While the Government remains lukewarm to it, Auckland Council, Auckland Transport and other interested parties continue to make progress towards it such as the protection of the planned route.

While blogger Jon C who ran this site for four years and a strong campaigner for it has moved to Brisbane and stopped blogging, volunteers will add the odd update to ensure that by the time it happens, this record has been kept.

Source AT

He’s going along with top NZTA executives to look at China’s infrastructure projects especially the impressive Shanghai Changjiang tunnel project where 2 German-made Herrenknecht tunnel boring machines have completed the world’s largest mechanized twin tunnels.

The giant Shangahi tunnel project

The under-river tunnels link the mainland with the island of Changxing.

The largest tunnel boring machines in the world were used with a diameter of 15.43 metres.

The largest tunnel boring machines in world

The project involves an 8.9km tunnel and a 10km cable stay bridge for both traffic and rail.

The necessary power to drive the machine with a weight of 2,300 tonnes and a length of 135 metres through the ground was provided by a 3,500 kilowatt main drive, which weighed 170 tonnes alone.

The cutterhead with its 6 cutting wheel arms can be accessed via the rear of the shield under atmospheric conditions – allowing for cutter changes under extreme conditions and ensuring the highest possible safety standards on the machine.

The Herrenknecht Mixshields excavated two tunnels with a distance of 23 metres – measured between centre axes – and operated at a pressure of 6.5 bar. The machines achieved top performances of 26 metres per day, 142 metres per week and 556 metres per month.

The tunnel boring machines each drove a 7,472 metre long tunnel beneath the Yangtze river, underpassing dikes and a residential area with low overburden, with downtimes of maximally 6 hours.

The first machine broke through a year earlier than scheduled after a construction period of 20 months. The second machine reached its target 10 months ahead of schedule. The tunnels have a vertical deviation of less than 2 centimeters and a horizontal deviation of less than 2.7 centimeters.

While China missed out on being in the front line for building Auckland’s new electric trains, KiwiRail has been buying Chinese rail expertise – but more significantly, China is being eyed for future massive infrastructure projects.

Engineers from the China Road and Bridge Corporation were in New Zealand last year scoping for projects and transport minister Steven Joyce was also China just before their visit.

Prime Minister John Key, when he last visited China this weekend, was asked about the speculation China wants to built Wellington’s Transmission Gully.

Mr Key responded: “They might do, and at the end of the day from New Zealand’s perspective I mean we’re looking for value for money.”

In July, I asked why NZ’s huge construction costs here did not add up.

China is busy showing off its new Jiaozhou Bay bridge, 42km long, 35m-wide and the longest of its kind. It links China’s eastern port city of Qingdao to the island of Huangdao.

It cost about $1.4 billion.

Vhina's new bridge cost $1.4b

The Millau Bridge in France – the highest road bridge in the world, opened in 2004, cost in today’s currency $659 million.

France's Millau bridge cost NZ$659m

I asked:

So to ignorant commuters like me, who are angry that the CBD Link and Tunnel are unlkely for decades because of the cost, can someone explain why other countries can get projects done at a reasonable cost and everything here sounds over-inflated and still comes out at the end with aspects unfinished because costs had to be trimmed to prevent overruns or to give the impression we’re getting value for money?

If Prime Minister Key and Transport Minister Joyce are looking for cost savings, it’s great his NZTA department is getting a close look at the incredible development being done in China on a massive scale for reasonable cost.

Having Mayor Brown along will hopefully give them the chance to have – away from the heat of the election debate- some rational discussions about the CBD link and Auckland harbour rail tunnel proposals and how they could be achieved.

Dealing with NZ’s still heavily regulated environment before projects can be undertaken and NZ’s labour costs compared to China’s will still be issues that need to be taken into account but in the end, this trip will inspire, open eyes, allow networking with the Chinese and hopefully open doors to making the CBD Rail Link just that bit easier for the Mayor to achieve.

He expects the Government to pay 50%, and ratepayers 16.6%. 30.9% would come from what he calls alternative transport funding and 2.5% from development contributions.

He told the Council’s strategy committee in a presentation of his 10 year plan, that the construction should begin from 2016 and the cost will be $2.4 billion.

Property will be acquired from next year.

He says the link is essential to service the growth in population, protect the city centre urban environment and meet the Council’s environmental objectives.

He says the Council is preparing a discussion paper addressing key issues around transport funding.

“Central to this is the need to develop new sources of revenue for funding essential local transport systems as we deal with about an $10b funding gap.

“This paper will  be released in the early part of next year to give the community the opportunity to contribute to the debate. The paper will address issues such as the effect f local road user levies on low-income households.”

The Mayor said Auckland’s population will reach 2.3m by 2051.

Britomart’s capacity for trains will be reached early next year. Critical parts of the City Centre bus network especially Symonds, Fanshawe and Albert Sts will reach peak capacity between 2014 and 2020. On Albert St alone this will mean 8 buses per minute at peak.

“The City Rail Link provides another exit point from Britomart. This initially doubles its capacity for rail passengers from 12,000 to 24,000 people per hour and provides options to double this again to 48,000 per hour. It achieves this without spoiling and actually improves the quality of the urban einvironment. This future proofs communter rail needs into and from the CBD for the next 60 years while freeing up road capacity for freight and vehicle use.”

$9.5m is also envisaged to extend the Wynyard Quarter tram to Britomart.

In his 10 year plan he outlined his other transport priorities:

• Increased PT subsidies – 73.5m over 10 years with priority

• Investment in PT infrastructure- rail stations, ferry terminals and bus lanes

• AMETI and other major roading projects

• School travel and safety plans ($23m more)

• Extension of the waterfront tram to Britomart ($9.5m)

• Designation of an airport route ($47m)

• Walking and cycling infrastructure improvements

• Investigation/ designation of a 2nd harbour crossing

“Included in my proposal is additional funding for public transport subsidy – bus rail and ferry.

I have asked Auckland Transport to optimise the distribution of funding between these modes.

“As part of this additional funding I want to see public transport needs as identified through the Southern Initiative addressed first.“Public transport connections between places of work, education and residence are to be improved to assist these areas of need.

“Improvements to rail stations, ferry terminals and bus lanes with particular emphasis on the latter two for north of the harbour bridge are also projects for my proposal within the overall capital budget of AT along with extensions to the walking and cycling networks.”

The contentious issue was rating now Councils are all one.

The Mayor reaffirmed his commitment to keep rates increases at, or around, the level of inflation and proposes average rate increases of 3.6% for 2012/13 and 3.4 – 5.1% in subsequent years.

Alongside that is the development of a single rating policy for the council.

“We always knew this was going to be one of our biggest challenges and whatever we do there is going to be significant change,” says Len Brown.

The Mayor’s proposal includes

• A Uniform Annual General Charge of $350

  Differentials:

•   Business 2.63

•   Rural business 2.37

•   Rural residential 0.9

• Farm and lifestyle properties 0.8

• Sea-only access properties 0.25

•  Targeted rates for business improvement districts and city centre upgrade

Len Brown told the Council committee he’s proposing the transition to the new rating mechanism be through the use of remissions rather than a legislative or phased approa

“The Long-Term Plan as proposed is based on the transformational shifts identified through the development of the Auckland Plan and will allow us to get on with building an even more liveable city.

“We are focused on fixing Auckland’s transport network, enhancing the economy, protecting the environment, supporting our young people and strengthening local communities.”

Spending money restoring the rundown and bordered up St James Theatre in Queen St is in the Mayor’s 10 year project check list which includes:

• Additional funding for an Auckland-wide education trust
• Continued investment in libraries
• Development of a tertiary education cluster
• Investing in youth in sport programme
• Waste Management Plan
• Hauraki Gulf Marine Park spatial plan
• Regional schools tree planting
• Increased subsidies for public transport – particularly in the southern initiative area
• Investment in train stations, ferry terminals, roading and bus lanes
• Further funding for school travel and safety plans
• Town centre upgrades
• Developing a health hub
• Major events strategy
• Developing a visitor economy
• Implementation of the Waterfront and City Centre master plans
• Cruise ship terminal
• Local Board funding
• Heritage and culture projects
• Tamaki innovation precinct
• Super yacht refit infrastructure

Greens say central Government can afford to fund at least 60% of Auckland CBD rail link, to boost the economy and give Aucklanders better options to get around their city,

In a statement this afternoon, responding to the plan, MP Gareth Hughes said the Green Party also supported giving the Council alternative funding mechanisms, so they would not have to rely solely on rates to pay for their share of the project.

But at the same time, it has begun a campaign warning about plans for four-storey buildings on what is the playground and public areas, right next to the “Six Pack” of historic grain silos on the re-vitalised Wynyard Quarter and a massive reclamation planned by Ports of Auckland.

In a campaign called “We only get one chance,” Heart of the City says the problems with Auckland’s rail system “became all too clear” at the opening of the Rugby World Cup in September.

It calls the planned City Rail Link  an exciting proposal and says the business group believes it’s  a worthwhile investment in Auckland’s future.

“This would turn the central Auckland rail system into a loop. Britomart would become a through terminal rather than a dead end, connected directly to new stations in the city centre. Add the city’s new electric trains, and you have a modern, efficient rail system.”

But the group issues a dire warning about plans for Wynyard Quarter which would wipe out the playground and public park near the old oil silos – a stunning feature of the development.

Wynyard Quarter playground a popular new public space

“To the north of this there are yet more shops, offices and apartments planned, while the very end of the headland becomes a park.

“There is simply too much development planned for the area. The park needs to be much bigger and it needs to be better connected with North Wharf. As planned, its entrance will be dominated by multi-storey buildings.

“We believe that intense development like this privatises public space and creates dead areas. Rather than treat this as a property development, we need to build generous open spaces that future generations will thank us for.

Wynyard Quarter's public space will get bowled?

“We believe there should be no significant development north of North Wharf, except for public buildings and parks. We’ve only just got these public spaces, let’s not lose them.”

Heart of the City also warns about a massive reclamation planned by Ports of Auckland.

The port is predicting that by 2040, it will process more than four million containers a year, up from 800,000 now.

To do that, it will have to reclaim large areas of the harbour – Bledisloe Wharf, for instance, will be 50 per cent as long again as it is now, jutting into the harbour and obstructing views of the Hauraki Gulf.

“Those extra containers have to moved off the port somehow and that means more trucks and more trains. The plan envisages $1.7 billion worth of roading and rail improvements to support that expansion, including the possibility of a large concrete bridge or underground tunnel right on our waterfront to connect the port directly with Grafton Gully. In the mean time there will be more and more trucks on The Strand.

“The plan assumes that every one of those containers has to pass through Auckland’s waterfront. There are other options and these need to be explored.

