. Is there a tolerable "least worst" candidate?

So I list by electorate, the status of the electorate and who I am endorsing, then if you care, an explanation why.  Just search for the name unless you want to have a very long read...  and of course I am happy to see contrary views expressed.  I am updating this as I am on a series of flights in the next couple of days, and it is dependent on the gap between flights, wifi access and access to laptop power...

Comparing parties' transport policies (in progress)

Given the blogosphere in NZ in terms of transport policy debate is dominated by one (well-meaning) blog that is almost entirely focused on one dimension of transport (how people move about in cities, specifically one city), and with one philosophical perspective (central planning, state funded, as opposed to market driven, user funded), I thought I'd do a quick review of parties' transport policies for this election.

My test for them all is:

1. Understanding of the transport sector:  Most politicians don't know who owns what, who is responsible for what and what exists and doesn't exist.  Those that do deserve some credit.

2. Support for competition, innovation and entrepreneurship:  New entry both of operators and vehicle types, and new modes of transport should generally be encouraged.  This includes those who wish to do what the government fails to do.

3. User pays:  Taxpayers generally shouldn't be subsidising users of transport services or infrastructure, but it does allow cross-subsidisation of marginal users of networks that are inefficient to charge for (e.g. footpaths).  Infrastructure costs should generally be recovered by users of those networks, not by other network users.

4. Economic rationalism:  Where the state does intervene, the net economic benefits should exceed costs, demonstrably.  This includes spending and reducing compliance costs for unnecessary regulations.

5. Wider impacts:  Make this safety, environmental and social impacts, and say I'm being soft.  What this basically means is, will the policy help or hinder reductions in accidents, noxious pollution, and improve people's ability to access what they want (bearing in mind the impacts on others who may have to bear the costs of the measures).

I'll give each a score out of 5, giving a total possible score of 25.  Bear in mind I am looking at land, air and sea transport.  Any party that says nothing about any mode is presumed to agree with the status quo, which is generous I believe.  I am guided only by the parties' expressed policies online, unless there is a statement by a leader or leading spokesperson that gives cause to vary this.

following the order of registration by the Electoral Commission:

National: 5, 3, 3, 2, 3 = 16 out of 25.  It's about big roads, some of which aren't good value for money, some of which are.  There's a lot for public transport, not enough for the fundamentalists, and spending on Kiwirail is likely to be the best last chance it gets to show it is worth anything.

NZ First: 2, 2, 2, 1, 1 = 8 out of 25.  Suddenly an obsession about public transport, especially reviving long distance passenger trains. Remember the Northerner, the Southerner? They'd be back. Get rid of road user charges, replace them with fuel tax, then replace fuel tax with tolls like road user charges.  Usually silliness you'd expect from a cult that gets one member to write policy.

ACT: 3, 4, 4, 4, 3 = 18 out of 25.  It's all about roads, and having them run like businesses, with user pays for public transport and allowing the private sector to build competing roads as well.  It's light in terms of content, with nothing on other modes, but given air and sea largely look after themselves, that's not a bad thing.  It's a start, and it would mean some of the Nats' pet road projects would come under closer scrutiny.

Labour: 1, 2, 1, 1, 2 = 7 out of 25. "The current government has been obsessed with a handful of hugely expensive projects that it selected for political reasons" then Labour selects the ones it agrees with, for political reasons, including the big Auckland underground rail loop, building a new line to Marsden Point and reopening the Napier-Gisborne railway, so it can carry the 12 truckloads a week it once carried.   Lots of spending, lots of utter drivel, and it supports the so-called "congestion free network" promoted by leftwing/greenie/central planner ginger group "Generation Zero" (which will do next to nothing for congestion on the network people are prepared to pay for).  It's Green Party policy-lite and just as intellectually robust, with silliness on motorhomes and trucks not being allowed in fast lanes on motorways to give NZ First something to admire.

Democrats for Social Credit: 2, 1, 1, 1, 1 = 6 out of 25.  Central planning obsessives with weird statements like "Air New Zealand as an important means of transporting perishable goods to overseas markets".  The mental contortions required to give credibility to the funny money men adds to it (but then funny money is more common than we think).

Greens: 3,1,0,1,2 = 7 out of 25.  So much money wasted on road projects with poor economic returns, stop them and build railways with even worse ones.  Well that's not what they say, but it is the truth. The Green mantra is that walking, biking and riding rail based transport puts you into the promised land, but driving is a curse.  Those who drive are "auto-dependent" and are "forced" to use your car, and you're just aching to walk to a tram stop to wait to ride a tram with lots of other people to go to the place you want to go.  If only everyone could get about this way it would be smart. Except its not. It's a tired, old-fashioned obsession with building your way out of problems, except this is with railways and busways, not roads.  What's got to be most stupid is that unlike green parties in other countries, the Greens have ignored congestion charging as a way of reducing traffic congestion and pollution.  Politics over evidence.  

ALCP: no policy

Maori: no policy

Internet Mana: 2, 0, 0, 0, 1 = 3.  Well you didn't exactly expect much did you?  Rhetoric on nationalising parts of the transport sector that are already government owned, but the big deal is free public transport. Everywhere.  It's an old-fashioned tired old leftwing proposal that claims it would free up the roads, but what it would do is shift a lot of air by rail and bus.   It wont ease congestion, it will cost a fortune (uncosted), and don't expect any innovation or competition, but a large union dominated set of monopolies.

