Subscribe to RSSPuhoi Cost Ratio Officially 0.8
The Puhoi motorway delivers a ratio of only 0.80 (80 cents on every dollar). On conventional analysis the CBD rail loop delivers a cost/benefit ratio of 1.1 (for every dollar spent, it generates a $1.10 return) at the same Treasury current discount rate of 8%.
This is the latest figure from the Transport Agency. Sunday Star-Times economic columnist Rod Oram was sent the figures by the office of transport minister Steven Joyce in their continuing public spat over the Puhoi highway versus spending on the CBD rail loop - today’s Oram piece is here.
Oram had earlier revealed that the Puhoi Highway had a cost benefit ratio of only 0.4% according to the government’s own documents.
This had angered Joyce who fired off his own piece to the paper in which he failed to explain why he was approving the Puhoi highway with such a poor benefit yet made it clear he won’t approve the loop insisting “local body wish lists for $2.3b CBD rail tunnels on top of all this need to be fully tested.”
Minister wants to push north with more highways, but no loop
The excellent local blog on city planning Rod refers to today is Cities Matter by consultant Phil McDermott.
9 Comments
Great piece making some well though out ideas on how to address these issues.
Great article. This well thought out and researched peice of writing from Oram is in direct contrast to Stephen Joyce’s emotional, fact and figure free rant last week.
Just because it’s the “official” BCR doesn’t necessarily mean it’s the correct BCR. From what I’ve seen, the 0.8 is calculated over a very long return period - which is very much not standard practice.
More here http://transportblog.co.nz/2010/11/30/rod-oram-on-national-radio/
Jarbury, thats correct, I beleive the 0.8 for P2W is calculated over 50 years while the 1.1 for the CBDRL is over 30 years
And the SAHA report’s Puford BCR of 0.4 came from standardising the timeframes and methods, didn’t it? Seen no evidence yet to argue with that, despite Oram’s backdown.
Point is though 0.8 is still a negative BCR it’s still losing 20c for every dollar invested which is poor. Without WEBs the CBD loop still has a positive BCR, changning the loss from 60c to 20c is the best Joyce can do in spinning this project. That says to me that this is one giant turkey.
No matter how much the figures are massaged this is luxury spend up at a time when the money could be better spent elsewhere, i.e. solving Auckland’s woeful traffic congestion.
Joyce has a lemon on his hands with his PUFORD extension.
Bet he wishes he hadn’t rushed in to make it one of HIS 7 Roads of (n)Significance. I will take my hat off to the Minister if he stops this wasteful, uneconomic project from going ahead.
Sadly Jon i don’t think he regrets it at all. His article in last week’s SST suggests he’s baffled at why anyone would dare question him on this. The tone of it suggested that he knew best and why should he have to produce “facts” or “statistics” to back that up. He’s thinks he’s right and everyone should just back off and let him get on with it.