Ports of Auckland reclamation plan

“The scale and cost of the proposed expansion is such that Aucklanders have to ask themselves whether they want the port to grow to this size with this impact on their waterfront.”

How typical Auckland.

Just when we think we have sensible thinking going on in opening up the waterfront to the public and making use of the connection between sea and land, it’s planned to make the same mistakes all over again.

See what the Ports reclamation will look like here

Good on Heart of the City for raising awareness of this. Let’s hope the final plans for the port and Wynyard don’t make the final Waterfront Plan . Raise your voice now.

The Prime Minister was once again reported today pouring cold water on the Government coming to the party on the rail link “any time soon” and continuing the Government tune that it’s the Auckland Council and its ratepayers and citizens who will have to adopt innovative ways to fund such schemes.

The Plan canvasses the options and motorway congestion charges – or whatever is decided- would be implemented around 2016.

The draft Auckland Plan sees the most appropriate target date for introducing a new form of transport revenue such as road network pricing is seen as when the new electric trains start  (listed as not 2013 but 2014-15) and Waterview Tunnel is opened (2016/17).

Funding mechanisms that seem most favoured for consideration are tolls, road pricing, increases in parking charges and levies or increases in passenger fares that “reflect service quality and reliability improvements.” On the latter, it argues that the improvements passengers fund will ultimately lead to a better transport system for everyone.

“Transport improvements over the 30-year period must be agreed by Auckland Council and central government and must benefit users and those who contribute funding.

“It’s likely a different mix of funding mechanisms will be used for different projects. This work will be done jointly by the various planning and delivery agencies.  Again council and central government will have to agree to any such new funding packages.”

The Plan considers other options:

Private private partnerships are considered a form of procurement rather than a funding mechanism. The downsides are listed as being complex and costly.

Regional fuel tax (which Auckland was suppose to have had) can lead to distortions at the borders of the region with motorists driving over the boundary to fill up. Another problem is they would charge all road users regardless of the costs that each road-user creates meaning road users who drive outside peak times still subsidise peak time drivers. Anyway, it sounds academic as the transport minister is reviewing the Land Transport Management Act potentially removing a provision for such fuel taxes being possible.

Road pricing which includes tolls congestion charging and network pricing is considered a viable option and can change behaviour.

Congestion charging has been used successfully in some cities but Auckland Council would have to consider a number of factors. The best approach would be to initially price congested destinations that are already well served by public transport. Discounts, entitlements or exemptions could be a way to increase mobility. “Congestion pricing is premise don taking private motor vehicle mobility as a free good away and then allowing the driver to buy that mobility back. Therefore a scheme should in principle  have as few discounts or exemptions as possible in order to maximum the potential congestion reduction.”  On areas where public transport options are limited it says a “wider suite of options for those motorists with little or no access to public transport is desirable.’

Network charging such as charging vehicles to join the motorway network is not currently permissible. If legislated, the level of charge would be calculated to both optimise revenue and manage demand to create free flow traffic on motorways.

Value Uplift levy, used in Melbourne is also raised. This is a payment designed to reserve for community use part of the uplift in land value. It  differs from a capital gains tax as it’s charged only once when the property changes hands after upzoning.

Local sales taxes are dismissed as not having government support along with more admin burdens and undermining GST

And here’s where the money is needed for transport -

It’s a debate that needs to be had now and ended soon.

In the past when people finally are having to commit to achieving their dream plans, such debates get messy and break into the historical Auckland factions which go nowhere.

How Auckland will look by 2040

Plans for Auckland’s Waterfront

What the Plan says about Transport
Taming Auckland’s landscape – what the Plan says

Read Auckland Plan

The project was featured prominently as an option in the Auckland Unleashed discussion document on which consultation closed on 31 May. It was also featured in the City Centre Masterplan discussion document. It has also been presented to the CBD Advisory Board which passed a resolution unanimously supporting the project.
The heat is continuing on the Government to come to the party.
The Council paper says There has been strong support amongst groups consulted for the Link. It has also been strongly supported in the submissions on the Auckland Unleashed discussion document on the Auckland Plan.
The good thing is that the Council and Auckland Transport are ignoring the resistance from the Government and acting as if it is full steam ahead so that no time is lost if it can get a change of heart.
The Auckland Council has already endorsed, as its top transport project for Auckland the underground rail line between Britomart and Mt Eden and Auckland Transport resolved to endorse it in principle, and requested the Council to allocate funds for the project.
The heads of agreement says Auckland Council and Auckland Transport will use “their best endeavours to secure funding from local and other sources when and as required…and will work collaboratively to develop a funding plan to enable Auckland Transport to fulfil its financial responsibilities in relation to the Link.”
On the provision of land, the agreement says Auckland Council will make available to Auckland Transport “any land or interests in land it owns that is reasonably required for the link and provide all reasonable assistance for acquisition of land under the Public Works Act.”

Symonds St would be one area to get revitalised

What do you think of their argument?

Here is their release:

The recent furore over the merits of the Auckland CBD rail loop clearly illustrates the difficulties of planning major transport investments in isolation from land use planning and implementation. The CBD Loop has the potential to positively shape Auckland’s future form but it’s viability is dependent on the concurrent development of high quality, high density, mixed use residential and commercial development that will support the economics of the project.

In November last year a business case report commissioned by Auckland local government found that a CBD loop would return at least $1.10 for every dollar invested, and as much as $3.10 if ‘wider economic benefits’ were taken into consideration. Last week, a second report commissioned by the Government estimated the transport benefits of the loop were barely 30c for every dollar invested, or up to 40c including wider economic benefits.

When both parties broadly agree on the price of the project, the number of commuters using the service, the number of cars taken off the road and most other factors, how is it that the numbers are so wildly inconsistent?

The answer is in the land. In general, large transport projects raise the value of surrounding land as improved access makes living and working there more attractive. The Council, who strongly supports the project, has projected big things for surrounding land. The Government, who is more hesitant, doesn’t think the transport and land use returns stack up.

Who’s right? Well, it all depends on what actually happens to that land adjacent to stations.

The CBD loop business case is predicated on achieving a significant uplift in density, both residential and commercial along the new rail tunnel from Britomart through Albert Street, Karangahape and Newton.

However the Government’s recent review clearly shows that commitment to urban density and supporting land use does not yet justify the substantive $2.4 billion investment in the loop.

In essence both the Government and the Auckland Council are right. On the one hand Auckland Council rightly wants to optimise the contribution of rail to the overall transport solutions for Auckland and provide alternatives to traditional urban sprawl. On the other hand the Government is right to say that development of the business case and the supporting land use policies requires considerably more work by the council. Having already committed billions in electrification and rail and station upgrades the Government is wary about further investment until the benefits from existing investments are realised.

The CBD rail loop has the potential to link major land development opportunities not only in the CBD, Karangahape, and Newton but also leverage recent investment in rail infrastructure, at Newmarket and New Lynn. The former brewery site in Newmarket provides a fantastic location for intensified development adjacent to rail, the proposed CBD loop, shopping, the domain and other city amenities.

For the business case to stand up it is critical that the project is fully supported by a coherent land development plan for the corridor and the inner city. This necessarily means appropriate phasing of the development of commercial land, incentives to support development of land adjacent to the rail network such a streamlined planning approvals for developments that meet certain design standards, along with the commitment to investment in the rail system. Proactive support by the Council is central to giving the private sector confidence to invest.

But that level of commitment is not yet being demonstrated by the Council. For example, its Waterfront Development Agency is very successfully promoting the development of Wynyard Quarter. While not served by the inner city rail loop, this significant waterfront land development will compete in the same residential and commercial property market as the land adjacent to the CBD loop. Already the ASB Bank has committed to relocate its head office to Jellicoe Street in 2013, vacating considerable floor space in the existing ASB centre which is directly adjacent to the proposed new Aotea station. Given that the rail loop is designed to serve the CBD, perhaps Wynyard quarter should be put on the back burner? Alternatively, should the CBD loop also incorporate a connection to Wynyard quarter? These decisions are vital to the business cases for both the CBD rail loop and the Wynyard quarter Development.

The most recent decision to proceed with SkyCity’s proposal for a 3500-seat convention centre to be built between Hobson and Nelson Streets is a case in point. While no doubt the other proposals were meritorious, concentration of major projects like convention centres, shopping, residential and commercial density is exactly the kind of development that will be needed to support the economics of the CBD rail loop. It’s this kind of joined up infrastructure land development that drives the success of Melbourne. The integrated Southern Cross rail, bus and tram station in Spencer Street is central to major passenger generating attractions such as the 74,000 seat Etihad Stadium, a major shopping mall, the Southbank entertainment hub and the 5,560 seat Melbourne Convention and Exhibition Centre.

In comparison to Auckland, the key difference between Melbourne and similar successful cities like Vancouver is the calibre of the new high density neighbourhoods that have revitalized the downtown and offered a viable alternative to suburban living.

The CBD rail loop is one of the most significant investments that will shape the future development of Auckland. It is central to effective implementation of a more compact city as envisaged by the spatial plan.

Implemented properly it has the potential to contribute positively to the world’s most liveable city. Implemented poorly it could create a legacy that New Zealanders will regret for decades.

__

Thank goodness for that.

Even if the Government had approved the CBD rail link it wouldn’t have been able to happen.

Maori Statutory Board member Glenn Wilcox has complained to the Council that no one has asked the local Ngati Whatua about it at all. And they are supposed to as the iwi was here first.

“What’s being done about the taniwha Horotiu who lives just outside here, and that tunnel will be going right through his rohe (area).”

A few years back the transport agency (Transit) decided to move part of SH1  after Ngati Naho of Meremere protested that the highway cut through the domain of one eyed taniwha Karu Tahi.

According to the official NZ encyclopedia Witi Ihimaera, author of The whale rider, says that he has a kaitiaki (guardian) which is a taniwha. Her name is Hine Te Ariki and she lives in the Waipāoa River.

Maybe Hine could give Horotiu a call and tell him it’s OK, the tunnel is all good.
The politically correct encyclopaedia also reminds us the building of a prison in Ngāwhā, Northland, was also opposed because of belief in a taniwha.

“Takauere, a taniwha in the form of a log, was said to have been created by a Ngāpuhi ancestress, Kareariki. While he was mainly located at Lake Ōmāpere he was also believed to manifest himself at Ngāwhā Springs and other geothermal areas. Local hapū were concerned that the prison would impede his travel. Ultimately, against these objections the prison was built.”

Thank goodness we got the unelected Maori representatives on the Council transport committee so they can give us a reality check.

I’m happier now I dont’ feel so bad about Steven saying no as it would not have been right.

Never upset a taniwha. According to the encyclopaedia they are angry beasts. Maybe we could get Horotiu to have a meeting with the Minister?