Conservative: no policy

MORE TO COME

United Future:

Focus NZ:

Civilian:

Independent Coalition:

More detail..

Commuter rail for Christchurch? Cheaper buying them each a Porsche

I'm being a little tongue in cheek here, but the proposal from the Labour Party to spend $100 million to give Christchurch a commuter rail service is so utterly ludicrous that it deserves ridicule.

Anytime a politician says he will "invest" your money, you know that you'd never see it again, and that's exactly what would happen to the $100 million David Cunliffe wants to waste on giving Christchurch a transport service that it neither needs nor is willing to pay for.  In the USA it would be called a boondoggle, a political driven project that has little basis on market demand or economic benefit.

The policy is described here, and then here and here, showing how much effort has gone into something that isn't even important.

I nearly wrote a lengthy post pulling it apart bit by bit, but it's much easier to list what's wrong in a few bullet points.

- Christchurch last had the remnant of a local rail service in 1976 when a once daily, yes once daily, service between Rangiora and Christchurch was scrapped because of lack of patronage.  The last regular service (as in all day service like in Wellington) was between Lyttelton and Christchurch, which ended when the road tunnel was opened in 1972 (the rail service only had an advantage over driving over the Port Hills).  Before that, other services were discontinued during the 1960s as bus services proved more cost effective and car ownership rose.  Christchurch's population grew by over 50% in the period between the end of these services and the earthquake, indicating it was hardly constrained by a lack of passenger rail services.

-  It wont unclog Christchurch's roads.  The Press report says Labour intends the system to accommodate 10% of commuters from the north to central Christchurch.  Phil Twyford says there are 5000 - yes 5000 commuters making this trip (10,000 trips), so it is $100 million for 500 commuters.  That comes to $200,000 per commuter, before any operating subsidies are considered.  In other words, the price of a Porsche 911 for each commuter.  Taking about 400 cars off of Christchurch's roads every morning isn't going to "unclog" them,  it hardly makes a difference, even if it did happen.

- However, what it might do is encourage more people to live further away from the surrounding suburbs closer to the city, because it subsidises living well outside Christchurch.  That's hardly conducive to reducing congestion, nor environmentally sustainable.  It would be far more preferable to focus on finishing renewing the local road network including marking out cycle lanes, than to incentivise living well out of the city.

- A commuter rail service to central Christchurch can't even go there, as the station is 4km from Cathedral Square, in Addington.

- The $100 million is to double track the line to Rangiora, and rebuild some railways stations, but not a new central station (which can't be anymore "central" than the old one on Moorhouse Avenue), nor new trains, although the ex. Auckland ones could be relocated, if a depot could be built, and sidings to put them on were rebuilt as well.

- The rail service would replace commercially viable and some subsidised bus services, but politicians don't find buses sexy.

- The service would lose money, a 1000 trip a day railway service is a joke.  Proper commuter trains in major cities carry that number on one train.  

- If there really is demand for more public transport from the northern suburbs, it could come from commercial bus services.  Clearways could be used for bus lanes and the hard shoulder of the existing and future extended Northern Motorway could be used for peak bus lanes too, if needed.  Trains only make sense if buses are incapable of handling the volumes of demand, and that clearly isn't the case.

- Christchurch was the first major city in NZ to scrap trams, because the grid pattern street network and low density of the city meant there were few major transport corridors to support high density public transport systems, like trams (and commuter rail).  It was also the first of the big four cities to scrap commuter rail altogether (even Dunedin had commuter rail services until 1982 to Mosgiel).   In short, the geography of Christchurch is as poorly suited to commuter rail as it is well suited to cycling.

So when David Cunliffe says "The long delayed recovery of Christchurch hinges on a modern commuter system for the city"  you have to wonder what he's been smoking.

  

Really David? Really?? Not entrepreneurs investing in businesses creating jobs, and so attracting people who want to live there?  

No, David Cunliffe wants a toy, something he can point to and say "I did that", with money taken from motorists (as he wants to divert money collected from motoring taxes from roads to this pet project).  He has no real interest in reviving Christchurch by letting business do business, but to spend up on shiny projects that polish his ego - at your expense.

UPDATE: and the Green Party idea of creating a new bureaucracy called Canterbury Transport is equally ludicrous, because there isn't a governance problem.  Christchurch City Council is responsible for all roads except the State Highways, in the city (and no central government would rightfully surrender national corridors to local politics). It isn't broken up into multiple districts or cities like Auckland was.  Environment Canterbury, like all regional councils, is responsible for contracting subsidised public transport across the region, and planning urban public transport services.  Again, there is no division here.  It's far from clear what such an entity would do that is different from this.

Unless,. of course, you hark back to the "good old days" of council owned bus companies having monopolies and getting endless ratepayer subsidies. A model that saw the near continuous decline in urban bus patronage across NZ for 30 years.  You see at the moment bus services in Christchurch are operated mostly by two companies, one owned by Christchurch City Council, another by a private firm.  They typically compete for contracts for subsidised services, helping keep costs down and providing a check on performance.  The Greens are awfully fond of state owned monopolies, because you can trust politicians and public servants to be incentivised to look after customers and taxpayers' money far better than the private sector competing for both, can't you?

