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Opinion: This Auckland electrification decision is just as bad as Cullen's Kiwirail debacle

Posted in News

By Bernard Hickey Why on earth is the National government making the same mistakes as Labour did with rail? National rightly hammered Michael Cullen for his disastrous decision to buy back TranzRail, arguing he had not even bothered to consult Treasury or done any sort of robust analysis of the economic costs and benefits. Apparently it was something Cullen cooked up inside his own office with the help of some handpicked advice from outside. Steven Joyce and John Key appear to be making the same mistake with their decision to commit at least half a billion dollars (and the numbers always end up being doubled with this sort of thing) to a plan to electrify Auckland's rail system. Where is the economic justification? Has any serious analysis been done? It wasn't evident in the press release that came out. Joyce did not make a single rational economic justification for it yesterday, apart from saying Auckland has a lot of traffic and rail sounds like a good idea. Passenger rail always sounds like a good idea until the numbers are crunched and everyone realises the public subsidies are enormous and the investment makes no sense. I have made a request under the Official Information Act (OIA) to see the advice the minister relied on for this decision, which has huge fiscal ramifications and sets in train (pun intended) a series of decisions about Auckland's transport infrastructure that we will have to live with for decades. This decision to back the Auckland Regional Council (ARC) and Auckland Regional Transport Authority (ARTA) plan to electrify the Auckland rail system appears even more opaque than the TranzRail purchase decision, which has lumbered the taxpayer with at least NZ$2 billion of costs once networks and rolling stock are upgraded.

We do not need a second white elephant sunk in a morass of concrete and steel. It seems NZ$2 billion more of taxpayer and Auckland rate payer funds has been committed without any of the usual checks and balances in our system, which means scrutiny by Land Transport New Zealand, the Ministry of Transport or Treasury. How can Bill English's aim for government to be more efficient be supported by this sort of 'shoot from the hip' decision that will have implications for decades and for billions of dollars? English is going through government spending line by line to save millions here and millions there. Then Steven Joyce and John Key step up to blow NZ$2 billion on a train set.  Can New Zealand really afford this sort of wasteful government spending? Standard and Poor's will be watching closely. Let's have a closer look at the Joyce statement from yesterday (ie time for a Fisking). 

After double tracking, electrification is the important next stage in the development of Auckland's rail network.  Rail is an important and growing way for Aucklanders to get to work each day.

Says who? How many more Aucklanders are using rail? It's currently a tiny proportion that is massively subsidised (up to NZ$10 a ticket) and would have been dwarfed by the extra commuters using cars, bikes and buses.

ONTRACK's electrification plans will proceed unchanged. The purchase of electric trains was to come out of Auckland's regional fuel tax but will now be supported by crown funding "“ either via a capital appropriation or additional debt funding, until such time as patronage levels reach the point where regular passenger transport subsidies are sufficient.

Why will ONTRACK's electrification plans proceed unchanged? ONTRACK is a complete mess from what I've heard from people in the industry. KiwiRail is in crisis because the best people have left and it is now dominated by engineers hungry to build a bigger train set. Has anyone put these ONTRACK plans through the ringer. Of course ONTRACK wants more trains. But it shouldn't be making the decision. When will patronage levels reach the point where regular subsidies are sufficient? 2015? 2025? Where's the Minister's advice from Treasury on this? Joyce didn't bother to tell us yesterday. His office did not have anything to give me today.

The government has decided in principle that now that KiwiRail has been re-purchased by the government, it should be the owner of the new crown-funded passenger rail stock in Auckland and Wellington.

Surely someone has to point out that pouring good money after bad money is still a bad idea. Where's the analysis saying it makes sense for KiwiRail to run this?

Mr Joyce says this will save costs over time and ensure the most efficient use of transport funds.

Says who? Why would it save costs. Did anyone consider not electrifying Auckland rail? That would save an enormous amount of cost over time and be the most efficient use of transport funds.

The decision is in principle to take into account the report of the Royal Commission on Auckland Governance, which may recommend changes to Auckland's current transport arrangements. The Royal Commission's report is due at the end of this month.

The outcome of this Royal Commission will have a huge bearing on who will run Auckland's transport network, how it will be funded and how it will all be funded. So why has the government committed this electrifying rail before knowing exactly how this extra NZ$2 billion will be administered or even whether Auckland voters will want it under their new system? My quick searches show that Michael Cullen's decision to support electrification was based on this paper to cabinet. In this paper there is this tell tale line. There is no mention of a Treasury review. 

The Ministry of Transport has been involved in discussions on the Auckland electrification proposal, although due to time constraints it has not seen this paper.

Elsewhere in John Key's statement on the overall plan, he claimed this extra spending would help the economy recover.

"An additional billion dollars of construction of new and improved state highways will be an important stimulant to the economy as more jobs are created in the roading and construction sectors," Mr Key says.