Even though the Rail Link might have helped Auckland’s transport woes and boost inner-city rejuvenation, depending on which version of the story you believe, there is no way we could have messed with a taniwha.

That aside, it was good to see Auckland Council and Transport officials positively pressing ahead with their determination to get the Link happening.

Work to be done on brainstorming possible funding avenues is exactly the course that is needed now that Bill English has shut his cash register on the project.

Who knows some bright out of the box idea may come forth, although some of the big funding options (like regional taxes and tolls) still need a government buy in.

The Council and Auckland Transport is doing a good job in not rolling over but acting as if it will still happen. It has to.

Auckland Transport has publicly reminded us no development means the city’s roads and railway lines would become clogged by 2024, when there would be no spare capacity left for trains and buses, let alone more cars.

The Government and their officials remain living in the belief this is 1960s and Auckland can become a motorway jungle like LA.

A report before today’s Council Transport Committee suggests this is one way forward. It is also revealed that it could cost $270m for property acquisition costs to protect the proposed route for the CBD Rail LInk.

This may be subsequently partially offset by property sales of $140m when the project is in place. This would leave net property costs of $130m. Auckland Council and Auckland Transport would bear the costs as it’s considered unlikely NZTA would assist.

Property negotiations were planned to happen between July and 2013. Most of the yet unnamed properties are expected around the Mt Eden area of the link route.

With the Government turning down funding for the project, a report before the committee suggests the steps that could help change the Government’s stance.

The review released by the Government did not support consideration of funding of design or construction at this stage, but concluded that it makes strategic sense for the route to be protected now, subject to this being funded by Auckland Council.

The report to today’s Council committee lists the range of actions identified by Central Government agencies that could be undertaken or facilitated by Auckland Council and Auckland Transport which would improve confidence in the outcomes expected from the City Centre Rail Link as being:

• Auckland Council finalising and implementing its spatial plan and City Centre Masterplan to help clarify the project’s role in the CBD and wider Auckland.

• Demonstrating commitment to resolving current and emerging CBD access issues, for example by improving bus operations and addressing capacity issues.

• Development of a robust and achievable multi-modal programme for transport in the CBD, which considers a thorough analysis of alternatives and identifies the optimal mix of modes to meet demand.

• Beginning implementation of large scale residential developments along the rail corridor.

• Implementation of additional park and ride sites, and changes to bus feeder services where appropriate.

“The implementation of these measures, combined with rail patronage above forecasts and arobust economic case, would provide a strong signal that the conditions are in place to drive the necessary benefits from the project and therefore to reconsider the business case for the project

“Officers are working with Auckland Transport on any additional work and actions required. Of note is that the City Centre Masterplan work has provided an excellent opportunity for a collaborative approach between Auckland Transport and the Council on a multimodal approach to the transport elements of the Masterplan process in the City Centre.
“Work on transit oriented growth around future City Rail Link stations is already underway as an input to the Auckland Plan and Unitary Plan processes. A number of Transit Oriented Development processes are either underway in planned in locations such as New Lynn and Panmure.”

The Council’s Strategy and Finance Committee has approved Auckland Transport’s funding request to allow work on Notice of Requirement documentation; affected landowner engagement, design and resource consent preparation, to proceed in the 2011/2012 financial year.
It says other decisions on funding will need to be considered through the Long Term Plan process, which is subject to public consultation.

Funding ideas for the Link that have been thrown around within the council include:

• Rates
• Regional GST, income tax or payroll tax
• Targeted rates inclduing CBD Link area
• Regional fuel tax
• ‘Car parking charges
• Car parking levies on parking spaces
• Congestion charges
• Higher fares to central city stations
• Visitor or bed tax
• Regional lottery

So now we can forget that.

The Papakura/ Strand option  was considered to be the best option as:

• The Silver Fern railcars are available now
• Space is available at peak times at The Strand (but not at Britomart Station)
• There is no requirement for passengers to change trains at Papakura
• There would be lower initial capital costs as shorter platforms would suffice and there is no requirement for additional rolling stock.

The working party believes it would allow a limited service to start up initially at lower cost that, if successful, could be improved over time.

But the funding issue remains a big one.

The only current funding provision is $200,000 in Hamilton City Council’s Long Term Council Community Plan for station upgrade work.

A report to the Auckland Council on the issue says the service is expected to be fully funded by the Waikato as the NZTA has indicated that it will not subsidise this service. In other words Waikato people will have to pay for it through their rates. The Long Term Plan process for the Waikato councils will gauge public support for a rates increase to subsidise the operation of such a service.

So the final decisions rest on the outcome of the Waikato councils various long term plan processes. They will determine whether they make funding available in order to implement the final preferred option.

Staff from Waikato Councils’ have also been instructed to work on funding policy options for the service. These options will form part of the final recommendations report prepared by the Working Party.
And while Auckland Transport supports the idea, it has expressed concern that any commuter rail service from the Waikato serving passengers at Auckland stations could reduce the revenue that it receives from urban train services to these stations. This in turn could require additional funding from Auckland Council and NZTA.

A Hamilton to Auckland commuter rail service could begin operation in the 2012/13 financial year.

But and it is a big but – the report adds that is all subject to sufficient funding being included in those Council plans and a range of technical and operational issues being resolved.

in August or September a final recommendations report will be prepared and referred to all member Councils.

And from the history books:
A commuter rail service, known as the Waikato Connection, did operate a single weekday return
trip between Hamilton and the then Auckland Station (now known as The Strand Station) from
June 21 2000 until October 7 2001.
At the time of its cancellation, it was carrying an average of 129 passengers per trip, with the large majority of passengers boarding at either Pukekohe or Papakura. Only 31 passengers travelled the whole distance between Hamilton and Auckland,while 46 boarded at Pukekohe and 45 boarded at Papakura.
This service provided the first commuter rail connection between Pukekohe and Auckland. The day after the cancellation of the Waikato Connection, the then ARC contracted Tranz Metro (the then
Auckland urban rail operator) to run a single return service between Pukekohe and Auckland to
retain the commuter rail connection to Pukekohe.
There are now 20 return weekday services between Pukekohe and Britomart with 460 weekday passengers boarding at Pukekohe.
.

He told AKT: “This is especially unfair as Auckland was forced by the government to undergo the major costs and dislocation of creating the Super City – ostensibly so that ‘Auckland can speak with one voice’.

“Well, Auckland has spoken with ‘one voice’.

And the man who coined the term Holiday Highway for the the transport minister’s favourite proposal, said that “unlike the Holiday Highway, the City Rail Link has a sound business case compiled by reputable NZ and international experts.

Mike Lee's efforts have taken us beyond steam trains in Auckland

Mike Lee said the important thing it that the CBD link has a powerful mandate reflected by the overwhelming majority of Aucklanders who voted for Len Brown who campaigned strongly on this issue.

“In contrast the politician who has done most to block the project, Transport Minister Steven Joyce as a first term list MP who unlike the Mayor of Auckland has no personal political mandate from voters whatsoever.

“He has never been elected by the public to anything.  This is history repeating itself and the third time a National government has done this to Auckland sine 1954.”

Full coverage:
Ministry of Transport and Treasury report

Full commissioned Auckland Council Auckland Transport report

Minister, Len Brown and Greens react

Ministry of Transport explain their decision
Auckland must fight back: And more reaction

Correspondence between the Minister and Review team

The RWC 2011 is a good example of the way figures are made up.

Auckland’s official RWC2011 site opens with the unattributed bold statement:

“Rugby World Cup 2011 has the potential to generate $267 million of direct economic benefits for the Auckland region.”

Not doubt some economic research modelling company was paid a lot of money to come up with a good story that makes an impressive quote. How on earth can they get away with just throwing out this projection when they don’t even know yet how many tickets will sell (only half to date, 100 days out).

This spreadsheet nonsense gets serious when it means such playing with figures has cost us the CBD Rail Link.

One of the key elements used to torpedo Auckland’s CBD Rail Link Case was playing with the projections of how it would grow Auckland’s rail traffic – and the impact in the CBD.

Sorry to use the tired clique that build it and they come but with rail, that has been proven in recent years.
It would have been difficult to have correctly projected just how fast rail patronage would have grown over the last year but if courageous leaders had not pushed for an improvement of the rail, we would never have found out how when you build it, people flock to it.

Treasury officials closeted in the unreal world of Wellington’s government department world have never been stuck outside the Britomart tunnel for 10 minutes waiting for a berth or struggled to get on a crowded train in recent months. They may use the odd Wellington train but that’s a different story in a vastly geographically and culturally different city.

Yet they and the Ministry of Transport review had to crunch the numbers and using modelling got the bullseyes that suited the Minister who had long ago declared the case seemed over blown in its claims.

When it got to the level of the team trying to work out future costs of parking in the CBD to justify we don;t need more rail is insulting and laughable.

And in one scenario, Auckland Transport appears to have thrown in the impact of the planned Parnell heritage stop – but because the funding had not been finalised at that stage, the review team decided not to take it into account. It’s unlikely it would have really made much of a difference.

We can conclude the modelling helped:

• The review team fiddle like a dodgy tax accountant to get the figures that satisfied their end goal of keeping their ministers (Transport and Finance)  happy – both of whom publicly declared no love for the rail link.
• Or expose total incompetence by Auckland’s trusted Transport and Council staff in which case,. because their projections are so wrong, they should be sent to Siberia.

I know which one I would bet on.

Mike Lee’s blog noted last year his fears National was doing this again to Auckland – and republished a 1954 Herald cartoon which lampoons the scuttling by the National government of a previous plan to build an underground rail link through Auckland. The bound and gagged figure depicted Auckland Mayor J.H. Luxford. (from ‘Decently and in Order’ by Dr Graham Bush). The 2 casks of dynamite as “procrastination” and “dissension” demolishing Auckland’s aspirations.

Papers released by the Ministry of Transport today review the thinking they had over the months of the review and what they feed the Transport Minister as they built upa  case to question the claims that the extended tunnel would boost Auckland economically and increase the numbers using the services.

Here is what they said over that time about the patronage figures in the post-electrification era – which they insist is a very key point to saying yes or no to the Business Case.

In January the review team said:
The do minimum

“You will recall that the APB&B study team provided two memos last year with patronage forecast numbers for the post-electrification do minimum and CBD rail tunnel scenarios. In these memos, the number of passengers inbound to Britomart during the AM peak is capped at the 2024 level of 7,283.

We note that this is well short of the expected post-electrification fleet capacity for inbound AM peak trips of 25,149. This means that patronage in the Business Case do minimum scenario is not constrained by Britomart.
We have asked Auckland Transport and the APB&B study team to explain this difference and they have identified two reasons.