Wellington local election voting guide; Onslow-Western Ward

3 councillors are to be elected from this ward, there are 12 to choose from.  So surely someone must be decent?

Well that is true.

Phil Howison deserves your positive vote to be ranked number 1.  He is on the Affordable Wellington ticket and is both intelligent and a thoroughly approachable, thoughtful, hard working and polite young man who is focused on keeping spending down by focusing the Council on its core services.  He wants processes streamlined and is opposed to "unnecessary restrictions" on businesses and residents.  Yes he was an active member of Libertarianz and was a candidate, but he's watered down his views somewhat (in fact rather too much, I'd like to see Phil push much harder for cutting rates and cutting local government).  Notwithstanding that, I endorse him as someone who has a clear position on ensuring Council minimises costs upon ratepayers and residents, and concentrates on doing its core business well.  Rank 1

The rest? Hmmm well...

Wellington local election voting guide: Mayor

Yes, I get to vote in the local elections.  Better my vote than, well anyone else's really (look if you can't be arrogant about your own vote then don't bother).

So here's my run-down of the motley lot that are standing, and a motley lot it is.  I can't get enthused about almost any of the candidates.  So I figured since blogs are about venting one's opinion, I'd do a bit of my own.  Of course because voting is by STV you get to rank the candidates, which means you don't need to rank anyone you find particularly loathsome (after all being ranked 8th is worth more than not being ranked at all).

Remember, one of the most important things for Wellingtonians should be remembering what happened in Christchurch could happen again.  Wellington needs a Mayor and Council that can take on central government bureaucracy and be for private property rights.  It's a shame it doesn't have enough standing who do.

Self-driving cars could transform land transport

In the UK the talk is about taxpayers paying for an extensive high speed railway network between London, Birmingham, Manchester and Leeds.  It would cost £35 billion to build and would lose money.   It will mostly service well-heeled business people (the fares will be too high for families, who will drive, or the poorer, who will take the multiple competing privately provided coach services).  90% of its users will be those using trains now, or people who wouldn't have travelled in the first place.  It will make next to no impact on domestic flights or road traffic.  One of the main objectives is to free capacity on the existing lines, so that more loss making commuter services can operate on the lines close to London.

In Auckland the talk is about an underground rail loop to enable its commuter rail service, soon to be electrified, to have more capacity during the peak hours.  Roughly 45,000 trips a day are taken on that system, roughly the entire average daily trips of Fenchurch Street station in London (yep that busy) (and 10% less than Wellington's network, despite Wellington's region having at least a quarter of Auckland's population.  It would cost NZ$2 billion to build and would lose money.  

In both cases the projects are expensive, not financially viable, and serve relatively few people.

They are 20th century solutions to perceived transport problems, but another is on its way, and it could transform land transport between and within cities.

Self-driving cars. Allister Heath says it makes big rail schemes like HS2 outdated.

The technology exists now.  Cars can already park themselves, emergency brake, follow road lines and follow other vehicles and brake automatically.  Several US states are already changing laws to allow for fully autonomous road vehicles, and the technology now being trialled enables vehicles to navigate safely along existing roads.

What could that mean?

Road vehicles that actively avoid collisions, both with other vehicles, and cyclists and pedestrians.

Road vehicles that operate in convoys, in close formation on major roads, increasing the capacity of those roads by a factor of three to four, rivalling railways.

Road vehicles that don't need a driver, that can be sent to be parked anywhere, called up on command by mobile phone.

Motorways that operate like trains of vehicles, except that the vehicles have the ultimate flexibility of starting and ending trips anywhere on the road network.

Traffic lights will no longer need to keep traffic stopped, but rather interweave traffic to maximise capacity.

Speeds can be faster where it is safe to do so, and better managed where there are many pedestrians.

Cars could be parked with a far higher density.

Let's not pretend there are barriers to this.

Technology needs to be refined, it needs to be secure.  Nobody wants autonomous cars diverting onto footpaths and mowing people down.

Laws need to be changed, so that owners of vehicles are liable for accidents when there is no driver or active driver.

Roads need to be better managed, so lines are maintained, databases about road rules, traffic signals adapted and systems in place so the network is actively managed.   

However, it can transform transport.

Buses can have the capacity of commuter railways (with the exception of high frequency metro services, which Auckland will never have).

Roads can have much more capacity, so there is far less need to build more capacity, and there is far less need to build safety into the roads with barriers and signs and speed limits that reflect driver behaviour.  

Roads would be so much safer that incidents of accidents causing congestion would be rare, and thousands of lives would be saved from serious injuries, and hundreds of millions of dollars of property damage and health costs avoided.

Vehicles would be much more fuel efficient, as vehicles become more efficient anyway, reducing emissions and the environmental impacts from transport.

Roads would be more like networks akin to telecommunications and energy networks, and politicians choosing projects to expand capacity would be rightly treated as amateur fools.  Who today would listen to a politician who says that a specific switch needs to be installed on a network, or a substation or that cable capacity be added somewhere?

Railways are bespoke inflexible networks that have a lot of capacity best suited for a narrow range of transport tasks.  The range of those tasks will narrow even more with automated road transport.

Of course some will still choose to drive, and will have options to do so, for leisure, but probably pay much more for insurance to do so without driving assistance.   What happens ought to be up to market demand, for vehicles and for roads.

