Emirates first to fly whalejet into NZ

Those looking forward to flying on the "superjumbo" new Airbus A380 from a New Zealand airport look like they'll have to wait a year. Emirates is the first airline to announce flights with the A380 to/from Auckland. According to Business Traveller, Emirates daily flight EK 412 from Dubai to Sydney (and EK 413 in reverse) will be flown by an A380 from February 2009, and the flights will be extended onto Auckland (the flights currently continue to Christchurch). Emirates will be the third airline to fly the A380 starting September 2008.

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Presumably there will be some rejigging of flights between Auckland and Christchurch, unless Emirates is dropping Christchurch, but anyway Emirates does promise its A380s will introduce new first, business and economy class products on board. That will be interesting given the world beating Singapore Airlines products on its A380s, although the number of seats Emirates is installing on its A380s will range from 489 to 600, whereas Singapore Airlines only has 471. I suspect Emirates will be flying the low density long haul version on this route though, as it seeks to compete with Singapore Airlines, Qantas, BA and Virgin Atlantic for the lucrative Sydney-Europe routes.

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Anyway it will be good to see the whalejet flying regularly to and from NZ. This will undoubtedly put pressure on airfares in all classes. Frankly, the odds are that no other airlines will be flying A380s to NZ in the near future. The other airlines that have ordered A380s that currently fly to NZ are Qantas, Singapore Airlines, Thai, Korean and Malaysian. Out of them only Qantas and Singapore Airlines currently fly their biggest aircraft (747s) into NZ, and in both cases the majority of their flights are on smaller aircraft. I doubt it is worthwhile either Qantas or Singapore Airlines flying such large planes on any of their services to NZ.

Private road or expensive folly?

Earlier reports that the government was going to bribe Auckland voters by using taxpayers money to fund the hienously expensive and greenplated "Waterview extension" motorway link have proven to be only partially correct. It appears, amazingly, according to the NZ Herald that the government is looking to use private capital to fund, build and operate it. The full details are here in the government press release.

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Firstly, it makes sense to do this. It makes sense for the private sector to raise capital and pay it off, using revenue collected from road users. It also makes sense for the private sector to not only build it (all roads in New Zealand are built by private contractors in essence), but operate it and although discussion is about a "lease" this in effect means it is a private road. The talk of Annette King that it is "not privatisation" is a fudge. In effect, even if it is a traditional BOOT operation (build own operate transfer) it is a privately built road that gets nationalised at the end of the lease period. This is not much different from similar private roads in Australia, or shouldn't be!

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However there are still some significant issues:

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1. Why must only the section of SH20 that goes under the PM's electorate be placed underground in a tunnel that adds well over NZ$1 billion to the cost? If the people of Mt. Roskill, Manukau, Albany-Puhoi, Greenhithe, Hobsonville and Waiouru Peninsula can have motorways built at ground level or in trenches, why is the PM's electorate special?

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2. Should Transit do more than complete investigations on this project, and let the private sector take control of the design, route selection and property purchasing as well as construction? In Melbourne, the Citylink tollway saw the private company responsible for it determining the route, producing a design, engaging in consultation and negotiating with property owners for building the road. Why not let the private sector be incentivised to do all of this, so the road is built quicker, with more public acceptability and lower cost? Transit is clearly poorly incentivised to keep costs down.

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3. How should the private sector recover the costs of building the road? The only fair, modally neutral and economically efficient way to do this is:

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• Allow tolls to be charged on the highway, at a rate of the choosing of the private sector (it will charge at rates to maximise use of the route, and is likely to vary by time of day. There are easily two alternative for potential users of the road);
• Land Transport NZ should pay shadow tolls to the private owner to reflect the fuel tax and road user charges collected from road users as a result of using the road.

Of course, a combination of these and the ultra high cost tunnel option wont work. It simply isn't enough money to pay for the road. That is why the private sector must be involved in the design stage, and lower cost alternatives be developed. However, even then there may still be a gap, which the government will be tempted to fill. The question is whether non-users should pay.

The only way this could be justified is to charge other road users for the benefits the road will bring in relieving roads they travel on (such as the parallel Great North Road, and Central Motorway Junction). This could be calculated and be part of a shadow toll (recognising that you could recover this if the roads were properly priced according to demand/supply), but that's it. I'd be wary about calculating this as well, because assessing economic benefits to non-users should not go beyond road users, so that the benefits of the project are not double counted.

If the project cannot be financed from tolls and shadow tolls that reflect what the users pay, it should not proceed. The road is not good "at any cost", it is only worthwhile if those who will benefit from it are willing to pay for it.