Firstly, they anticipate a ‘walk-up’ constraint at Britomart, i.e. they have assumed that use of Britomart will be limited by the amount of job growth within a five minute walk of the station. Secondly, they state that trains on the Western and Southern iLines are at capacity approaching Newmarket and Grafton Station and as more passengers alight at these
stations than board, there is a low number of passengers travelling to Britomart. These assumptions appear inconsistent with the patronage projections provided to us as part of the EMU project and which drove the size of the EMU fleet.
We will work with all parties to investigate these assumptions. Auckland Transport and the APB&B study team are providing us with the outputs from the modelling work and data from station surveys monitoring the number of passengers alighting and boarding at various stations on the network.”

Assumptions about employment growth in the CBD were also considered a key to the Business Case for the tunnel. The modelling assumes that the CBD will grow faster than the rest of the region.
However, in January review team told the Minister:

“CBD employment growth for the last 15 years appears to follow the overall Auckland trend and the rate of growth is materially slower than what is required to meet the levels assumed in the transport modelling. For example, if current levels continue, CBD employment by 2041 could be 15,000 – 25,000 jobs lower than the 122,000 jobs assumed in the modelling.

This presents a risk to all projects that seek to meet forecast growth in transport demand into the CBD. Of course, a range of factors could change the trend including, potentially the CBD rail tunnel. We are working with the Auckland Council to investigate this issue.”

In February the suits had this to say about patronage projections:

“The Working Group has yet to confirm that the modelling assumptions used in the
Business Case are appropriate, so you should note that figures used in the final Working Group report may change.
The transport model used to assess public transport projects in Auckland does not have a mechanism for incorporating rail or bus capacity constraints, for a given service frequency, as part of its outputs. Model outputs therefore assume unlimited train capacity. Consequently, train capacity constraints and their impacts need to be assessed outside of the model.
You will recall that the modelling used in the Business Case assumed that all morning peak patronage growth in the DMEN stopped in 2024 at 26,420 passengers across the network and 7,283 passengers into Britomart.
This is a critical assumption as it impacts on project timing and the benefits from the project.
The model runs that formed the basis for the economic appraisal in the Business Case
show the following outputs.
Assuming no capacity constraints, the DMEN continues to attract patronage until
2041 and would grow from around 20,000 morning peak period passengers across
the network in 2016 to 39,862 passengers in 2041.
The CBD rail tunnel will increase morning peak period patronage across the network
to 47,617 rail passengers in 2041.(This model output was not used in the Business Case due to the assumption that patronage does not grow beyond 26,420)
Around 60 percent of the increase in rail passengers from the project comes from a
reduction in bus passengers, with the remainder coming from vehicle passengers
and active modes. Assuming no capacity constraints, 10,712 morning peak period passengers arrive at Britomart in the DMEN in 2041. (NB This model output was not used in the Business Case due to the assumption that patronage does not grow)
As noted, the above figures do not take account of capacity constraints in the DMEN and therefore overstate the performance of the DMEN and understate the patronage increase that can be attributed to the project. They do, however, indicate the scale of change caused by the increased accessibility to the CBD and higher frequencies that the tunnel project enables.
A key task for the Working Group is to agree a methodology for identifying when capacity constraints take effect in the DMEN. This will then be used to review the Business Case assumption that constraints will stop patronage growth from 2024. Based on input from a technical consultant, we have tentatively agreed a methodology with the technical
members of the Working Group and are currently working to refine the approach.”

Sections from the modelling plots for the unconstrained DMEN and the rail tunnel options for 2041 are included, in the report to suggest that,”although the CBD rail tunnel considerably increases patronage into the core CBD, a large proportion of this is a redistribution of existing trips away from stations – such as Parnell, Grafton and perhaps Newmarket – on the CBD fringe” and they added: “We will investigate this pattern further.”

It is here that noted that the planned Parnell Station has a major effect on patronage in the do minimum, but has no funding committed.

“We have requested a modelling run without this station. The proportion of total trips into the CBD in the DMEN is lower in the future than we had assumed. Britomart currently accounts for 66 percent of inbound alightings. According to the modelling, Britomart’s share of inbound alightings reduces as Grafton, Newmarket and particularly Parnell (which we had not accounted for) grow in significance.”

The group wanted an independent review of the wider economic benefits methodology used in the original Business Case. It  commissioned the UK branch of Steer Davies Gleave (SDG) to undertake this review, adding that “SDG are currently undertaking research work for the NZTA on a methodology to extend the range of wider economic benefits captured in the Economic Evaluation Manual. ”

“Auckland Council has provided the Working Group with an internal memo responding to concerns we raised over CBD employment assumptions and their use in the Business Case and the Regional Land Transport Strategy. The memo raises a number of concerns over the wider economic benefits methodology used in the Business Case.

“It also provides evidence to suggest that a large proportion of the employment growth attributed to the tunnel in the Business Case could be explained by relatively simple factors, such as differences in the geographic area and types of employees included in employment forecasts. We have included the Auckland Council memo in the material provided to SDG for review.

“Auckland Council officers have emphasized to us that the findings in the memo do not
necessarily negate the benefits included in the Business Case, or mean the methodology is inappropriate.”

During this period, the review also got stuck into its obsession about benefit cost ratios, which seem an issue for Rail but not for Motorways although it cheekily suggests that its’ the rail supporters who are not fairly using the (awful business clique ahead) level playing field.
The review team told the Minister:

“We have previously advised you that the BCR for the project, using the standard appraisal methodology, is 1.13. The Treasury has identified, and recent information from the Study Team consultants shows, that this is not the case. The BCR of 1.13 is the government BCR, which nets fare revenue from the overall costs. The national BCR, which is comparable to State highway national BCRs and treats fare revenue as neutral. We note that national BCRs are not referred to in the Business Case.
Additional information from the Study Team shows that the project is sensitive to the
reduction in patronage that occurs as a result of increases in fare levels. We have yet to review the material, but the impacts on BCR appear to be quite large.”

On March 11 the team asked for a extension of time, saying it needed to reassess the claimed benefits and had hired Steer davis Gleave and awaited that report.

The “technical issues” outstanding were:

By March 21 the review reported its conclusions on these patronage issues:

• “At present, we expect that the project will increase total rail network trips in the 2041 morning peak period by up to 9,688, and remove up to 5,000 car trips. We expect that this would include around 7,700 additional rail trips into the CBD.
• With regard to potential capacity constraints, our assessment currently shows that demand on the Western Line will exceed the former Auckland Regional Transport Agency’s target desirable loading limit around 2027, but only on inbound trips in the morning peak hour. The Southern Line and Eastern Line do not reach the target limit. However, limited seating capacity may be an issue, with some passengers standing for up to 30 minutes on the Southern Line. Further work is needed in this area.”

You can read their reports to Steven Joyce here.

Good on the Ministry for at least releasing such material without the need for us having to make an Official information request.But it did note that word was getting out and it had already started receiving such requests so it was better to put the material available when the announcement is made. Only a few lines seem to be omitted in the papers – this was when they were discussing  three main options for completing the Review.

1 Cease work and request Auckland Transport and Auckland Council commission a new business case addressing the issues we have identified. This is not recommended as we think the evidence needs to be set out in a final report, and a new business case may not necessarily resolve the key issues.

2. Complete the review by the end of April. This option is achievable, but is likely to lead to stronger disagreement over the content of the report and presents some risks to the completion of all advice. (Blanked out) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

3 Complete the review by the end of May. This option would provide time to moderate some areas of disagreement and improve the robustness of the analysis.6. To meet the timeframes in options two and three above, we seek an urgent decision on your preferred option. We retain our preference for an extension to the end of May, but recognise there are difficulties with this. If the issue is with the length of the extension, even an additional week or two would prove useful to complete the work.

Let’s hope this is at least the way their business is conducted in the future – open and available for proper debate.

You can read all their documents here

Full coverage:
Ministry of Transport and Treasury report

Full commissioned Auckland Council Auckland Transport report

Minister, Len Brown and Greens react

Ministry of Transport explain their decision
Auckland must fight back: And more reaction

Mike Lee calls it a major setback

The proposed Auckland City Centre Rail Link is a 3.5 km double track underground rail line running beneath the central business district from Britomart to the Western (North Auckland) Line near the existing Mount Eden Station, with underground stations proposed at Symonds Street/Khyber Pass Road, Karangahape Road/Pitt Street and on Albert Street between Victoria and Wellesley Streets.

The Business Case was prepared for the former Auckland Regional Transport Authority and KiwiRail.

The government requested officials formally review the business case in order to help determine if, how and when to progress with the project.

We need more motorways - forget rail

What is the agreed cost of the project?

All agencies agreed initial capital costs at $2.4 billion for construction of the project including additional rolling stock and network infrastructure.

What were the findings and recommendations of the review?

The review concluded that:

• The benefits of building the City Centre Rail Link are much less than expected costs.
• The case for the City Centre Rail Link does not justify further consideration for central government funding at this time because the project does not currently represent an economically effective investment.
• Auckland Council could undertake a range of actions to provide greater confidence about the growth projections needed to make the project viable.
• There is a strategic case for lodging a Notice of Requirement and it would make sense for Auckland Council to proceed with this if it is prepared to meet the costs.
• Significant patronage growth is still needed before the capacity provided by new rolling stock under electrification will be exceeded and the project is consequently not urgent.
• The City Centre Rail Link will cater for around 19 percent of extra journeys expected into the CBD in the 2041 morning peak. The majority of this increase in travel is expected to be met through bus trips and so a wider set of solutions is needed to deal with the whole of the transport demand faced by the CBD over the next 20 to 40 years.
• The Business Case did not properly consider potential alternatives to the project and key aspects of the methodology used do not meet the Treasury or NZ Transport Agency criteria for central government funding (as set out in the NZ Transport Agency’s Economic Evaluation Manual and Treasury’s Better Business Cases for Capital Proposals guidelines).

What changes in travel patterns are expected as a result of the project?

The City Centre Rail Link is forecast to result in an additional 6,000 rail trips into the CBD during the 2041 morning peak. This is 19 percent of the additional 31,800 car person and public transport trips forecast into the CBD (or six percent of the 98,800 total car person and passenger transport trips) during the morning peak in 2041.

The City Centre Rail Link will result in an increase of 9,551 rail trips in on the wider rail network in the 2041 morning peak. This compares to a forecast of 840,000 car person and passenger transport trips on the entire Auckland transport network.

The project is expected to remove a maximum of 3,800 car person trips from the entire transport network.

How was the review carried out?

The Ministry of Transport led a review of the Business Case with the Treasury and the NZ Transport Agency. The Ministry of Transport convened a working group comprising the Treasury, the NZ Transport Agency (NZTA), KiwiRail, Auckland Council and Auckland Transport.

The report sets out where findings have been agreed between all organisations involved in the working group and identifies the alternative views of Auckland Council and Auckland Transport.