Unfortunately, roads are managed by politicians and bureaucrats.  If anything is going to get in the way of setting them free, it will be them.

Urban myths about Kiwirail

Once again the Alliance Party and rail unions' views on Kiwirail are being touted by the Labour Party as truths.

They are not.  Don't believe me? Thought not.  However, you might believe the Institute for the Study of Competition and Regulation based at Victoria University.

I've blogged this before, but it is worth repeating.  The full presentation debunking the myths is in Powerpoint here.

Here's a good summary I wrote before...

1. Rail network shrinked due to privatisation. Wrong. Almost all line closures were under state ownership when rail had a statutory monopoly on long haul freight!  The track network length has barely changed in 20 years.

2. Rail stopped being viable after free market reforms. Wrong, it stopped being consistently financially viable by 1945. It had short pockets of profitability since then. The early 1970s saw it drift from profitability to losses, which weren't recovered until 1983 after debts had been written off and it started being paid by government to run commuter rail services in Auckland and Wellington under contract (and a host of unprofitable freight lines, such as the Otago Central Railway).

3. Track Maintenance was run down after privatisation. Wrong, it was already being run down in public ownership, track was run down more, but sleeper replacement under private ownership increased.

4. Rail is worth a lot as an asset. Wrong. The NZ$12 billion book value of rail that was on the Treasury accounts was a nonsense, equating it to all other SOEs combined (e.g. 3 power companies, Transpower, NZ Post) which all make profits. Most of the value is based on a replacement cost if it was built today, which of course would never be done. I'd argue it is probably worth 4% of that at best.   It's worth noting that this has only been partly fixed as of late.

5. Rail only needed rescuing after privatisation. Wrong. It has been rescued several times before. It has long had serious economic viability issues.   In recent history it was bailed out in 1982 (all debts cancelled, and the operation commercialised), 1990 (had the debt of the North Island Main Trunk line electrification written off as a "Think Big" debt, then NZ$350 million, and another $1 billion wiped off to pay for the restructuring to make it viable).

6. Rail is good to reduce accidents, congestion and environmental problems Wrong. "the optimal level of externalities is not zero – at some point it becomes more expensive to lower them than the welfare created by their further abatement" Rail related deaths are only slightly lower than truck related. No evidence that rail reduces congestion. Sea freight is twice as fuel efficient than rail, but little interest in that mode.  Indeed Greens actively oppose international ships carrying domestic freight along the coast to placate their unionist mates.

Like I said before, the presentation basically says that rail is not as fuel efficient as is quoted, and that only 30% of the current network handles 70% of the freight. It suggests concentrating on the main trunk, and lines to the Bay of Plenty and the West Coast

Point scoring not principle

The paucity of principle in modern politics is unsurprising, so let's just establish the Labour Party's view on state ownership.

1.  The State can buy whatever it likes, even large unprofitable businesses, without an electoral mandate.   Taxpayers are expected to cough up for whatever politicians think they should buy with their money. 

 

2. Successful privatisations have been erased from history.  Opus, the former Ministry of Works, is now a successful multinational consultancy firm taking New Zealand expertise to the world.  Auckland Airport is a shining success as an airport.  Hardly a peep is heard of Contact Energy, bringing private competition to a state owned market.  State Insurance hasn't been state for 20 years.  NZ Steel continues to be a competitive exporter and productive job creator years after it was sold.  

3. It was ok for Labour to try to sell 20% of a state owned asset to its largest foreign competitor.  Dr Cullen was salivating at the chance to sell part of Air New Zealand to Qantas, which would have ended competition on domestic routes, sewn up around 80% of the Trans Tasman market to one operator.  However, that was "ok".  Only the Commerce Commission stopped this cosely set up deal, although few remember how much effort Qantas made to lobby the Labour Government at the time to delay giving the consent to Singapore Airlines buying 49% of the then privately owned Air NZ/Ansett group, which was a key step in kneecapping the group - in Qantas's interest - as it knew the NZ government wouldn't bail out Qantas's biggest domestic competitor (Ansett), and scuppering the Singapore deal bought Qantas years of dominance on the Australian market.

Either you're upfront and believe the state should own businesses and acquire new ones under certain principles, or that it shouldn't and should divest itself of them over time.

The Greens believe the former, Labour and National believes in none of the above and all of the above, depending on who you ask, and what time of day it is.

Kiwirail's asset revaluation - because Labour concealed the truth with accounting: UPDATED

Regular readers will remember that I’ve been long critical of the bizarre Treasury valuations of the social policy/heritage/commodity sector subsidy project called Kiwirail. So the latest report that this “asset” is to be revalued hardly surprises me. However, I am enormously dismayed at the unprofessional politically driven basis for valuation of this business which was instigated by the previous Labour government. It is one thing to throw taxpayers’ money at buying it back, another to hide what a real dud it is on the government accounts. Let’s bear in mind that neither Labour, nor the church of the Holy gRailway the Greens, have any interest in really showing what it’s worth.

So let’s start with the latest announcement. What does it mean?

The short version is “I told you so… again”. What was reported before has finally happened.