By the time this money is spent (mostly in late 2010 and 2011 by the time the planning etc is done) the economy will already be recovering strongly, according to the Reserve Bank. Could the Reserve Bank have to put up interest rates to dampen down the inflationary effect of this turbo boost to spending just when the economy is turning the corner? I'm all for infrastructure spending that is economically justified over the long term. But this appears to be just spend and hope. It's a bit like Kevin Costner in 'Field of Dreams'. Build it and they will come. But that's no substitute for some cold, clear-eyed analysis and assumption checking. I'm happy to be proved wrong with the full Treasury analysis of this NZ$2 billion decision. But there was no evidence yesterday that the Minister had it, or had asked for it. It's too late now to do the research. The decision has been made and taxpayers will pay. I did however find a business case prepared by ARTA in September 2006 (Page 14), which actually showed that under the standard Land Transport NZ assumptions for such transport business cases the Auckland rail plan only generated 87 cents of benefit for each NZ$1 spent. It did not make economic sense according to ARTA's own study.  The standard assumptions are for a 10% discount rate over 25 years. Fair enough. ARTA however thinks a better set of assumptions is for a 7% discount rate over 40 years, saying this is what is used overseas. Then the project would return NZ$1.52 for each dollar invested. ARTA then argued that fuel costs would rise and that Land Transport NZ discriminated against public transport users by valuing their time as less valuable than car users. Using the same assumption for the value of time for both types of people, and assuming extra productivity benefits from a more built up CBD and more built up residential areas, and the environmental benefits of trains, electric and diesel trains would return NZ$2.34 for each NZ$1 invested. This is what ARTA had to say.

It has become clear that applying Land Transport NZ's standard project evaluation methodology to a major Passenger Transport investment such as this is too restrictive in its nature and does not allow for the full benefits to be realised. In particular, this is because of the long time periods involved with the rail upgrade "“ the time involved in establishing the assets and the far-reaching and enduring nature of the benefits. Simply put, the Rail Development Plan compares favourably as an investment if all the benefits are considered more broadly and over a longer period reflecting the life of the assets and the ongoing generation of benefits, but not so well if a more narrow and short-term view is taken. Evaluation of the relative asset lifespan is consistent with international accepted practice. Many other countries adopt a methodology similar to that used by ARTA for long-term public infrastructure assets.

You can read between the lines. 'We really, really want these trains and we think it's a good idea and if you only tweak a few assumptions, it looks a brilliant idea from an economic point of view.' Let's hope S&P vetoes this nonsense. I'll leave the final word to ARTA in its business case.

Our current modelling suggests that by the year 2016 (when the system will be carrying some 15.7 million passengers) the total operating cost per passenger trip will be around NZ$5"“NZ$6 and the subsidy per passenger will be NZ$4; this subsidy is well below the current figure of around NZ$7"“NZ$8. If we recognise that the average train journey is over twice as long as the average bus journey, the subsidy per km for rail in 2016 will be very similar to that of bus services. However, all similar Passenger Transport systems around the world require a subsidy.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Liberty Scott puts his ten

Liberty Scott puts his ten cents on this issue in here

Bernard, Seriously - how many


Seriously - how many cars do you expect to be crawling around Auckland in 10, 20, 30 years time?

Do you think that what we have now is going to continue ad infinitum?

Does rail and electrification start to stack up if there is supply disruption to transport liquid fuels, and or pricing. Auckland would grind to a halt without the current cheap abundant transport fuels we take for granted.

Yourself excepted with your bike.

Blair, Many thanks. NZ$2 billion

Many thanks.
NZ$2 billion would buy about 2 million bikes and a heck of a lot of cycleways. A dumb idea I acknowledge, but no less dumb than electrification.
What's wrong with more buses, bus lanes, cycle lanes, congestion charges, walking buses and some slightly wider motorways.
And how about some broadband so we con't have to commute in the first place?

If we taxpayers are going

If we taxpayers are going to be paying other taxpayers to stay away from work one day per fortnight , then I guess it makes sense to pay people $6 per train trip to use rail. What a madhouse!
Has anyone done a study on what it costs the economy in lost productivity when the rail system fails as it did recently in Auckland during rush hour ?
Isnt the Auckland regions electricity supply on a knife edge allready?

Another idea suggested by Bryan.

Another idea suggested by Bryan.
Let's turn all these handy rail lines in Auckland into cycleways!

Blair The problem with your


The problem with your question is that all the times such questions have been asked before, the answers have been wrong by significant factors on the downside.

So you are saying invest heavily now in a low probabality future. Wouldn;t it be better to wait until we have a lot more information? We'll possibly be better able to afford it then too.

If fuel supply does become acrisis then the economy and society will respond. Most of these projects take 10-20 years becasue they are not worth doing in one go and the economy limists resources. If they become critical the economy will likely allocate the people and the money needed much more quickly. Look at war production for an example, because that is the kind of situation that would prompt a dramatic and sudden cut in fuel access.