What growth forecasts did the review team use to understand future transport demand?

The review team assessed the project using Auckland Council’s land use and transport models and the region’s forecasts for employment, population and transport trends included in the 2010 Auckland Regional Land Transport Strategy. This strategy includes the City Centre Rail Link.

How does the Auckland Council/Auckland Transport policy case fit in to the review?

At a late stage in the assessment of the Business Case, Auckland Council put forward a revised approach to managing the public transport network that would direct more trips onto the rail network (the policy case.)

While an in-depth analysis has not been possible, it is clear that some of the interventions in the policy case – particularly the additional park and ride and reconfiguration of bus routes – could be used to increase the benefits from the current rail investment as well as the City Centre Rail Link project. This issue would need to be explored and clarified in any future Business Case.

Why does protecting the route make sense?

The project is a strategic priority for Auckland Council and protecting the route now would provide clarity for landowners along the route.

Actions by Auckland Council as a result of its new Auckland Plan and other policy initiatives could change the nature of the risks and the expected benefits of the project in the future. Evidence of the success of electrification and the current $1.6 billion rail investment in leading change will also increase confidence.

Who will need to meet the costs of route protection?

All costs associated with route protection would need to be funded by Auckland Council, if it decides to proceed with this step.

What are the next steps?

Auckland Council needs to decide if it wishes to exercise and fund protecting the route. This is a two to three year process and involves lodging a Notice of Requirement to protect the route and working with KiwiRail as the designating authority.

Will the government consider a further business case?

There are a range of actions that could be undertaken or facilitated by Auckland Council and Auckland Transport which would improve confidence in the outcomes expected from the City Centre Rail Link:

• Auckland Council finalising and implementing its spatial plan and City Centre Masterplan to help clarify the project’s role in the CBD and wider Auckland.
• Demonstrating commitment to resolving current and emerging CBD access issues, for example by improving bus operations and addressing capacity issues.
• Development of a robust and achievable multi-modal programme for transport in the CBD, which considers a thorough analysis of alternatives and identifies the optimal mix of modes to meet demand.
• Beginning implementation of large scale residential developments along the rail corridor.
• Implementation of additional park and ride sites, and changes to bus feeder services where appropriate.

The implementation of these measures, combined with rail patronage above forecasts and a robust economic case, would provide a strong signal that the conditions are in place to drive the necessary benefits from the project and therefore to reconsider the business case for the project.

What is the Benefit Cost Ratio (BCR) and what does that mean?

Central government officials assessed the benefit cost ratio (BCR) for the City Centre Rail Link at 0.4 (or 0.3 if considering the same types of benefits assessed for other transport projects, including the Roads of National Significance). This is a calculation of the ratio of benefits over the costs of the project. A 0.4 BCR means that for every $1 invested in the project (i.e. the cost); there will be a return of benefits that are worth 40 cents.

A BCR calculation compares transport benefits, and wider economic benefits with capital and operating costs.

The review included some wider economic benefits that are not currently included in project assessments by the NZ Transport Agency.

What is the difference between direct transport benefits and wider economic benefits?

Transport benefits mainly reflect the direct impacts of a transport project, such as time savings, vehicle operating cost reductions and safety improvements.

Wider economic benefits reflect the indirect impacts of a transport project on the economy, including effects such as productivity improvements from increases in employment density and changes in job location, as well as benefits from growth in labour supply and increased output.

What are the key reasons for the differences in transport benefits and wider economic benefits between the Business Case and the review?

The review identified a number of methodological issues with the Business Case assessment of the transport benefits from the project. Correcting these issues, and applying a more robust approach to calculating the decongestion benefits from the project, resulted in a substantial reduction in transport benefits.

The Business Case estimated $3.3 billion in urban regeneration benefits (a form of wider economic benefit based on increased productivity which results from jobs locating in the CBD instead of elsewhere in the region). The Business Case estimated that an additional 22,000 jobs would locate in the CBD as a result of the project.

Following an international peer review, the review found that the Business Case estimate had not allowed for a number of factors such as types of businesses, workforce skills and capital investment that contribute to the higher productivity of CBD jobs. The Business Case had also not allowed for the fact that only a proportion of the productivity gains, equal to the tax on the increased productivity, would be additional to the direct transport benefits. After correcting these issues, and based on a lower number of jobs locating into the CBD as a result of the project, the review estimated job relocation benefits at $148 million.

The review estimate for Wider Economic Benefits included benefits from agglomeration, job relocation, increased labour supply and increased output. This resulted in total wider economic benefits of $305 million.

What about employment growth?

A key element in the calculation of the wider economic benefits hinges on the scale of employment benefits that have been forecast by central government and regional officials. This centres on the extra number of jobs and firms that would be enabled to be located in the Auckland CBD by the rail link. Estimating additional employment directly attributable to transport infrastructure projects is difficult as this is an emerging field and there is limited Auckland specific data.

Auckland officers estimate a range of 5,000 to 20,000 new jobs over and above current job growth forecasts. These numbers are reflected as low and high growth scenarios in the alternative policy case recently proposed by Auckland Council and Auckland Transport. Achieving these growth scenarios requires an average annual growth rate of 2-2.3 percent, compared with an annual rate of 1.7 percent in 1990-2006.

The Auckland officers’ view is based not just on the rail service that the link would provide, but on a general lift in the attractiveness of the CBD triggered by the rail link.

Central government officials estimate a maximum of 5,000 additional CBD employees as a result of the rail link, and that this number is within the region’s current overall forecast of 58,000 additional jobs by 2041.

Central government estimates are broadly in line with the review’s forecast growth in morning peak rail passengers as a result of service and capacity improvements from the City Centre Rail Link. Although some change seems likely, the evidential basis for claiming large job location effects as a direct result of a project is weak.

What are the other key areas of difference between regional and central government officials?

Transport benefits

Auckland Council and Auckland Transport note that the Review has identified and corrected issues with the way that the transport benefits were estimated in the Business Case. However, they consider that, combined with a number of other initiatives not included in the Business Case, the benefits would be significantly greater than the Review concludes.

At a late stage in the assessment of the Business Case, Auckland Council and Auckland Transport presented a new policy case which estimates transport benefits between $1.2 and $1.4 billion. This compares to a Review figure of $387 million.

While an in-depth analysis of the policy case has not been possible, it is clear that some of the interventions in the policy case – particularly the additional park and ride and reconfiguration of bus routes – could be used to increase the benefits from the current rail investment as well as the City Centre Rail Link project. This issue would need to be explored and clarified in any future business case.

Wider economic benefits

The NZ Transport Agency has undertaken an extensive research programme to develop a robust, international best practice methodology for assessing wider economic benefits beyond agglomeration. While this methodology has yet to be formally approved, all parties agreed to use it to calculate wider economic benefits.

Applying the draft methodology resulted in total wider economic benefits of $305 million. This comprises agglomeration (productivity) benefits arising from the project of $128 million plus additional wider economic benefits from imperfect competition, increased labour supply and job relocation of $177 million.

Auckland Council officers believe that the business case and subsequent work has only partially captured the potential wider economic benefits of the project. Specifically the review has not assessed any increase in the size of the regional economy arising from the project. Council officers believe this represents a significant share of the economic benefits from major transport infrastructure investment and that consequently the wider economic effects are likely to be understated by central government.

Urgency

The urgency issue centres on when the electrified rail system in Auckland (complete in 2013) will reach capacity in the morning peak period.

The Business Case assumed that all passenger growth on the rail network would cease in 2024, largely as a result of the Britomart bottleneck and the limited walking catchment around Britomart.

Auckland Council/Auckland Transport believe that the network will be operating at its maximum capacity once electrification is completed, which when combined with patronage growth, will lead to service delays across the network.

KiwiRail has advised that operational risks will not be fully mitigated by the current upgrade and electrification. These problems would be exacerbated by the proposed addition of a station at Parnell.

Analysis by central government officials indicates that some patronage loss will occur as Auckland’s rail system gets more passengers and more crowded at peak times. However, the emerging constraints are not as significant as set out in the Business Case, and there will be significant peak period rail patronage growth beyond 2024.

Full coverage

Ministry of Transport and Treasury report

Full commissioned Auckland Council Auckland Transport report

Minister, Len Brown and Greens react

Auckland must fight back: And more reaction

Mike Lee says decision major setback

The correspondence between the Govt agencies and the Minister

Unlike the Government-ordered review this concluded it would have transformative benefits to the region.

The review was prepared with the assistance of the following international experts: PricewaterhouseCoopers,  Parsons Brinkerhoff, John Bolland Consulting,  M.E Market Economics, Beca, GHD,  Ascari,  AECOM and the UC Berkeley Transportation Centre.

Britomart being built. It won't be going any further anytime soon.

Executive Summary

Historically, a range of proposals have been developed for a rail tunnel through the Auckland city centre.

In 2010, a preferred route for a tunnel, the City Rail Link, was identified and work commenced on a concept design and Business Case to support designation of the route. In November 2010, Auckland Transport (AT) and Auckland Council (AC) in partnership with KiwiRail Group (KRG) presented the case for the City Rail Link to the government for its consideration.

The Minister of Transport (MoT) requested a review of the City Rail Link (or CBD Loop) proposal. That Review has been undertaken over the last 5 months and its report is expected to be released shortly.

The government led Review has provided AT and AC with an opportunity to further review the assumptions, refine the costs and benefits, and identify the further work needed to secure funding for the City Rail Link. All of this work has been made available to the government led Review team and the same material used to prepare this report.

The Review confirmed that the costs of constructing and operating the City Rail Link are accurately estimated, with a small increase in operating expenditure arising from new information which became available after the original Business Case was completed.

There was, however, a wide disparity between the benefits assessed by the MoT/Treasury Review compared with those estimated as part of the AT and AC update. This is largely due to the lower transport benefits assessed as part of the government led Review.

AT and AC consider that, taking into account the wider transport policy initiatives which are planned, the City Rail Link would deliver overall benefits exceeding overall costs, with the benefit cost ratio ranging from 1.1 to 2.3 (BCR = 1.1 to 2.3).

While there are differences between the findings of the government led Review and the AT/AC update, AT and AC and their advisors are strongly of the view that the overall evaluation results are sufficiently robust to justify the immediate commencement of the designation process, particularly as the CRL is economically justifiable in terms of its transport related benefits alone. This process needs to commence as soon as possible to minimise the potential for any development to increase costs, delay the project, or even prevent its implementation.

AT and AC acknowledge that, in line with all major project development programmes, more work needs to be done to further develop the case for funding of the City Rail Link. This work will take full account of central government‟s requirements for the development of public sector funding requests.

In addition to progressing with this work, this report recommends that the Auckland Council resolve to immediately commence the process to secure and protect the route of the Auckland City Rail Link.