The land assets will remain under the NZRC, which has in fact been the case since 1 April 1982 when it was created. There was always a peppercorn rental of NZ$1 paid for use of the land under the rail corridor, which given that the Crown isn’t paid for the land under the road network, has always seemed an easy compromise in dealing with the thorny issue of valuing strips of land with little alternative use (especially roads, given land without access to roads has greatly diminished value). This should not be controversial, but let’s be honest about what the valuation of that asset should be – the market value of the land if sold. A study commissioned by the MoT valued it, in 2001, at NZ$462 million. This could be indexed to today’s values and priced, but I doubt it would top NZ$1 billion. Bear in mind this was never privatised in the first place, because every time TranzRail closed a rail line (which was rare), the corridor would, ultimately, be able to be sold by the Crown.  So the valuation was done professionally based on assumptions of the value of neighbouring land being applied, in most instances, to a narrow inaccessible corridor.

Yet the Annual Report 2011-2010 indicates land is valued at just over NZ$6 billion. This is quite absurd, so is the asset write down going to address this? Let’s continue.

The transfer of the other assets to a separate SOE is exactly what happened before the last privatisation, when NZ Rail Ltd was set up. The logic of this is clear, as the issues around rail land and its use are complex. Partly because of Treaty of Waitangi claims over Crown land, partly because the confiscation of past land under the Public Works Act means that if the land isn’t to be used for rail purposes, the previous owners or their successors must be offered the land back.

So the new SOE will be responsible for everything, other than the land, just like before. This is already raising the spectre of a new privatisation among those who treasure Kiwirail because they think it will be the saviour in the event oil prices and climate change suddenly decimate the viability of road transport.

Bill English states the total assets are being written down from NZ$13.4 billion to NZ$6.7 billion, this being both the land and the operations business. A simple halving of value, indicating a lot of in depth work was not done into this at all. The Kiwirail press release explains this further by saying that the non-land business will carry a valuation of up to NZ$1.3 billion “reflecting the revenue generated by it” rather than the current NZ$7.8 billion.  That's helpful in analysing this further.

The land component of the valuation seems to retain most of its book value, as it will be worth around NZ$5.4 billion, yet wont be expected to make a return on most of that asset (given the land under the roads isn’t expected to either). A small writedown of around NZ$600 million, but not nearly enough. Has the land under the rail network really shot up in value by a factor of 11 since 2001?  Kiwirail's Annual Report indicates that a professional valuation was done, no doubt in good faith. However, does that really reflect the market value of this land? If a railway line across a field, or behind some warehouses or houses is sold, are there really any other likely buyers beyond the neighbouring property owners? The discrepancy between valuations seems extraordinary, and I doubt whether valuations of railway corridors are done frequently enough in New Zealand to enable it to be equated to other such valuations.  

Setting that to one side, the valuation of NZ$1.3 billion for the operating business still seems wildly excessive. It was bought for NZ$665 million. How has it suddenly become worth double that since 2008? Is it revenue? Well no.

In 2011 it had gross revenue of NZ$667 million. It also got nearly NZ$345 million from taxpayers (yes you’ve spent more than a billion on this one and counting). However, its operating costs were NZ$567 million. Cool NZ$100 million profit before government right? No. Once you remove roughly NZ$60 million in subsidies for operating Auckland and Wellington passenger rail services, you’re down to about NZ$40 million. Not so good then.

Bearing in mind that the NZ$345 million from taxpayers is a capital grant to replace and renew some assets, you’ll also see it’s clear this isn’t a sustainable business able to renew its capital.  Otherwise it would take out debt that would be repaid over the depreciated life of those assets, which of course is not going to happen (but Treasury of course has taken out debt to pay for the nationalisation and all of the capital grants).  Bear in mind also that the market valuation when Toll Rail was nationalised was only NZ$435 million. Has the government really trebled the value of this business even though it has never paid a dividend yet? 

One guess as to why Opposition Finance spokespeople haven't asked that - because they fully supported this destruction of taxpayer wealth.

So the valuation continues to be generous in market terms. Kiwirail, if sold, would not go for the sort of money on its accounts, even if it continued to get hundreds of millions of dollars in subsidies and grants every year.

The use of replacement cost as an asset valuation gives a false impression of the value of an asset if it to be sold, simply because it does not generate sufficient revenue to justify ever replacing the asset on the scale (and in the same way) as it was originally acquired.

My previous post on this was right.

Kiwirail is not an “investment” in its current form, but rather an emotionally laden piece of heritage that mixes some commercial elements, some local public policy elements with a lot of hyperbole and wishful thinking.

Debates about pouring taxpayers money into it need to be based on some market based accounts, accounts that might actually show it can generate a reasonable rate of return based on what it could be sold for – but which wouldn’t ever justify the money poured into it so far.

For that reason, given both National and Labour have thrown over a billion into this taxpayer owned bonfire, and the Greens are just gagging to throw billions more at it, means that having debates based on reasoned balanced analysis are absent when most of those involved prefer conspiracy theories around corruption, hyperbolic evangelism about rail “saving the economy” and economic illiteracy.

Most of my past posts on this subject are summarised in this one, on what it would take to make the railway a viable business.

It includes the following ones:

-  The Greens posted a link to a great presentation on Kiwirail, which actually destroys most of their own self-generated myths about the business.  I link to it here.

-  Where is the rail network viable?

-  Bill English admits the rail network is virtually worthless

Another good read is this from Ross Clark which explains that the "failure" of rail privatisation is because there are some serious questions about the viability of rail at all.