@Bernard - I'm all for

@Bernard - I'm all for the Bike proposal! Many wouldn't be of course - and think of the health outcomes!! Visions of Ciclovía like what they have in Bogotá spring to mind.

Whilst I wish like you that broadband gets significantly better - broadband doesn't solve all. Some would argue why spend all that money on Broadband - when they don't even have a computer. Is this a parallel argument with Rail investment?

@insider - Thanks - Fairpoint's, but- I'd argue that we already do have plenty of information and the information is not palatable. What do you think the effect of Mexico being a net importer of oil by 2013 means?

Personally - I can't see rail ever really serving Auckland that well - it fundamentally has been designed for the car and suburbia, and rail doesn't fit well with that.

It sure is an interesting decision that came out yesterday.

<a href="

Whaleoil reckons: "A better use of money would be to rip the tracks up and pour cement to make dedicated bus lanes and then send bi-articulated buses down the busway." Now that is thinking!!!

Blair hits the key point

Blair hits the key point when he says:

"Personally - I can't see rail ever really serving Auckland that well - it fundamentally has been designed for the car and suburbia, and rail doesn't fit well with that."

Urban rail can work very well (e.g. Singapore, London), but the city has to be designed to fit with it. This decision only makes sense if the Government & local authorities are planning a fundamental urban design change for AKL - and I bet they won't put that to the vote!

Yep another dumb govt idea.

Yep another dumb govt idea.

Either start from scratch (say build monorails along the key motorway routes) or else use the subsiday/costs to pay people to use existing transport where possible.

Auckland doesn't have the density or geograhpy to use rail properly as it stands.

And peak oil will not impact indivdual travel as such. Without oil, the car (or its alternative form whether electric, gas, air or whathave you) will still be the key mode of transport. Horses didn't disappear due to problems with hay supply, just as car won't if oil goes. We will always perfer to have the convenience, security of driving a vehicle from point a to point b in our own time.

I can't understand why people

I can't understand why people have such a problem with this rail plan, unless you believe in the fundamentalist religion of libertarianism. National are pragmatic centrists and thats why they are supporting it. Auckland is projected to grow another half a million in the next 20 years. New motorways are only going to go so far in accommodating the extra traffic that comes from that population growth. If you need to move around Auckland for business like me you will realise that a huge amount of time is wasted driving on our clogged roading system.
Bus lanes have got serious limiitations. Recent coverage of the new bus lanes in Remuera attests to this. There are limits to how much length of routes can be bus lane. I used to live in St Heliers and there were only a few relatively small stretches of the bus route into town that were bus lane. Otherwise you were clogged up in the car traffic.
A large proportion of Auckland's growth is planned around town centres and railway stations. This will help support increased train patronage.
Yes, rail requires subsidisation. But so does all forms of public good.
And don't tell me rail isn't a public good. Its good for the environment and our health, and it is an affordable means of transport for lower income workers and students.
How would the shop assistant in Manurewa who works in Queen Street afford to get to work otherwise? they'd have to buy a car, spend upwards of $50 a week in petrol and $50 a week in parking. They can take the train and spend maybe $40 a week
Without good public transport the Auckland economy will grind to a halt. I'm sure the business costs of growing congestion would be far greater than the subsidisation required.
Of course rail is only one part of the overall transport approach (car, bus and bike are also important).

Matt in Auckland, Land Transport

Matt in Auckland,

Land Transport NZ's model for calculating the economic impact is far from being a tool of the Libertarian extremists.
ARTA's own analysis says it doesn't stack up.

<b> Urban rail can work

Urban rail can work very well (e.g. Singapore, London

London!! Every used the tube in rush hour in the last 10 years!

Even in London, Public transport simply does not pay.

What does is the libertarian solution - it's simple, its efficient and it gets the job done.

Ironically it was only tried by Red Ken!: Road Pricing will solve Auckland's traffic jabs overnight

Lets face it: Mccully was right. Charge people $10 to drive on a motorway or a major road - ban people rat-running - and then the traffic jams will be gone. If they are not, just push the charges up a bit more. That's how to clean up the traffic problem.
Not mess about with trains!

In fact, you could get

In fact, you could get Auckland's congestion down to manageable levels through four (albeit substantial) steps:
1. Introduce road pricing, to replace rates funding of local roads and the unnecessary increase in road charges. More sophisticated than London, as it should vary by road and time.
2. The resulting reduction in congestion and increase in price of using busy roads will make buses far more viable, increasing the commercially viable bus services than can run.
3. Local roads reorganised so that badly needed spending on increasing their capacity can be built.
4. End ridiculous gold plating of road projects like tunnelling the Waterview extension and the Victoria Park tunnel (should be a viaduct), allowing these important links to be completed sooner and affordably.

@Realist Yep Govt - no


Yep Govt - no matter the colour of the rosette almost hold a monopoly on dumb idea's. Where is the Commerce Commission when you need them.