This summary report presents AT and AC‟s key findings arising from participation in the government led Review of the City Rail Link project.

Background

In 2008, the then Minister of Finance, Hon Dr Michael Cullen, wrote to the Chair of the New Zealand Railways Corporation stating that it “was in the long term public interest to secure and protect the CBD tunnel route even though construction may not take place for many years” and advising that it was “appropriate for ONTRACK to assist in the protection of the CBD tunnel route by acting to protect the route at the earliest appropriate opportunity.”1

In 2009, the Auckland Regional Transport Authority (ARTA) and KRG (previously ONTRACK) commenced an investigation to designate a route for the City Rail Link (CRL) for inclusion in Auckland‟s District Plans. A preferred option for the route was identified in early 2010 and approved by ARTA and KiwiRail. This preferred option was endorsed by the Auckland Regional Council, Auckland City Council, and the Auckland Regional Transport Committee.

In 2010, a consortium of AECOM, Parsons Brinckerhoff and Beca (APB&B) was appointed by KRG and ARTA to identify the preferred route, prepare the concept design for the preferred option together with the business case to support the Notice of Requirement (NOR), and prepare the NOR documentation. In November 2010, AT, AC and KRG released the findings of this work (the Business Case) and forwarded these findings to the Government for its consideration. The work undertaken by APB&B was reviewed and endorsed by PWC.

The Minister of Transport asked the MoT and Treasury, in conjunction with the New Zealand Transport Agency (NZTA), to review the Business Case (the Review). The purpose of the Review was to formally review the Business Case and provide advice on the merits of the CRL as a transport and economic investment, and when the project might be required. The Review was also intended to assist in determining if, how and when to progress with the CRL. Management from AT and AC assisted in the analysis undertaken for the Review, supported by APB&B and others.

The Review was completed in May 2011 and the report setting out its findings is expected to be released by the Minister of Transport shortly.

Auckland Transport & Auckland Council Update

The government led Review process has provided AT and AC with an opportunity to further review the assumptions in the Business Case, to refine the costs and benefits of the CRL, and the transport measures which would be put in place to support its operation (AT/AC Update). It has also assisted in identifying the further work which will need to be undertaken to secure funding for the CRL.

AT and AC management and advisors have contributed to the Update in their specific areas of expertise. The opening page lists AT and AC advisors.

This summary report sets out the findings of the AT/AC Update. Further detailed information on the CRL can be found in the Business Case at www.aucklandtransport.govt.nz/improving-transport/current- projects/rail/pages/cbdraillink.aspx

Strategic Context

Auckland is New Zealand‟s biggest city and its largest regional economy. It is home to more than 1.4 million people, one third of New Zealand‟s population. It contributes 35 per cent of New Zealand‟s gross domestic product (GDP) and provides 32 per cent of employment. It plays a fundamental role in ensuring the economic success of New Zealand as a whole and will continue to do so.

Over the next 30 years, Auckland‟s population and its importance to New Zealand are projected to increase. Over that period, 75 per cent of New Zealand‟s population growth is expected to occur in Auckland. By 2040, 2.1 million people are expected to live in Auckland, an estimated 42 per cent of New Zealand‟s population.

Auckland‟s city centre plays a pivotal role. Of the 611,000 jobs in the region, 13 per cent are located in the CBD. The Auckland city centre provides the location for many of New Zealand‟s corporate head offices and employment in many high-value industries. These include 22 per cent of New Zealand‟s financial and services employees (11,300 employees), 17 per cent of information, media and communication services employees (6,500 employees), and 12 per cent of the professional, scientific and technical services employees (16,440 employees)2.

Auckland‟s city centre is also a centre for culture, recreation and leisure and a focus for international tourism, with 30 per cent of all bed nights in New Zealand spent in Auckland city centre accommodation3. It is also an education centre providing for the majority of Auckland‟s tertiary students, and contains New Zealand‟s largest container port.

Auckland‟s city centre relies heavily on its accessibility and quality of life for its continued prosperity and future development. Currently, around 20,000 people live in the city centre and there are some 90,000 employees and 50,000 tertiary students. Land use projections indicate that the usually resident population of the city centre will increase by 80,000 people by 2041, and employment by 60,000.

The ability of private transport to meet this growth will be severely limited by the capacity of streets in the city centre, parking constraints, and demands from buses and pedestrians. There are already significant constraints in the existing transport network, for example, within the roading network most approaches to the city centre are at or near capacity in peak periods. The bus network is already under pressure with significant constraints projected to occur in Symonds Street from 2014, Albert Street in 2016 to 2020, and Fanshawe Street by 2019.

The rail system also faces capacity constraints, primarily as a result of the limited capacity of the Britomart terminus. Once electrification is completed and the 10 minute peak timetable put in place, Britomart‟s practical capacity of 21 trains per hour in each direction will be reached. Patronage growth is expected to continue after electrification resulting in trains becoming progressively fuller, and placing stress on the Britomart station facilities. However, the ability of rail system to handle significant growth in patronage demand will be constrained by the limitations of Britomart‟s terminus configuration.

A further increase in demand for travel will impose critical pressure on the transport network serving the city centre and, without further investment, will result in worsening congestion, unreliability and delay.

nvestment in the transport network to cater for increased travel demand will be essential if Auckland is to achieve its goal of a thriving regional economy and becoming the world‟s most liveable city.

The Business Case considered a range of transport solutions to meet the future growth needs of the city centre.

Three options were identified and developed as part of the analysis. These were:

On surface bus capacity improvements Central area bus tunnel with three stations City centre rail tunnel with three stations (CRL).

The CRL was assessed to provide the most cost effective means of meeting the projected growth in transport demand to the city centre as it provides a dedicated rapid transit corridor through the city centre unaffected by traffic congestion. It unlocks latent capacity within the existing rail network that cannot currently be exploited due to the constraints of Britomart.

The CRL also provides the greatest opportunity to address the risks associated with Britomart as a terminus station with fixed capacity, and to improve its resilience. As the number of trains increases and patronage rises following the introduction of new electric trains, the risk of delay at Britomart increases with a consequential impact on reliability across the rail network.

Investment in upgrading Auckland‟s rail system over the last 10 years has demonstrated the willingness of Aucklanders to change their travel habits and use rail, with patronage increasing from 2.2 million trips million per annum to 9.5 million, a growth of 332 per cent.

City Rail Link – Project Description

The CRL provides for a 3.5 kilometre double track underground electrified rail line running under the Auckland city centre from Britomart to the Western Line near the existing Mt Eden station. Britomart would become a through station and three intermediate stations would be provided:

Aotea – under Albert Street between Wellesley and Victoria Streets Karangahape Road – under the intersection of Pitt Street and Karangahape Road

Newton – under Symonds Street between the intersections with Khyber Pass/Newton Road and Mt Eden and New North Roads.

A map of the proposed CRL route and stations is attached as Annex 1.

The CRL would have the potential to provide up to 30 trains per hour with enhanced signalling. This would provide for between 30 and 60 services per hour through the CRL stations, compared with the maximum 21 trains per hour which will be able to operate into Britomart after electrification.

The cost of building the CRL, including property acquisition costs, is estimated to be in the range of $2 billion to $2.38 billion (at 2010 prices). In addition, operation of more rail services enabled by the CRL will require additional rail network capital investment of $120 million to $130 million, and $240 million for more electric trains during the first 10 years following the opening of the CRL. Additional operating and maintenance costs of $18.1 million per annum will also be incurred.

Transport Benefits of City Rail Link

This section describes the transport benefits which would result from implementation of the CRL.

Rail will benefit the users of the rail system, bus users, and those who continue to drive. Rail has the ability to move more people more efficiently than other modes during peak traffic periods when congestion is at its highest, freeing up Auckland‟s congested motorways and arterials for freight, commercial, and other trips that cannot use public transport but are vital to economic development. Auckland‟s rail network closely parallels the southern and north western motorways, maximising the decongestion benefits.

More passengers boarding and alighting from trains at Britomart is likely to increase the potential for delays to services as the station facilities come under increased stress. Delays to trains at Britomart frequently result in knock-on delays across the network. Passengers are generally intolerant of unpredictable delays to services, so increasing reliability problems at Britomart could be expected to result in passengers choosing other modes rather than rail or choosing not to work in the city centre, reducing the benefits from having a large concentration of employment.

Changing Britomart station from a terminus station into a through station will also enable significantly increased train frequencies which will:

 Address the problems expected to arise following electrification when patronage will continue to rise and trains will get progressively fuller

 Provide for improvements in accessibility for both the city centre and the rail network as a whole

 Increase the effectiveness and longevity of the Northern Busway reducing the need for suburban bus services from the south, west and east out of Britomart and the congested Albert Street bus corridor

 Enable the rail network to be extended further and more efficiently due to the cheaper per kilometre operational cost of electric trains compared to diesels. The additional patronage opportunities as well as the benefits and costs of any future extensions are not included in the AT/AC Update

 Expand the number of stations accessible by a single trip.

Providing three additional city centre stations also creates excellent direct access to city centre commercial, employment, shopping, tourist and cultural activities unaffected by road congestion. It gives commuters, shoppers and tourists a demonstrably cost and time effective alternative to using a motor vehicle. Further, it significantly expands the viable city centre area as journey times are reduced and accessibility is improved. Annex 2 illustrates the significant improvement in city centre accessibility which would result from the CRL.

Implementation of the CRL would be supported by a range of policies and external trends including:

 Improved bus rail feeder services  Wider park and ride provision  Increased city centre parking charges  Rising fuel prices.

Taken together, the transport outcomes delivered by the CRL during the congested morning peak traffic period by 2041 are projected to be:

 Between 25,000 and 31,000 people will travel to the city centre by train i.e. at least 20,000 more people will use rail to get to the city centre than at present.

 Reduction of around 8,600 car trips in the city centre in congested peak traffic periods.

 Public transport mode share into the city centre will be around 69 per cent of trips, up from its current level of 46 per cent. Of this, the rail mode share will be 25 per cent, bus 39 per cent and car 31 per cent.

The Auckland rail network will attract between 23,000 and 29,000 more boardings each morning peak period than if there were no CRL, because of the higher frequencies across the entire network resulting from removing the constraint of the Britomart terminus. There will also be 14,000 to 19,000 more people using rail to get to the city centre than if the CRL is not built.

When travel distance is taken into account, rail becomes the dominant mode of travel to the city centre in the congested morning peak traffic period. The key economic driver of the transport benefits of the CRL for the regional transport system is that rail is more effective than any other mode in reducing congestion. This is because people who use rail travel longer distances than those using other modes, including buses and cars. As a result, rail is the most effective in removing long distance car trips from congested motorways and arterials.