UPDATE:  I know this article has been linked to by a couple of forums.  Please read the articles at the bottom and indeed the presentation I linked to here. You can romanticise as much as you like, and I have a stack of Rails magazines from the 1980s and 1990s, and the NZ Railway Observer as well, so I am a rail enthusiast at a personal, emotional level, but the hard economic facts are that rail is an expensive way to move goods given the high capital costs of the bespoke equipment and infrastructure.  Only when volumes are high, frequent and over long distances do the fuel and personnel advantages start to offset this.  It's about economics.  In the US, rail freight succeeds in spite of serious undercharging of trucks on untolled interstate highways, in NZ Road User Charges contribute to a very different picture.

Brian Rudman - a little knowledge isn't dangerous, just ignorant

Brian Rudman is perhaps the most regular of the NZ Herald's columnists to comment on transport issues in Auckland.  He comes at it from a rather predictable standard point of view which blends the railevangelism of the Greens with the cynical populism of NZ First.  To be fair to him, he does a bit of research, but the conclusions he comes to shows a rather dire lack of understanding of economics, a paucity of depth of knowledge about the sector and an unfortunate tendency to be driven by faith rather than evidence.

His latest column is headlined "tolls alone won't unclog our roads".  The implication being that someone claimed that they would.   A more honest headline in response is "trains wont unclog our roads", since column after column he has been preaching the gospel of the church of passenger railways.

What he is talking about is a proposal to introduce new tolls on Auckland's existing motorway network to "raise revenue" tax road users to pay for Auckland Council's grand transport plans, much of which is to fund infrastructure for subsidised public transport services.

There are three substantive issues here:

1.  Is the NZ$11.7 billion "funding gap" real and justified?  (i.e. should that much extra money be spent on transport in Auckland? What is gained by that? Who are the winners, and are they the same as the losers?  Why should anyone trust Auckland Council on this?  Given that all of the future money taken from motoring taxes and rates is already taken into account, has anyone asked Aucklanders whether they are willing to pay more?

2.  If there is a gap, how should it be funded?  Should users pay more for infrastructure and services they will benefit from?  Should ratepayers pay for infrastructure that increases their property values?  Should existing taxes go up? Should there be new taxes?

3.  Should Auckland roads have direct tolls/road pricing introduced as a different way to charge for road use, which could also reduce congestion by introducing the price instrument?

Is the NZ$11.7 billion "funding gap" real and justified?

On the first question, Rudman fails.  He doesn't ask this question.  With some irony, the Greens are attacking (with some good reason) central government's Think Big highway spending plans for being poor value for money.  Neither the Greens nor Rudman apply a similar test to the Auckland Council project list.  For many years, the former Auckland Regional Council had unfunded transport wishlists, is it any surprise the new Auckland Council has simply grandfathered that wishlist and added to it?

He simply parrots the simple line that Auckland "needs more public transport " and the myth of "building the passenger transport options that might well help unclog the roads without the need to build more".  Might well? Where in the new world have major rail projects actually unclogged roads?  What city has accomplished this successfully?  It's a simple belief system - it is one the Greens share - but it is just that, a belief.  The bare fact is that no new world city has significantly reduced traffic congestion from construction of a new rail link - none.  Advocates may argue that congestion would be worse without them, but that's just hypothesis, and it isn't based on any significant difference in mode share from car driver to rail after a line has been opened.

So let's take the highest profile project that he and the Greens advocate - an underground CBD rail loop.

The Treasury/MoT report that reviewed the Auckland CBD underground rail tunnel states that this project, estimated to cost NZ$2.4 billion in capital, with ongoing additional costs of NZ$37 million per annum (although revenue offsetting that is not mentioned), will only reduce car trips into the CBD by 2,000 a day - out of a total of 40,000.  Now 88% of commutes in Auckland are not to the CBD.  That stark fact is constantly ignored by almost all advocates of rail in Auckland.

Of the remaining 12% around, 42% of motorised commutes to the CBD in Auckland are by car - yes a majority go by public transport now. You might ask why that is a problem.

So his pet rail project, will reduce 5% of 42% of 12% of Auckland commutes, which means only 0.25% of Auckland commutes will be shifted from car to public transport.  It's a brave person indeed who claims that is worth NZ$2.4 billion.

However, he completely blanks out the other effect.  The CBD rail project reduces bus trips to Auckland CBD by 10%, with double the number of people taken from existing bus services, both subsidised and unsubsidised, than from cars.  NZ$2.4 billion would in part be about shifting more people from buses than cars.  In short it is estimated to accommodate only 19% of the growth in future trips to the Auckland CBD.  The rest would be travelling by bus, car and ferry.  In his own article on this very report he blatantly misses this point by saying that other improvements wont be able to "cope with the predicted 32,000 extra passengers into the CBD in the 2041 morning peak. For that we need the rail loop." No Brian, only 6,000 of those 32,000 will use the loop.  It's deception to claim otherwise.

So it has a negligible impact on congestion, in fact the effect is so low it will be more than offset by forecast growth in traffic.  It reduces bus use more than car use, and only 1 in 5 future Auckland CBD commuters (which are themselves a subset comprising 1 in 5 of all Auckland commuters) would use it.