And peak oil will not impact indivdual (sic) travel as such.

Not impact individual travel much! Oh lordy yes it will. We will look back on the unfettered mass mobility with fond affection. Not quite the forum to go into it in any depth - but if you think that the way we do things now, will be able to be done with any combination of alt fuels/energy - you are going to be seriously disappointed with what lies ahead.

Back to Bernard's mass transit solution at the start of the thread - Bikes and lots of them.

Bernard <strong>ARTA’s own analysis says


ARTA's own analysis says it doesn't stack up.
Can you elucidate

I think you are wrong and right about rail electrification, by itself it doesn't stack up but combined with high density hamlets next to stations it does.

A more radical approach would be a monorail thru a high density corridor between the CBD and the airport, monorails have the following advantages

1/ They are quiet, so can run next to residential buildings
2/ They can be automated, so you can run small ones during the day, large ones at high demand times (because you have no Driver overhead)
3/ The have no collision risk


In order for the Auckland

In order for the Auckland rail system to work (financially), there needs to be higher density villages created at the stops. Don't picture CBD shoeboxes think, mixed-use, mixed-level, 3-5 story buildings. Kingsland is getting pretty close already and so is Newmarket.

Saying that Auckland is not well suited for rail is crazy. I ride my bike everyday into the CBD on Dominion Rd. The stream of car traffic is basically a long train of bumper to bumper traffic. Of course this road as well as Sandringham, Mt Eden, maybe Great North rd, Etc. all had a functioning trams, so it is no coincidence that this is occurring. Agree that improved bus service would also work in these corridors, but developers usually require the more permanent infrastructure of light rail to make serious investment as described above.

Some other thoughts. There is basically no traffic after 9:30 AM and 6:30 PM. We need to become more flexible with our workdays (including home-based work). Also, it's crazy how much traffic schools generate. Stagger school start times.

While were at it we also need to stagger school holidays. For example, North Shore gets their own "Auckland Day" holiday. This will stagger the tourism for small towns and reduce the impact on motorways usually jammed at the beginning and end of each holoiday.

And fer god sakes create more livable, safe local roads. Too many asshole drivers.

Sinner <strong>Every used the tube


Every used the tube in rush hour in the last 10 years!

Yes, actually took it to the airport with bags, The point is that without it London would be clogged to a point of dysfunction, Before the rise of the auto London risked drowning in Horse shit, "The Great Horse-Manure Crisis of 1894", if you think London or Paris would be better off without their underground trains, i'd think again


Cullen dug a big financial


"Where is the economic justification?

"Where is the economic justification? Has any serious analysis been done?"

Perhaps it's a response to global warming.

Moon-hoppers! Works for those Premo

Moon-hoppers! Works for those Premo milk girls. I'd follow them into the CBD on one. Otherwise add a congestion charge to any vehicle with less than 2 people in it. Much easier to attack (and profitable) the symptoms than look deeper for the cause.

it is a waste of

it is a waste of money to spend it on rail and the cycleway,if they spent it on an extra lane on the motorway that was a dedicated bypass of Auckland from orewa to Pokeno with only one turnoff to the airport they would reduce congestion.if you drive from hamilton to bay of islands or rodney to bay of plenty you have to still drive through auckland city traffic there is no other way

I do wish people would

I do wish people would get over the idea that monorails are a meaningful transport system. They are a total dog.
It's time Auckland entered the 20th century, let alone the 21st and had a decent electrified rail system. In 20-30 years it will be that, or the bike, or walking...

Andy Can you please explain


Can you please explain I do wish people would get over the idea that monorails are a meaningful transport system. They are a total dog


A proper rail system will

A proper rail system will be around for literally thousands of years, if Penny pinching Aucklanders had got it write from the start their wouldn't be this problem.

It's a case of catch up Bernard, in fifty years their wont be petrol available for everyday consumption and even cars will be run on batteries.

All I can say is

All I can say is wow. I can't believe the number of people who haven't got a clue about anything they are saying. Sure lets build more motorways to solve the problem, then more people start taking cars because its easy again and the whole problem starts all over again.

If people stopped with there pathetic ill informed moaning and waited to see what the rail system in Auckland will be like after the Electrification if completed I think they will all be pleasantly surprised.

Its amazing to see that people in Auckland don't seem to object to, for example, building a 700m long road bridge at a cost of $700M just so it takes 5 minutes off their commute, but at the same time complain till blue in the face when the government spends a small amount of money improving the rail system. The new locomotives and Tranz Scienic carriages was a prime example. Everyone complained about spending $150M on rail to replace 40 year old locomotives and 70 year old passenger carriages but spending Billions of dollars on motorways is fine.

It seems as though I am the only person in the country to take a step back and look at the big picture with all of this (fuel cost, environment change, city density, urban sprawl) from a neutral and holistic standpoint.