Taking the travel distances by mode into account, mode shares for travel into the city centre during the congested morning peak traffic period change dramatically. With the CRL in place, rail accounts for 38 per cent of passenger kilometres compared to 30 per cent for bus and 27 per cent for car.

Figure 1 below illustrates the projected mode share of passenger kilometres in 2041.

The AT/AC Update suggests that the potential transport benefits of the CRL are between $1.2 billion and $1.4 billion.
Economic Benefits Of City Rail Link
This section provides a summary of the transformational benefits that are likely to arise from the implementation of the CRL and the conventional assessment of the wider economic benefits (WEBs) as conducted in the Review.
The CRL is considered to be a transformational project as it will cause structural change to the determinants of travel (land use, population and economic activity) across Auckland. By contrast, conventional benefit cost analysis (including WEBS as calculated in the Review) requires no change in these factors. Benefits that come about from a transformational project are therefore distinct from the conventional definition of WEBs. As the Review has proceeded on the basis that the CRL is a conventional (i.e. non- transformational) transport project, the scope of the assessment is limited.
Conventional WEBs are direct and subsequent flow-on benefits for an economy that are created by new transport infrastructure. These benefits arise as the economy as a whole adjusts and responds to the changes in transport efficiency, and are over and above those direct effects identified for users of the transport network.
The CRL performs very well in terms of conventional WEBs, highlighting a project which will enhance the economic potential of Auckland‟s city centre in particular, and the Auckland economy in general. This occurs by increasing the efficiency of New Zealand‟s largest and most productive economy, increasing accessibility and reducing transport costs for firms and consumers in the first instance, and enhancing Auckland firms‟ competitiveness.
The WEBs for the CRL were originally calculated as part of the Business Case. A peer review of the WEBs by Professor Robert Cervero4, commissioned by APP&B, reinforced that “on balance … the APB&B analysis is thoughtful, well grounded, objective, reasonably transparent, and appropriately measured in its interpretations, assumptions, and forecasts”5.
MoT engaged Steer Davies Gleave (SDG) to assist with the Review. The Review then recalculated the conventional WEBs, and incorporated several new categories and improved the accuracy of the Business Case calculations. APB&B then recalculated the agglomeration effects taking into account SDG‟s review and concerns of the Review group. Due to data and time limitations, the WEBs were largely calculated as a proportion of conventional direct transport benefits, agreed to within the Review6.

Conventional WEBs are expected to generate an additional 53 per cent to 82 per cent of total conventional transport benefits or between $627 million and $1.146 billion over a 30 year appraisal period (at an 8% discount rate). When compared to other urban rail projects and measured as a proportion of conventional transport benefits, each category of WEB falls within previously established ranges7.
The CRL performs very well in terms of conventional WEBs. This is not surprising given the urban spatial structure of Auckland‟s economy. The relatively high additional effect of conventional WEBs is explained by the concentration of sectors in the city centre that benefit from co-location, together with the anticipated centralisation of high-value employment activity into the city centre. The latter effect is significant because of the substantial productivity differential between the city centre and the rest of Auckland, reflecting the role of the city centre as a key driver of growth for Auckland and New Zealand.
This assessment has not considered the transformational benefits which are likely to arise from the implementation of the CRL. The project is intended to increase land use intensity around the city centre, to increase net inward migration and to increase economic activity. The assessment of conventional WEBs holds each of these factors constant. Accordingly, the Review does not in AT and AC‟s view provide a full assessment of the CRL‟s value.
8 Summary Evaluation
The Review confirmed that the costs of constructing and operating the CRL were accurately estimated with around an 8 per cent increase, due mainly to operational expenditure increases arising from new information becoming available after the Business Case was completed.
There is a wide disparity between the results arising from the Business Case, the Review and the AT/AC Update, largely due to the lower transport benefits assessed by the Review.
The benefits and costs of the CRL are set out in Table 4 below comparing the Business Case, the Review and the AT/AC Update.
Table 4 shows that the CRL has a transport related benefit to cost ratio ranging between 1.0 and 1.1 and is a viable transport project in its own right. When WEBs are added, the BCR increases to between 1.1 and 2.3.

CRL Project Timing
It is estimated that the CRL can be completed within 7.5 to 10 years, depending upon the procurement method chosen. The design and consent phase is estimated to take between 2.5 and 4 years, while the design, construction and commissioning phase is estimated to take between 5 and 6 years.
Assuming the project proceeds by July 2011, the CRL could be constructed and commissioned by 2019 at the earliest or, taking a more conservative approach, by mid-2021.
10 Conclusion
The updated evaluation undertaken by AT and AC concludes that the benefit to cost ratio of the City Rail Link ranges from 1.1 to 2.3, clearly demonstrating that benefits outweigh costs.
While there are differences between the findings of the government led Review and the AT/AC Update, AT and AC and their advisors are strongly of the view that the overall evaluation results are sufficiently robust to justify the immediate commencement of the designation process, particularly as the CRL is economically justifiable in terms of its transport related benefits alone.
It is essential this process commences as soon as possible. Delay could result in significant difficulties, including the potential for development to increase costs, delay the CRL Project or even prevent its implementation.
AT and AC acknowledge that work needs to be done to further develop the case for funding. This work will be needed to support the AT and AC‟s own requirements to ensure value for money, and any bids for funding from central government and the private sector. This work will take full account of central government‟s requirements for the development of funding requests.

Assessment of Wider Economic Benefits for CRL
(Co-authored by Auckland Council‟s Economic Development Group, Market Economics and NZIER)
Executive Summary
Scope
The objective of this report is to consider an appropriate basis for evaluating the City Rail Loop (CRL), which is believed to be a transformational project. It also summarises the wider economic benefits (WEBs) as calculated under a conventional analysis. This is supported by an upcoming background document titled „Assessment of Wider Economic Benefits for the Auckland City Rail Loop‟, co-authored by Auckland Council‟s Economic Development 1 Market Economics Ltd and NZIER.
Key Issues
Auckland Council officers view the CRL as a transformational project as it is likely to cause structural change to the determinants of travel (land use, population and economic activity) across Auckland.
The evaluation to date is based on conventional appraisal, which does not capture many of the benefits of transformational projects. Auckland Council officers support WEBs in principle, but demonstrate how transformational project benefits are distinct from WEBs.
As the CRL is a transformational project, its benefits cannot be captured by conventional appraisal and therefore, a BCR does not fairly reflect the value for money of the project. Specifically, it cannot take account of potentially large benefits arising from changes to the urban spatial structure, land use intensification, increased inward migration and a larger economy.
Auckland Council officers seek to ensure that the CRL evaluation is appropriate and comprehensive, and able to provide a robust basis for future decisions – including route protection. The assessment scope is limited, as the Review to date has proceeded on the basis that the CRL is a conventional (ie non-transformational) transport project. The Mayor has reiterated that the project is likely to be transformational. Auckland Council officers need to do further work to develop the case for this.
The size of the Auckland economy and rapid growth rate mean other projects may also be considered „transformational‟, and it is important that robust methodologies for such projects are developed and applied on a consistent basis nationally.

Background
The CRL WEBs were originally calculated in the Business Case by APB&B. The interagency working group (IAWG) recalculated the WEBs, incorporating several new categories and improving the accuracy of the Business Case calculations. A Business Case review by Ministry appointed, Steer Davies Gleave (SDG) noted “the methodology employed [by APB&B] is broadly fit for purpose.” A further review of the WEBs by Professor Robert Cervero2, after seeing the SDG comments, reinforced that “on balance … the APB&B analysis is thoughtful, well grounded,
With assistance from the Research, Investigations & Monitoring Unit Robert Cervero is Professor of City & Regional Planning at UC Berkley as well as Director, University of California Transportation Centre; and Director, institute of Urban & Regional Development. Robert Cervero works in the area of sustainable transportation policy and planning, focusing on the nexus between urban transportation and land-use systems objective, reasonably transparent, and appropriately measured in its interpretations, assumptions, and forecasts3”. However, SDG noted a range of errors, omissions and questions of interpretation needed to be addressed to provide a correct representation of the likely wider benefits of the project4.
MoT identified and calculated three additional WEBs to include with agglomeration benefits in the analysis – labour supply, job relocation and imperfect competition effects. APB&B recalculated agglomeration effects taking into account SDG‟s review, and IAWG concerns. Data and time limitations meant WEBs were largely calculated as a proportion of conventional direct transport benefits, agreed to within the IAWG5. Table 3 illustrates the absolute WEB estimates to date as applied to the conventional transport benefits.

Wider economic benefit calculations and comparisons
WEBs are expected to generate an additional 53% to 83% of total conventional transport benefits ($627-$1,146 million over a 30 year appraisal period at 8% discount rate). All WEB categories fall within previously established ranges6 (of conventional transport benefits) of other international urban rail projects.
The CRL comprise a high proportion of WEBs, reflecting a project that will enhance Auckland CBD‟s economic potential in particular, and the Auckland and national economies in general. This occurs by increasing the efficiency of New Zealand‟s largest and most productive economy. High WEBs are explained by Auckland‟s urban spatial economic structure – a concentration of sectors in the CBD that benefit from co-location of firms, together with the anticipated centralisation of high-value employment activity into the CBD. The latter effect is significant due to the substantial productivity differential between the CBD and the rest of Auckland, reflecting the CBD‟s role as a key driver of growth for Auckland and New Zealand.
Transformational benefits
The core concern of Auckland Council officers throughout the CRL Business Case development has been to consider its potential to affect the size of the regional economy, to affect land uses, and its effect on sustaining Auckland‟s population growth. These are the core determinants of the demand for travel.
Auckland Council officers acknowledge the particular method used to incorporate these „regeneration benefits‟ in the first cost-benefit appraisal (CBA) could be improved on. However, it is firmly believed that the CRL will cause major changes to determinants of travel, and that this must be a core element of a fit-for-purpose economic appraisal. The IAWG has imposed conventional transport appraisal methodology upon this project that requires to entirely rule out any such transformational effects. Auckland Council officers want central and local government to work together to appraise potentially transformational projects differently. This section briefly explains the essence of this issue.

Regional economic growth
A strong interrelationship exists between transport provision and regional economic activity. Large improvements in transport efficiency and firm productivity will likely generate changes in the size, nature and rate of growth in the economy overall. Improved economic growth can be expected in such a case because transport infrastructure is pervasive, affecting all sectors of the economy and society, resulting in a more efficient and competitive regional and national economy.
However, conventional transport CBA treats economic activity as exogenous (imposed from outside the system). Although current CBA methods can take account of marginal effects to the economy7, it cannot take account of any structural effects to the economy that change the quantity of transport demanded for any given cost of travel8. This is potentially a major source of benefit that has been ruled out of consideration in the Review‟s evaluation.
As analysed by SDG. Net job relocation benefits is the exception where only three projects have been assessed. As such, no meaningful comparison can be made. Via inducing the quantity of transport demanded because of downward sloping demand curves. That is, the entire demand schedule for travel may further to the right in the long-term if the project had have been done than if it had not. This increases the willingness to pay for travel for any given level of travel relative to the business as usual (BAU) scenario.