Even if you presume that all of the car commuters to the Auckland CBD benefit from the 5% reduction in car trips (and presumably a handful of fewer buses), that means that only 5% of all Auckland commuters experience a reduction in the negative externality of congestion.  So quite why should anyone pay over NZ$2 billion, plus ongoing operating subsidies, for 6,000 new rail commuters and for 5% of car commuters to save time (which they would do, on the margins), is a mystery.  It either hasn't occurred to Rudman (the report is rather clear on this) or he is evading it.

If there is a gap, how should it be funded?

However, let's leave that to one side, because his column does.  How should the money be raised if it was legitimate in the first place?  He doesn't spend much time on how it should be funded, rather how it should not be.

The solutions be posits are to both spend existing funds differently and raise new taxes from motorists.

He wants the state highway budget "redirected" towards public transport. Beyond the Puhoi-Wellsford motorway project, he isn't too clear on what other funded road projects shouldn't proceed.  In the past he has bemoaned other parts of the country getting money for roads, when his beloved Auckland can't get enough to pay for what it wants.  What he neglects is that outside Wellington and Tauranga, virtually all state highway projects are about reducing accidents, not reducing travel time.  However, he is an Auckland advocate so let's just accept that bias as being natural to him.  To be fair to the Greens, they do seek to abandon large swathes of road projects, including the Waterview connection, Puhoi-Wellsford and Waikato Expressway series of projects. 

For new money, he supported the regional fuel tax Labour tried to introduce, but which the National government scrapped.  This was a stupid idea, and tends to be embraced only by those with a paucity of understanding of such taxes and their role in New Zealand.

For a start, regional fuel taxes in the past have been opposed by oil companies because of the administrative cost in applying differential taxes for a commodity distributed nationally.  Service stations near the boundaries of Auckland (which most people wont be aware of) would be winners or losers for fairly obvious reasons if applied regionally.   National tried regional fuel tax in the early 1990s and had to abandon it because oil companies calculated the revenue that should have been collected based on consumption in the regions, but applied the tax nationally to save on the administrative costs and boundary effects.  Regional fuel tax for Auckland risks being applied nationally again, unless government applies stiff enforcement procedures to stop oil companies repeating this - which adds another cost.  Something Brian curiously ignores given his pleading on the cost of operating tolls.

Secondly, he ignores the effect on diesel.  There is currently no fuel duty on diesel, because diesel powered vehicles are liable for road user charges (RUC), paying in advance for distance travelled on roads based (shortly) on maximum vehicle weight.  There are various reasons for that, but what it means is that RUC, in its current form, cannot be applied regionally because diesel vehicles have distance bought before they travel regardless of where the roads are.  So regional RUC wont work for now, without a significant change in technology.  Regional diesel tax would mean the 36% of diesel usage off road would have to have a refund scheme (as applies to petrol tax), which imposes an administrative cost on the agriculture, industrial and fisheries sector to which this largely applies - unless Brian thinks that off road users of fuel in Auckland should pay for Auckland transport, in which case he is arguing to get rid of refunds for off road use of petrol and LPG as well (and why only abolish refunds in Auckland).   He simply wont be aware of these implications of imposing new costs outside the transport sector.

In other words, his bright idea for new money is full of holes, but since Labour tried to do it (against official advice) it must be ok, because he trusts politicians of a leftwing bent.

Should Auckland roads have direct tolls/road pricing?

Most of Brian's latest comment is a diatribe against road pricing.  That puts him firmly in a camp I describe as populist left-wing opposition to tolling - he shares this with NZ First.


I am, in principle, in favour of road pricing as a replacement for taxation of motorists, because it creates a direct relationship between the road user and road provider, sidestepping the interfering influence of politicians seeking to spend motoring taxes on pet projects.  However, from an economist's point of view, it enables the price instrument to be applied to roads.  That alone means road users can be charged directly for the costs of the roads they use, accordingly to the proportion of usage, according to the wear and tear they impose on the roads, and according to the vagaries of demand and supply.   Congested roads would cost more, managing demand, but generating revenue that might be enough to remove bottlenecks and build new capacity, or may simply mean off peak charges are lessened to spread demand.  It is this lack of the pricing instrument, which affects both demand for road use, and the funds to supply roads, that is the biggest single factor in facilitating traffic congestion, and the negative externalities from that in the form of wasted fuel and increased pollution.  Even when applied bluntly, the effects of pricing on congestion have been seen clearly in Singapore, Oslo, Stockholm and London.

It would appear Rudman is almost oblivious to this, or at best dismissive of it.


He claims tolling is "not fair", because he doesn't believe Aucklanders should pay more for their roads and public transport than other New Zealanders.  Rather odd that, if Aucklanders actually wanted more roads and public transport than other New Zealanders, they shouldn't pay.  Who should pay?  Aucklanders pay more for land and property now, does he suggest people living in Oamaru pay a land tax to equalise it, or should Auckland land be subsidised? However, this is a man advocating a REGIONAL fuel tax, which would mean Aucklanders would pay more.  He can't make his mind up. It is a specious "argument" worthy of a drunken talkback caller.   Aucklanders should pay for the transport they want, maybe if they did, they may want less of it (and nothing could be "greener" than that).