A dense city needs multiple

A dense city needs multiple modes of transport, and Auckland is currently a public transport joke.

The aim should be to make the retail cost of each transport option include the pay the full cost of it's externalities. That means driving a car should incorporate the cost of smog, congestion and road building/maintenance.
Travelers on a bus should receive some of the car congestion subsidy - after all they are taking cars off the road.
Train riders should receive more, as they are using even less road space. That's why this makes economic sense. As other posters point out we need to expand the transport system, and trains are much easier than roads - which tend to clog instantly.

When you add the true cost of carbon emissions to the equations then things will really start to pay off - for trains and for us all.

Meanwhile car drivers already pay a lot of tax for emissions and so forth via fuel tax, but they do not pay for the congestion cost. It's a real cost - increased fuel consumption and wasted time spent in traffic for thousands of people.

But we can only start charging for driving cars when we have a viable alternative transport system.

So yes - bring in more trains and other mass transit options, and especially bring in more transport to more areas.

Lance But Auckland is not


But Auckland is not a "dense city", the density is 19/Hectare and has not changed since 1900, it is in fact worse than LA. So we need to plan both, transport and urbanisation not public transport as a band-aid, it simply will not work


This is by Fred Hiatt

This is by Fred Hiatt
Monday, March 16, 2009 The Washington Post:

In this new world, a GPS would be built into every car and truck. It would keep track of where you drove your car, and when, but the data would not be shared beyond the vehicle so privacy would be protected. It could be set to charge more per mile driven for Hummers than for Civics; more during rush hour than in the middle of the night; more for driving on congested bridges than on empty roads.

it's an idea that may be just around the corner. Would this drive you to rail?

Lance, You make a good

You make a good point on congestion charges. I favour them.
But I reckon the best and most economically sensible options are buses (particularly if they are big articulated buses run along old, clean train lines)
I'm not a believer in 'build it and they will come'
We all need to be on bikes and motorbikes (even big ones like yours)

Bernard, you overlook the fact

Bernard, you overlook the fact that people area lot more attracted to trains (particularly electric ones) than buses. The trains are absolutely packed at peak times, buses wouldn't be able to cope with the loads. Go on, go down to Britomart and do a quick vox pop survey about your idea. You will find that plenty of people just don't "do" buses. Actually the poll results that you are running on this site backs this up.

And what about rail freight using the Auckland rail network? If you rip up the tracks, where does that go?

Totally support bikes though - just a shame that there are 900,000 cars registered in Auckland competing for the same road space, which deters quite a few people, myself included.

PS, where do you get your $2bn figure from? Also looking forward to you doing a fisking article on what the actual benefits of spending billions more on road widening projects are. Make particular reference to the $7.5bn we spend annually on oil imports, as well as the obvious flaws in roading BCRs, such as no attribution of private motoring costs, road maintenance costs etc.

Hi Cam I caught the

Hi Cam

I caught the train last night at rush hour from Britomart to Penrose. At no point was the carriage I was in "absolutely packed", in fact there were plenty of empty seats.


Has anyone ever consider using

Has anyone ever consider using light rail for Auckland? I've never seen the term come up in any discussion.

Hi Brian - Was it

Hi Brian - Was it the 5:10 from Britomart to Papakura? Comments on our own forum said it was standing room only. Other comments say the morning runs are now leaving people standing at intervening stations because there is no room.

And would you want to take a bus instead?

Hi Cam It was the

Hi Cam

It was the 6:10 or thereabouts, seemed to have a number of Auckland Grammar students on board. I guess all these anecdotal stories are a little pointless which is why taking the time to do the numbers properly is so important.

My own reading of ARTS reports is that the numbers are being massaged to fit the pre-determined outcome.



Bernard A recurring problem in


A recurring problem in NZ is paralysis by analysis. How many more planning exercises do we engage in before we actually get on and do something? It seems to me building a significant infrastructure project will never be cheaper than in the depths of a recession, when contractors globally are scrambling for work. I doubt very much the Wellington rail electrification went through endless reviews but how could anyone rationally say it has not paid off. Just get on with it. It is a far more rational project than Cullen's decision to buy the entire rail system, as the scope is known, the costs can be estimated to a reasonable accuracy, and while the direct benefits are obviously not certain, since they rely on future patronage, the Wellington figures would be a reasonable starting point.

As urban densities rise, the

As urban densities rise, the issue for public transport becomes how many bodies can be moved in an hour. Buses can only scale so far. Trains are much more scalable. Given it takes most of 15 years to design and build anything even in a hurry, public transport planners MUST plan for not just 15 years from now, but 30 or 50.

Buses may be perfectly adequate today if we build special bus ways and employee legions of bus drivers (one for every 60 peak hour riders - *expensive*) but buses simply won't be able to cope when 20,000 or 30,000 or more people must get to a certain part of town in the same hour. Remember that one large office building can hold 8,000 people without too much trouble.