4. Finally, the question of the period of private involvement is important. Labour's legislation limits it to 35 years. I'd argue it could be indefinite (in fact the whole of SH20 could be privatised), but that wont happen. In the interim it would be preferable to have a 99 year lease and for the private lessee to have full control over that period. By then maybe people will not be scared of private roads.

Fundamentally the government COULD do this right, as long as it doesn't write a blank cheque, doesn't subsidise the road from revenue from those who wont directly benefit from it and allows the private sector to innovate and bear the risk. After all, if the forecast traffic levels are wrong the private sector should bear the risk/benefit depending which way it goes. This is a chance to see how things COULD work, but I suspect the main reason private involvement is being sought is to do off-government balance sheet borrowing. In other words, while the private sector finances it, the state effectively guarantees it and will almost certainly be willing to bail out a failed private invetsment. If that IS the case then all of the criticisms by the Greens and others on the left about Public Private Partnerships will be true.

The Waterview connection MIGHT be a good investment for a private company, it might not be. The government should simply allow the opportunity to be presented on terms that don't mean it is subsidised and do not mean failure is protected by the government. If the private sector is not interested, because the revenue from those who will benefit directly from it is insufficient to pay for the road, then it should NOT proceed at present. It might be worthwhile in the future, especially once the other sections of motorway are completed and there is further traffic growth, but if it can't be paid for by users then others should not pay for it.

Meanwhile I have to laugh at John Key saying "it represented a "massive flip-flop" after years of opposing private sector involvement in roading". Pot calling the kettle black surely, John Key ought to know a flip flop or ten.

UPDATE: No Right Turn makes the nonsensical claim that PPPs have been a "complete disaster". You may as well claim that government funded roads have been as well, because some of them have not generated the economic returns that were promised (although thats not very transparent). The truth is that many have been a roaring success, Melbourne Citylink is one, as is the Dartford Crossing in the UK, Chicago Skyway and on and on. His example of the Sydney Cross City Tunnel (which was also about improving the on street environment) shows it went into receivership, but it is still private debt and being privately managed. The road is there, it wouldn't have been there otherwise. The point is though that he isn't talking about fully private roads, and frankly if no taxpayers' money is involved and it is a new facility, why should he care?

UPDATE 2: Further reactions are curious:

Peter Dunne is cheering it on, and even seems to not care if it is all privately owned. This is good news, although I don't think he is that agnostic about whether it gets built. After all, Transmission Gully being an economic dud hasn't stopped Dunne cheerleading it.

The Greens are jealous that the government doesn't want to piss more of your money down a drain into the faith based initiative of rail based public transport saying "A couple of billion dollars could pay for a rail line to the airport, turning the Britomart line into a loop - with an underground extension to Mt Eden - and connecting Onehunga with the western line at Avondale". Yes but whose money is it Jeanette? When you build you trainset you want hundreds of millions every year to subsidise its operation too!

ACT's Rodney Hide has turned his back on user pays and economic efficiency in saying the government is dithering without saying what he would do. An empty statement at best, at worst he wants taxpayers' money ploughed into it without any concern about value for money.

The NZ Contractors Federation want this to be part of a Think Big style massive taxpayer funded build of infrastructure, which their members could profit from building. They claim it can be built on time and within budget. Which budget? The cost keeps shooting up year after year! Most concerning is the belief in Soviet style planning saying "We would like to see it become part of a 20-year national infrastructure plan. At present infrastructure planning for this country is ad hoc. To get the best from our scarce resources in the future, New Zealand needs to better co-ordinate projects, particularly very major ones like this".

So you want to nationalise planning for telecommunications, electricity, water, sewage, stormwater, airports and ports as well? Sheesh.

Perhaps the best comment came from IPENZ Director of Policy Tim Davin who says the current legislation is flawed "We are already hearing in the media today, members of the community opposing the project. Because the Act’s ‘high degree of support’ clause it may make any large roading project difficult to proceed as a lot of communities may take the NIMBY (not in my back yard attitude.) ".

National backflips on Maori seats

I was slightly heartened by John Key's comment that, according to Stuff that (paraphrased) "the National Party would have no second thoughts about abolishing the Maori seats once the historical treaty settlement claim process had been resolved".

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Well only that the policy remains, except for the bizarre linkage between the seats and treaty settlements. This significantly incentivises the prolonging of that process. Why do those seats assist that process? The only people assisted by the Maori seats are the members of the Maori party

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John here is a new concept, it is called a principle.

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In New Zealand, as in all other liberal democracies, all eligible people 18 and over have the right to vote. This right should not have any limits or privileges. In a modern 21st century secular liberal democracy, race based seats have no future. Only one political party benefits from these, and it is racist itself. Only one political party benefits from winning constituencies defined in part by race, and by doing so gets a notably higher proportion of seats in Parliament from those race based constituencies (3.3%) than it would win based upon nationwide party vote (2.1%). MMP was partly advanced on the basis that it would allow party lists to comprise a more representative variety of people from different backgrounds, and this has happened.