He repeats the claim by Chairman of Auckland Council's business advisory panel Cameron Brewer that "tolling is a flat tax that hit the poor the hardest".  Yet I have never seen Brian advocate that poor motorists get a discount on their petrol tax (the equivalent to a toll now), or discounted train fares, or discounted phone line rentals.  Why is a user charge for one service a "tax" when it doesn't apply to others?  Again, a specious argument.  Even though Brewer's sensible suggestion that "it be levied at a reduced rate for service sector shift workers in off-peak times" has economic merit in that tolls should be lower at times of low demand.  Brian's regional fuel tax, which would be paid most by those in least fuel efficient (i.e. old) vehicles on slow lengthy trips would be paid more by them, but he blanks out even considering that.

His next claim is that tolling targets private motorists, whereas commercial road users and councillors (cue NZ First type rhetoric here) can pass it on.  Well what would a regional fuel tax do Brian? 

However, moving beyond this rather facile rhetoric, his big opposition to tolls appears to be because the collection costs are higher than fuel tax.  Now I've already fisked him on fuel tax given that the regional fuel tax would cost more than he thinks, and so would mean costs for administration by both government and oil companies, and for those off-road users of diesel facing a new refund regime.  However, he does use both the Northern Gateway toll road and the earlier Auckland Road Pricing Evaluation Study work to back up his claim that, yes indeed, having a direct customer relationship with users one by one and being accountable to them is more expensive than a tax.  However, as I have written before, the costs now claimed are for a government specified bespoke system that is far more expensive than it should be.  Work I've done elsewhere indicates the costs of collection can be much much less if you have the volume to sustain it and outsource much of it effectively, like utility companies do.  So this argument is less worthy that it appears on the face of it.

Yet the real benefit of tolls, compared to taxes, is that they can charge according to costs and demand.  The benefits to Auckland of road users paying tolls to use roads, compared to more taxes, is that they could be charged more for roads close to capacity and could be charged less for roads at off peak times.  This can spread demand, encourage use of other modes at peak times, and cause people to think again about whether it is worth using that rather expensive piece of infrastructure when it is highly priced.   Yes for "revenue" alone it isn't clever, but if that was the only measure, then electricity would be free and everyone would have paid for it through their taxes, so would phone calls etc.  The effect on use of electricity if it was paid for through your rates or income taxes would be dramatic.

To be fair to him, he is right in quoting the Auckland Road Pricing Evaluation Study work in opposing tolls on the motorways only.  I don't believe this can be justified in Auckland today, but I do believe that a shift from rates and fuel tax based funding of roads to tolls is justified.  The issue is how that is done (privatising Auckland Harbour Bridge might offer a clue).

If Auckland did have largely privately owned roads, charging usage on various basis (e.g. tolls, distance charging, property access charges), it would transform transport in Auckland, particularly by eliminating rates funding of roads (cutting your rates by 10-15%) and fuel taxes (cutting fuel prices by 20%).  It would mean users of main roads at off peak times would probably pay less, whilst at peak times they would pay more.  It would mean buses wouldn't need bus lanes in most locations, except where bus companies were willing to pay for special access.  Truck operators would probably change times of travel.  Short car trips would be more likely to be replaced with walking and cycle trips.  The legacy railway might even have a financially sustainable life, somewhere where it parallels road corridors too expensive to expand (or it gets taken over by them).  

Quite simply, it is Rudman who doesn't have a transformational state of mind.  He, and the Greens, are trapped in tired old solutions implemented en-masse in the United States in the 1970s and 1980s that have failed - in the form of new government provided rail transit systems.  He ignores road pricing, like it was ignored then (except at least then, technology was a bigger limiting factor than it is today).  He swallows the hackneyed and overused line that "building more roads leads to more traffic" (given Auckland has had a lot of new roads lately but no more traffic, he has failed to join the analytical dots).  He wants taxpayers to spend a lot of money for what are pet schemes, whilst he resists economics and employs contradictory arguments.

Auckland's transport could be transformed, with technology, pricing instruments and a more commercial and market oriented approach to the provision of infrastructure and services.  Cities from London to Stockholm to Singapore to Tehran even, have had success in better pricing of roads to reduce congestion, yes reduce.  New technologies in San Francisco and Los Angeles are offering real time information on parking availability with the scope for dynamic pricing of parking.  Bus rapid transit has demonstrated enormous success in Auckland in limited form as it is, and has also been a success in cities in the US, Brazil, Germany and Australia.

It is overwhelmingly clear that the advocacy of rail in Auckland is not about transport policy outcomes, but a broader agenda that is about intensification of the Auckland CBD, moving more Aucklanders into high and medium density housing, for environmental policy reasons, and because of a warm fuzzy feeling that electric trains are just great, but cars and roads are just wrong.

It isn't about Aucklanders making the best choices about how to get around based on the costs of travel, it isn't about balancing what people want in homes, businesses and leisure activities, it isn't about real environmental outcomes (because road pricing would deliver a bigger constraint to sprawl and reduce pollution due to traffic jams, than any rail scheme), it is about grand centrally planned visions that look nice in drawings and in theory, but don't actually deliver the real-world trade-offs people actually want.

The biggest irony is that the greatest beneficiaries of this agenda, if it gets pursued, are owners of commercial property in downtown Auckland.  Now they are far from willing, it would seem, to pay for more than a tiny fraction of the grand CBD rail project.   Is it not ironic then, that Rudman and the leftwing promoters of this plan are advocating a massive transfer in wealth from taxpayers across the country, to this small, some may say, elite group?