The people arguing against trains today are almost entirely using today as their measure. When one thinks instead of an Auckland with 2.5-3.0 million people 50 years from now, it becomes staringly obvious that denisities will have risen, cars for each one or two or three people won't physically be able to fit on the roads any more even if petrol was unlimited.....and even a mono-culture of buses will be grid-locked at peak hours.

There is a reason underground trains are ubiquitous in large cities. They are needed. London is still using train tunnels built more than a century ago.

Let's build the infrastructure now and plan for the future. I know that isn't the Kiwi way.......but it needs to become the Kiwi way.

The decision to buy KiwiRail,

The decision to buy KiwiRail, as I understand it, was a strategic one. in the immediate future, private operators were blocking the planning and growth of public transport in the larger cities. But beyond those immediate goals, a wider benefit is to ensure that NZ has a national transport infrastructure for movement of people and goods that could function without imported fuels or machinery if necessary and to do it with little or no carbon footprint. We can make our own engines and carriages. We can generate out own power and forge our own rails. We can do this fairly readily if we need to. Rail beds are easier and cheaper to build than roads.

Using the usual short-term business measures, buying KiwiRail wasn't a profitable thing to do. But from the perspective of providing a backstop infrastructure for national transportation in the event of economic upheavel and resource shortages, the KiwiRail purchase makes sense. I know the National party doesn't spare a thought for contingencies or the long term public good, ....their policies make that very clear.....but we would regret not maintaining a viable alternative to roads and millions of cars and trucks running imported fossil fuels.

A rail bed just needs a solid bed and two strips of steel. Much cheaper than a road to build and then maintain.

Part of what this issue

Part of what this issue is really about is getting rid of the ARC as an effective force in the rail market in the Auckland area. Certainly their idea of the CBD loop is brilliant, as is bringing rail to the Northshore by the proposed tunnel crossing of the Waitemata. Even though I would use it myself many times a year, I'm not sure about the proposed airport rail link.

Suggesting that we can do without railways is like suggesting that we can do without running water or roads. They all cost money and we just have to pay for them.

The liibertarian culture that Mr Scott and Co seems to live in, is a fantasy world. I have read their postings elsewhere on rail. They don't seem to realise that what rail offers is life, it's madness having all of the truck vs car derbies down the road at all hours of the day and night, these so called businesses are marginal businesses that are doing nothing for the wealth of the country.

There were much worse business decisions made and in the last 12 months and in many parts of the world than buying what is now "Kiwirail". I don't have much faith in the Greens but feel that their Madame Leader is right that the road fetish of the National Party is back in the 50's. Our dependence on oil is downright scary, especially when one considers the current price of petrol at the bowser based on supply and demand, not even yet at the bottom of the worst downturn in living memory! Do all the road warriors care to predict the next peak at the bowser?

By far the biggest problem with Auckland Rail I believe that the "catchment" isn't served with enough lines. Blame previous city fathers who apparently sold off the land. Definitely a line needed to the East, sooner than later and let settlement follow the railway.

As for Bernard Hickey's comments in his blog, one has to wonder. He hasn't even been able to identify the entity that the "Railways" was purchased from last year. I can only think that he doesn't want to pay for it becasue he won't personally be using it, a sort of other version of NIMB syndrome.

"at least half a billion

"at least half a billion dollars (and the numbers always end up being doubled with this sort of thing)"

Yep, you show those planners how to do serious economic analysis, Bernard.

FE I've been reporting on

I've been reporting on public infrastructure projects of over a decade. They are never, never on budget. My doubling is being conservative. That half a billion forecast from ARTA was also 2006. It's already at NZ$750 mln at least given construction inflation costs since then. I'll bet you a coffee this project costs at least NZ$1 billion by the time it's built. It would surprise me if it hits NZ$2 billion.
I don't know about you, but I pay taxes and I'm sick of subsidising other people for doing things they should pay for.

Steve Z
I know the government bought TranzRail from Toll Holdings. I also know from speaking to people inside Toll that they laughed their heads off after they got the cheque. They couldn't believe anyone would pay that much for that piece of junk. That is, they can't believe NZ taxpayers allowed it. But we did. And we want to do more.


Look, every half truthful study

Look, every half truthful study on this issue comes up with the following realities.

The true cost of running public transport is so high that if fares were "user pays", nobody would use it.

The true cost can be calculated simply by dividing total running costs of public transport (just like a business would have to; not omitting the cost of financing infrastructure) by total fare revenue: then just multiply every fare by that factor.
If it is cheaper for a given traveller to run a given car rather than pay true-cost reflecting public transport fares, then that car uses less resources than public transport; not even counting the energy used to get to and from bus stops.