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The Maori seats should go. It is NOT racism, it is NOT Maori bashing. It simply reflects that constituencies in the New Zealand Parliament should be based on geography - nothing else. It will mean National wont always win Northland (because most of the votes for that constituency are non-Maori), and it might never win seats in East Cape/Gisborne, but it wont mean Maori representation is over.

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However I suspect John Key wants to reserve the right to "do a deal" with the Maori Party after the next election, as he can't be sure of National getting 47-48% of the vote. No different than Helen Clark with Winston Peters and Peter Dunne - but how do we know John Key wont sell out National voters? We DO know Helen Clark does deals but tends not to sell out Labour voters (throwing a new bureaucracy, getting rid of tolls on a road and other baubles are nothing compared to what National might do).

Pork Barrel roads

In the 1980s and 1990s, funding for roads in New Zealand moved away from a pork barrel approach to one based on several key principles:

1. All central government funding for roads sourced from taxes raised from road users (with an increasing proportion of such taxes dedicated to such funding);

2. Removing direct political interference on decisions regarding which projects would proceed and would not proceed by appointing boards with specific independence to fund and develop projects that would meet goals such as economic efficiency and safety, within available budgets;

3. Allocating funding for projects based upon advancing those with the best ratio of benefits to costs first, and delaying/deferring very high cost projects with relatively marginal benefits. In short, allowing spending to be concentrated on maintenance and smaller projects that could be cost controlled, and allowed steady improvements to networks;

4. Increasing road funding based upon steady growth of funds for new projects, not largescale increases that could place severe pressure on contracting costs.

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Since 1999 Labour has eroded these principles, significantly by:

1. Introduced specific Crown taxpayer votes of funding for transport projects, in addition to dedicated road tax based funding (albeit it has also dedicated more and more road taxes to transport as well);

2. Introducing far more specificity in the outputs that the Minister of Transport expects from the crown agencies funding and building roading networks, and becoming significantly more interested in the timing of major road projects, particularly in Auckland;

3. Placing pressure on the government appointed boards to advance projects based upon "strategic considerations", being code for advancing lower value projects with high political profiles over higher value projects with lower political profiles. None of this is explicit or public, but it involve phone calls to board chairs, conversations between politicians, board members and chief executives;

4. Allowing goldplating and greenplating of major state highway projects with little justification based upon quantifiable returns or benefits (e.g. tunnel under Victoria Park viaduct), but high political profile.

5. Engaging politically driven official groups for special funding of transport in Auckland, Wellington, Bay of Plenty and Waikato to buy regional political support, and advance low value high cost projects that fail following the changes listed above.

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The last time you saw it explicitly was when Labour bought Winston Peters by using taxpayer funds to advance the Tauranga HarbourLink project, even though all the work beforehand indicated it could have been easily funded through tolls.

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Now you see it with Dr Cullen about to bribe Auckland voters with their tax cut - but by funding a heavily greenplated, expensive, and not particularly efficient new motorway. This project has grown from around NZ$700 million in cost to well over NZ$1 billion, and its benefit cost ratio has always hovered below 1:1. It cannot be funded from tolls as Transit's own analysis indicates motorists wouldn't pay to use it. On top of that, while it could be built as a motorway at surface (with some noise barriers), what is being proposed, largely for an environmental argument (i hesitate to use the word reason), is a huge tunnel, adding enormously to the cost. Before you say "it's done in Sydney", Sydney isn't a big volcanic basin - tunnelling is easy and cheap there, it isn't in Auckland.

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"but we need the road" you say? Well, prove it. Two other segments of the SH20 motorway are under construction now, extending it east towards the southern motorway bypassing Manukau and west towards Mt Roskill. Both of these projects are good, and will make a big difference to traffic conditions around Auckland. When completed they may indicate there is demand for improved roads between Mt Roskill and Waterview, and then? Well, let the private sector finance and build the road, find a route, develop a design, buy properties as necessary and then IT can toll it (and it would be fair for the proportion of fuel tax and road user charges paid when using the road are paid from the government to the owner). Why should current taxpayers (not road users) fund a road that will be used for generations? Why not let it be financed and the debt paid off over time from charges by those who will use it?

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It wont happen? Well maybe the road isn't that necessary then. Getting the government's state highway agency (Transit) with an insatiable appetite to spend money, to contract yet another huge road project in Auckland, right now, will further inflate road contracting costs. Promises from the contracting sector that funding lots of roads at once will save money have proven nonsensical.