In summary, there are projects that make major changes to the determinants of travel, and as such, there is potentially an entire class of benefits that will occur in actuality. Depending on the project, such benefits can be substantial. Appraisal methods need to be improved to take account of such benefits. Auckland Council officers believe the CRL is such a project, but that more work is required to demonstrate the likelihood of this.
Valuing the future appropriately
The Business Case uses an appraisal period of 30 years and a base social discount rate of 8% with sensitivity testing at 6% and 4%, consistent with NZTA EEM methodology. The 8% real social discount rate follows the Treasury‟s default guidance. Auckland Council officers do not support the basis for this high discount rate, nor an arbitrary 30-year cap on the length of the project appraisal period.
The current 8% social discount rate is a pure „social opportunity cost‟ (SOC) rate (the social return on private investment). While the SOC rate is an important economic concept in isolation, using a pure SOC rate for the social discount rate is not well grounded in modern economic theory. The social discount rate should appropriately reflect society‟s preference for trading off costs and benefits sooner against costs and benefits later. The current discount rate is too high to achieve this purpose and creates a bias against projects that are in the country‟s long-term interest. The social rate of time preference (approximately 3%-4%9) is the only appropriate social discount rate, and the effects on private capital displaced and augmented need to be explicitly considered10. For instance, using the UK methodology would see net present value benefits increase by some 4.5 times, while construction costs would only increase by around 75%.
The CRL benefits will extend well beyond the 30 year appraisal cut-off date. Even at the high 8% rate, the present value benefits are substantially greater (by 25%- 100%) at longer appraisal periods, for a wide range of benefit growth scenarios.
The UK uses a non-uniform discount rate starting at 3.5% for the first 30 years and 3% for years 31-60, and an appraisal period of 60 years for transport projects. This latter feature is called the „shadow price of capital‟ and is the approach recommended in leading textbooks (eg Boardman, A, Greenberg D, Vining A, Weimer D (2006) Cost Benefit Analysis; Concepts and Practice. Pearson Prentice Hall, New Jersey).

Employment reallocation
Although it may have fallen short of proving the likelihood, the original Business Case work effectively demonstrated the feasibility and credibility of projects like the CRL to cause major changes in land use intensification and job location. These are structural changes that take time to occur, and can substantially affect travel demand. A project that induces such changes may cause a greater willingness to pay for travel at all levels of travel than would have occurred in the business as usual scenario.
Changes to regional migration and even national population
As highlighted in modern literature, population moves across localities in response to: (a) amenity benefits of a locality; and (b) productive opportunities in a locality. A change to either of these may cause a population and employment inflow. A regional population increase can affect the demand for travel in the option scenario entirely differently to the BAU scenario. Again, this potentially leads to a new set of „transformational benefits‟.
Best practice cost-benefit analysis11 is to extend the appraisal period over the useful life of the project or to include a residual value that achieves the same purpose. NZTA uses the 30-year cut-off to treat all projects equally, which is acceptable within the context of NZTA‟s own budget routine funding allocations. However, the CRL is not competing for the same funds from, say, a rural road realignment, and is fundamentally different to routine road projects for many reasons. Auckland Council officers insist that an appropriate appraisal period for the CRL itself must be used.

Full coverage

Ministry of Transport and Treasury report

Ministry of Transport explain their decision

Minister, Len Brown and Greens react

Auckland must fight back: And more reaction

Mike Lee says decision major setback

The correspondence between the Govt agencies and the Minister

That was revealed today during the Auckland Council’s transport committee’s first ever meeting.

Auckland Transport’s Peter Clark, giving a presentation to members about the business case, made public yesterday, and answering councillors’ questions said:

• Some sort of Public/Private partnership is one option. There had already been approaches from Chinese interests keen on exploring options and such a relationship may result in a shorter time frame for the project being possible, such as the seven year plan Auckland Mayor Len Brown is keen on achieving. Such a timeframe also depends on the designation of the route and property acquistion process and whether the short of shortcut the Waterview project is taking is chosen.
• The business case was careful not to get into detail about funding options and that’s a matter for more extensive discussion at a later debate between interested parties and the government.
• Being a tunnel there should not be a significant effect on properties. The main issue is at Britomart with the tunnel extending under the Westfield Downtown shopping mall and discussions had already begun sometime ago about that. As far as station locations were concerned, Mt Eden would see the bulk of properties affected – not so much around the station but where the tunnel emerged. There would be few in the K Rd area because the station was intended to be around Beresford Square.
• The business case had been thoroughly peer reviewed with costings reviewed by the same parties that had looked at the SH20 costings and Price Waterhouse had peer reviewed the whole case.
• Transport minister Steven Joyce reportedly described the inclusion of transformational benefits to calculate a return of $3.50c for each dollar invested as “webs [wider economic benefits] on steroids” and said it was the first time he had seen such an approach in a business case. Mr Clark said the business case had taken the best expertise available internationally and the best advice. This had even included a leading US expert on urban renewal who had advised from San Francisco on the possibilities of urban renewal around areas where new rail stations were created, as planned in the loop alignment.
• The business case put the project as being comfortably over a BCR of 1.  This was way ahead of two of the roads of national significance – the planend Puhoi road and Wellington’s Transmission Gully. But in terms of the benefits economically for serving the country’s most congested area and one where population was expected to grow substantially, the benefits were better than any in those terms. The ministry of transport and treasury were now working through the case.

The new transport council unanimously endorsed the economic benefits of the report and urged it to now move to the next phases as soon as possible. That phase involves the designation of the route to protect it from any other future development and it is hoped that is completed within weeks.

Minister of Transport Steven Joyce spent last week dampening hopes for the link when approached by various media but in the Sunday Star Times he spells out in his own op-ed piece why he won’t approve it unless it becomes someone else’s financial problem:

“Local body wish lists for $2.3b CBD rail tunnels on top of all this need to be fully tested; and someone else besides taxpayers (and international moneylenders) will have to put their hands in their pockets if they want to bump those sort of projects up the queue. We also should be wary about putting too much faith in a mode of transport that currently carries less than 2% of Auckland’s commuters to and from work each day, even after some quite spectacular growth.”

It’s not even worth trying to wave around rail transport patronage growth figures, cherry pick the graphs from the business case or start to argue with someone who has clearly made up his mind and won’t listen to his views being challenged.

Two media outlets in the last week have furthered speculation that the next Key Cabinet reshuffle will see Joyce promoted to finance minister.

With Joyce holding on to all the money bags, this would ensure there will be no more money for pet rail projects, although there will always be money for the Puhoi road. A road economic writer Rod Oram had revealed a week previously had a cost benefit ratio of only 0.4% according to the government’s own documents. It was that Oram article headed “Going down the wrong road” that promoted Joyce to respond.

The government’s Auckland local government shakeup was suppose to enable Auckland authorities to work comfortably with the government to grow Auckland as a world-class economic hub.

Instead it is shaping up to become very ugly – especially when you read the rest of Joyce’s article about how Auckland should grow – which is again in contrast to how some Auckland local body leaders will view the way the city’s spatial plan should be developed.

Meanwhile the morning newspaper editorial rejects the “Build it and they will come” argument – even though that’s exactly what has happened with Auckland’s rail growth (including re-establishing the Onehunga line) and notes:

Transport Minister Steven Joyce seems to know what to look for: figures based on guesswork for wider economic benefits (webs). This report, said Mr Joyce, has “webs on steroids”….

Before Mr Brown, Mrs Fletcher and the rest try to convince Mr Joyce of the merits of this proposal, they should put it to Auckland – with an honest price on it.

Then, if ratepayers are as excited as they are by the case for an inner city rail circuit, they could have a proposition the Government would find hard to refuse. As it is, it sounds like business as usual – Auckland’s voice whining like a demanding child expecting a treat from the taxpayers.

Interesting times, one year out from a general election.

“The rail link is quite possibly the most critical element in Auckland’s transformation into a potentially competitive urban centre, and this report confirms that,” he said.

He said the CBD loop must happen -and Auckland expects him to deliver.

He said the project was comfortably over a BCR of 1 which was better than the Puhoi highway (0.8)  (At 8% discount rate it’s 3.5, 6% 4.7 and 4% 6.6.)

“It very clearly sets out a cost benefit ratio of 1:1 which I think is salutory and directional in terms of what we are trying to achieve here. For example, the cost benefit ratio for the Puhoi motorway was .08 so it has a very good cost benefit ratio.”

And he’s hopeful about the Government response, based on John Key’s reactions at the Mayor’s Town Hall inauguration ceremony:

Coverage continues:
What’s in Case study and how it will unlock Auckland’s potential

Len Brown -I want it in 7 years

Cost and what’s involved

Read the full case
Chinese interest in CBD loop

Loop funding row

Mayor Brown linked the rail projects to Auckland’s economic development as a supercity.
Among the examples he gave of the advantages:

• “It’s about ensuring that students from Manurewa can choose to study on the North Shore, without having to leave home at 6am to make it to their first class.
• “It’s about ensuring businesses can move their freight around and through our city quickly and efficiently, rather than having to factor time spent stuck on motorways and congested local roads into their costings.
• “And it’s also about ensuring that investors – local and foreign – see Auckland as a great place to establish a business, creating jobs and prosperity not just for Auckland, but for all of New Zealand.”

Rodney Hide said the Government’s aim has been to reform Auckland’s governance so the Mayor and council can implement their vision and strategy for Auckland, and have the tools to deliver on that vision and strategy.
“This is about creating a brighter future for Auckland. It is now over to Len Brown and his team to take control and build that brighter future for a unified Auckland City.”

And for NZ to catch up and pass Australia economically (a hobbyhorse of the Government), Mr Brown said our infrastructure has to match Australian cities like Brisbane.

Media covering tonight’s big event

Mayor Brown and the 20 councillors were sworn into office, making their statutory declarations to act in the best interests of Auckland.
The New Zealand Graduate Choir sang, and the Auckland Philharmonia Orchestra and Town Hall organist played a fanfare that has been specially written by New Zealand composer John Psathas.
The more business elements of the inaugural meeting will continue in the morning in the Council Chambers at 9.30am to lunch time and again on Wednesday at the same time. The meeting may also stretch over to Thursday if the additional time is required.
One of the first items on the agenda is a leftover from the last council -whether to approve the St Lukes area plan, which sees the extension of the St Lukes shopping centre.