The cost benefit ratio of getting a shift like 10% of car users, to public transport, is exponentially worse than the cost benefit ratio of simply providing new roads and lanes; if there is even a benefit at all. Because most travel is done only at certain times of day, huge "investments" in rolling stock would be necessary to cope with such a shift. Roughly ten times as many people use cars as what use public transport. This means that a 10% decline in car use, shifting to public transport, requires nearly a 100% increase in public transport subsidies. It is a myth that increased patronage will bring efficiencies sufficient to negate this need, as long as public transport is not having to compete in a free market.

If we attempted to run a public transport based, car-free transport system, the cost would be greater than our entire current GDP and/or the lost flexibilities of individual motor vehicles would lead to massive economic contraction. Look at the former USSR. Do you think that their public transport was more efficient than our car use? Did you know that they were far worse wreckers of the environment on every measure, and used more resources per unit value of GDP, than capitalist countries?

Car-free societies absent totalitarian planning, were (Victorian England) and are (Slumdog Millionaire) mixed-use land use societies with people and animals living above and around factories and offices. We will only reach the stated aim of resource conservation and emmissions reductions to the extent we return to such a society. Long distances are the main problem, not modes of transport.

Limiting sprawl does not achieve the desired result because of the effect on land prices. Alain Bertaud's work on urban density profiles show that average commute lengths have increased in cities like Portland precisely because of this effect. The cost of land closer to the urban center becomes prohibitive, and most of the infill development takes place closer to the more affordable fringes. Seriously, take a look at his graphs.

Cities that have been allowed to develop closer to Lassez-Faire principles actually end up with lots of mixed use land use and multiple nodes and much lower average commute distances, and urban density profiles that slope evenly from the highest at the centre, to the lowest at the fringes. The low density at the fringes means that the commuting done by these people is of minimal effect, while the affordability of land is retained over the whole urban area, meaning that many people who could not have afforded to live closer to work under the controlled scenario, can do so under the "free" one.

Trains initially served the use of getting wealthy people over longer distances faster and in more comfort than horse drawn carriage. Trains have had their day long since. But we are doing ourselves serious economic and environmental harm with our mistaken assumptions about all public transport.

People run their own cars by choice. The taxes they pay for petrol alone, covers the cost of roads and externalities. It is public transport that does not pay its way even for running costs let alone externalities.

No-one would use public transport by choice if they had to pay the true cost.

The worst thing here is that people are being lied to about what their hard-earned rates and tax money being spent on public transport, actually achieves. It has never achieved cost-benefit justifiable reductions in road congestion and it has never achieved real reductions in resource use or emissions, let alone cost-benefit-justifiable reductions. We would have been better off in every way to have never spent a cent on public transport subsidies, and simply built more roads and lanes and had lower congestion.

If there were no public transport subsidies, and no government interference in transport, entrepreneurs would identify opportunities to run appropriate vehicles on appropriate routes at appropriate times of day, and make a profit on it.

If you understand economics, you will understand that if people buy product A because it is cheaper than product B, it is simply because the making of product A is a more efficient use of scarce resources than the making of product B. It is not necessary to attempt to trace the whole process from one end to the other: (refer to the essay "I, Pencil" by Leonard Read: to see how complicated it is to calculate all the inputs into making a pencil) the price is the quick answer.

If public transport fares absent subsidies would have to be more than people would pay, then it is not an efficient user of scarce resources. Actually, you do not have to look very far into the way Public Transport is run, to get a gut confirmation of this.

It is NOT a question of running 30 people from A to B by bus, compared with 30 people running their cars from A to B, and it never has been.

The 30 people get from 30 different "A"'s to 30 different "B's". To get the bus to pick them all up and drop them all off, would take so long that nobody would use it. The only people that use the bus today, are the small minority who it really suits.

The bus has to start somewhere empty and finish somewhere empty. Its average loading for the 1 trip is more like 15 people. Then it has to go back to the start mostly empty; average loading drops to below 10. That is just for the peak times of the day, which are the only times when running these services might make any sense at all. But then we have the lunacy of running that same bus around all day, with average loadings not exceeding 3 people. And I said "buses", the same thing applies, only worse, to trains.

Why don't ratepayers and taxpayers realise this? We are being fleeced for no good reason. The environment is not being saved and there are stuff all less cars on the road; if public transport use increases 10% there are only 1% less people on the road. It is exponentially cheaper to build new roads for the 10% odd people who do not yet use cars for their travel, than it would be to provide buses and trains for the 90% of people who do not use public transport: in fact the latter has been calculated to cost more than our entire GDP.

As for the social objectives of running buses and trains for poor people to use during the day, this is so expensive that we could provide hired stretch-limos for them at a lower cost, to pick them up at their door and drop them off where they want to go.

Public transport in its current subsidised, "social objectives" form, is actually doing more harm than good. It is a pretty good economic rule of thumb that if it needs subsidising at all, it is not an efficient use of resources.