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So I'd let Transit fiddle around with determining a route, but that's about it - and finish the other two major projects on that corridor (plus duplicating the congested Mangere bridge, by tolling the new lanes). Then Dr Cullen you can give New Zealanders a bigger tax cut. Instead of spending $1.5 billion on a motorway of dubious economics, you might give that money to New Zealanders - $375 per man, woman and child would do a lot of good, wouldn't it?

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UPDATE: So I underestimated it. $2.5 billion is the hyperexpensive, fully tunnelled, "wish the country had the oil wealth of Brunei" option. Apparently it will be tolled, but I can assure you this will recover a small portion of the costs - most will come out of your pocket. So you can easily say that every person will pay $400 towards it, or in Auckland terms, $1500 per person or $4500 per family, for a road that the users wouldn't choose to pay for.

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However, the blurring of government accountability grows again with the report that "a six-member committee of two Government and three private-sector representatives with an independent chairman" would look after the project. Those of you driving substandard highways over the Maramaruas, or south Waikato, or from Kapiti to Levin might ask why your far cheaper, better value projects aren't so important. Well ask why people vote for political decisionmaking over roads.

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Also note the "Waterview connection" project has not even entered the design stage, and the budget for design has grown about 60% as the Herald reports "its estimate of design costs alone has soared from $50 million last year to $79.4 million in its latest draft highways programme".

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This is an Auckland election bribe, bribing Auckland voters with tax cuts that could be for the whole country. It's a bribe that Labour doesn't need to commit to either, as the project is not close to construction.

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The Greens oppose it, of course, because it's a road - preferring to waste taxpayers' money on rail projects that also aren't paid for by users.

What NOT to learn from Waitangi Day

PC has written an excellent post on Waitangi Day and what it could be, and being in the “mother country” of course, I wont have that day off. However, I can reflect on what it is like to be away from all of the wailing and gnashing of teeth that is around when the usual tribe of tired old collectivists seek to treat people on the basis of “ethnicity” not behaviour.
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As PC has said:
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What the Treaty did do, for which we can all be thankful, was to bring British law to NZ at a time when British law was actually intended to protect the rights of British citizens, and it promised to extend that protection to all who lived here. For many and often differing reasons, that was what the chieftains signed up to. To become British citizens, with all the rights and privileges thereof.
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Indeed!
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And yes, I do know that for some, these rights and privileges were in practice more limited, due to sexism for one, and racism. I know the 19th century was hardly a period of colourblind government anywhere, but in the realm of colonialism the Treaty was a significant step. No such rights and privileges for Australian aborigines.
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Unfortunately, Waitangi Day perennially becomes the rallying point for those who prefer tribalism and separatism, those who believe in intergenerational blame and guilt, and moreso the idea that you can blame your current life on what happened to your ancestors.
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It is identity politics, the notion that what matters most is not what you do, but what group you “identify” with. Interwoven with this is the belief that people treat you according to that identity, and that statistics can “prove” unfair treatment if members of an “identity” perform “below average”. You know what I mean, the idea that more Maori are in prison not because they committed crimes, but because “the system” was against them. Those of other identities don’t have this disadvantage because the system was “designed by and for them”. It denies objective analysis, it denies those who reject identity politics as either part of the problem, or traitors.
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The corollary of that is the notion that ones life today is directly attributable to what someone else’s ancestors did generations ago. To carry the notion that being unhealthy, being poorly educated and committing crimes is because you carry the pain of your forefathers is to be psychologically unhinged. No one can doubt that one’s inheritance matters, but what is done with it matters too. In fact far more important that material inheritance is the psychological one.
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Did you have parents who loved you, taught the value of hard work, education, respect and support you as your grew and learnt? That is far more likely to influence whether you commit crime, get a job, look after yourself and do the same to your children. Then beyond that is what you do with THAT personal inheritance. Sadly far too many Maori are being told that they don’t have choices, that it isn’t their parents fault they bashed them up or neglected them, but “society”.
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Waitangi Day could be a day to celebrate the founding of a nation-state, the opportunities it brings to those who live there, the relative freedom, lack of corruption and rule of law that exists.

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When you see those advancing “tino rangitiratanga” ask yourself what they mean by that? Do they mean the individual freedom and private property rights that British law SHOULD have granted them (and all citizens)? Or do they mean they want more government, government based on race, interventionist government, with more taxes and more control over education, broadcasting, property rights and the economy? Is it a coincidence that almost all those advocating “tino rangitiratanga” get inspiration from authoritarian socialists?

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So don't think of Waitangi Day by race - race is not an objective way to judge a person and it has no place in any considerations of state. Waitangi Day should be a day to celebrate the common nationhood of New Zealand.

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Then take the concept of one law for all - colourblind - and ask politicians this year, election year, whether they believe in that and what they'll do about it. Chances are the two main party leaders wont deliver.