We can make huge gains in average vehicle efficiency yet; there are still people who buy V8's by choice. Price rises will accompany resource depletion, and average vehicle efficiency will rise. Even with today's technology, we could gain 70 or 80%. But of course there will be further technological advances. Heck, Greenies themselves talk about this out of one side of their mouths, when it comes to energy SOURCES, but they talk out the other side when it comes to energy CONSUMPTION by private vehicles using roads. I believe that new technology, electric cars and so on, will be very quickly supplied at affordable prices through manufacture in Chindia; at the moment they are made in small quantities in the USA or Europe and are just unaffordable. Think of the first one-piece carbon fibre bicycle frames and what they cost (Kestrel; $10,000?).

Internet-based car pooling/ride sharing alone, is an answer that public transport is not. ANY full car is already more efficient than even the fullest bus or train, and any car with two people in it is already more efficient than the current public transport average. I think if the authorities want to get serious about this issue, taxi licensing regulations should be abolished to allow anyone to carry a passenger for a fee. That would incentivise participation by all those drivers with spare seats.

Then we must return to more flexible uses of land. It makes no sense to force lengthy commutes through rigid zoning that was based on a previously popular ideology; society has taken one step forwards and two backwards. Along with dispersion of sources of jobs, we need interconnectedness to minimise trip distances and times by road. It is an economic impossibility to provide this interconnectedness by public transport.

The model being pursued by our planning classes now is just so wrong-headed that one suspects that they are driven by ideologies other than genuine concern for humanity and its environment. Their model will only work under conditions of such population density, that totalitarian rule would be necessary to achieve it. Alain Bertaud's study on Atlanta concluded that Atlanta would need to abandon two thirds of its existing housing and retract back into the remaining one third, if public transport was to be viable. But of course the reconstruction that would be necessary, would consume so much resources that it would be doubtful whether recouping them would be possible through the alleged efficiencies of the higher density.

William Eager's study in my above list, shows that increased population densities result in more road congestion, not less, for the simple reason that greater majority of the increased population moving into an area still opt for car use. The exceptions may be downtown Hong Kong and Manhattan.

Such high densities bring their own environmental and quality of life problems. It is far from certain that the resource efficiency and emissions of high density living are superior to urban sprawl. Urban sprawl is partly the result of choice and partly the result of zoning fashions of the past. Free market choice is actually a very good allocater of resources. I believe that those zoning fashions of the past have given us the longer commute distances that are our main problem today: under a freer market in land use, we might have had more urban sprawl but we would also have lower average travel distances.

We don't have a "school zone" that we all pack our kids off to 30 km's away by train; I fail to see why we have to have "workplace zones", if we really do have such a "crisis" of resources and emissions to confront.

Isn't it funny how the political classes favoured "solutions" to any problem invariably involve reductions in human freedom, even when an increase in human freedom would be a better solution, knowledge of which needs to be suppressed accordingly?

The reality is that even if peak oil is real and AGW is real, public transport is no fix. The same factors that will make free use of private vehicles less feasible will also apply to public transport. If we really do have to confront such a crisis, we will be forced to resort to freely mixed uses of land; it will simply be impossible to continue an urban planning model that implies lengthy commutes and focuses myopically on the mode of travel. It is absurd to imply that massive investments in electric rail or any kind of rail or even in buses, is responsible planning for an anticipated future crisis of resources or climate.

I have actually read every one of those articles, essays, and reports I have listed below; that is how I came to make the list.

I heartily recommend the online essays:

David S. Lawyer "Does Mass Transit Save Energy?"

Brad Templeton "Is Green US Mass Transit a Myth?"

Ali Modarres "Commuting Patterns in Multi-Centered Urban Settings"

Ari Vatanen and Malcolm Harbour: "European Transport Policy: Strangling or Liberating Europe's Potential?"

Alain Bertaud:
"The Costs of Utopia"
"Clearing the Air in Atlanta"
"Sprawl and Urban Spatial Structures"
"Urban Transport and Cities Spatial Structures"
"Efficiency in Land Use and Infrastructure Design"

Owen McShane:
"The End of Cheap Oil and Urban Form"
"Why Urban Planners Love Global Warming, and, as usual, have got it all wrong"
"Alternatives to Smart Growth"
"Back to the Future"
"Why Planned integration of Land Use and Transport will not achieve its goals"
"Petrol Prices, Driving Habits, and Public Transport"
"Double-Bubble, and Oil, and Trouble"
"Applying Systems Intelligence to Transport"

Randal O'Toole:
"Real Global Warming Fix"
"Debunking Portland"
"Roadmap to Gridlock"
"Does Rail Transit Save Energy or Reduce Greenhouse Gas Emissions?"

Joel Kotkin:
"Opportunity Urbanism"
"Back To Basics"
"The New Suburbanism"

Wendell Cox: "The Illusion of Transit Choice"

David J. C. McKay "Sustainable Energy - Without the Hot Air"

Steve Polzin: "Energy Crisis Solved"

Ted Balaker and Sam Staley: "How Traffic Jams are made in City Hall"

William Eager: "Population Density and Reduced Road Congestion"

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