Infrastructure policy mistakes take decades to unwind and cost megabucks. Auckland Council economists say policy makers should 'think big' and make 'economically rigorous decisions'

Infrastructure policy mistakes take decades to unwind and cost megabucks. Auckland Council economists say policy makers should 'think big' and make 'economically rigorous decisions'
Sir George Grey Special Collections, Auckland Libraries, 1-W174

By Shane Martin*

• Auckland ratepayers continually expect better levels of service and reduced environmental impact – as they should.

• At the same time, the council is under pressure to keep rates as low as possible for ratepayers.

• This rational approach creates difficulty when decisions made decades, or even a century ago, are still having negative impacts today.

• The need to fix mistakes from the past at huge cost, to constantly increase service levels while avoiding repeating the short-sighted decisions of the past, may cost more in the short-run.

• Past experience shows the need for rigorous analysis of our infrastructure and policy choices to consider the immediate and long-term impact on Auckland, and the need to think big in our planning to avoid under-provision.

We often harken back to the “good old days” with fond memories about how good things were. However, nostalgia has a way of distorting our memories by omitting the unpleasant parts. In fact, many of the decisions that were made in the past, especially around environmental and transport issues in Auckland, are inconceivable in retrospect. And short-sighted or ill-informed decisions carry huge inter-generational costs.

How not to train your city

Many of Auckland’s transport decisions have been short-sighted over the last hundred years. Each has ended up costing Auckland ratepayers and New Zealand taxpayers both time and money in the long run.

For instance, a tunnel for trains that was proposed as early as the 1920s, but dismissed as too expensive, took until now (with City Rail Link) to even start construction. In the 1950s, a decision was made not to electrify Auckland’s rail lines and invest in motorways instead. Electrification was delayed until 2015.

Auckland’s vast network of electric trams that operated from the early 1900s was dismantled by the late 1950s. Now, the proposed light rail projects, at a cost of billions of dollars, will be bringing back some of the routes that existed a century ago, but were got rid of during the heyday of the automobile.

Imagine how different (and accessible) Auckland would be today, had we more far-sighted decisions all those decades back.

Each of these decisions severely stunted the growth of public transport in Auckland.

Similarly, Auckland’s harbour bridge – a design that was compromised on the grounds of cost – was opened in 1959 and was almost immediately overcapacity. Ten years later, the clip-on lanes that were added had a cost that far exceeded what it would have taken to build a bigger bridge in the first place.

These decisions illustrate both local and central governments making the easier and “cheaper” decision without fully considering the long-term implications. Since Auckland experiences the congestion consequences of these decisions daily, most of us are vocal about wanting an immediate improvement in service levels to reduce our transport difficulties.

The #2 harbour in Auckland

We see a similar pattern of short-sighted decisions on environmental issues – especially with regards to wastewater.

According to the South Auckland Research Centre, in 1908 Auckland’s municipal abattoir was moved from Western Springs over concerns of pollution in the Waitemata. Slaughterhouse effluent was being dumped directly into the harbour. The “solution” was to move the abattoir to Otahuhu and dump slaughterhouse effluent directly into the Manukau harbour instead.

Similarly, at the turn of the 20th century, household sewage was a major problem. The first wastewater (sanitary sewer) systems built discharged raw sewage into the Waitemata and Manukau harbours.

While this got rid of the problem of people throwing their waste in their back garden and night soil collectors spilling waste into the streets, it obviously created other problems. These systems were efficient, but did almost nothing to clean the sewage before it entered the waterways.

It wasn’t until the Mangere treatment plant opened in 1960 that the solution to wastewater on the isthmus was something better than dumping it in the sea. About 20 years ago, this plant was significantly upgraded and now cleans water so thoroughly that it can be safely discharged into the Harbour immediately after treatment.

Even though Auckland’s treatment plants do an excellent job at cleaning all the wastewater received, issues remain. A lot of the infrastructure that carries wastewater is outdated and undersized – especially on the western isthmus. There, many areas are on combined sewers. This means that wastewater and stormwater share the same pipes to get to the treatment plant.

Though these combined sewers were once common, they are no longer built because during heavy rain, the pipes get inundated with stormwater and the combined stormwater and wastewater overflow into the sea. This is one of the reasons why Aucklanders are wary of swimming after a heavy rainstorm.

Improved service levels already a reality

Because of these concerns around water quality, Safeswim, a partnership between Auckland Council, Surf Life Saving Northern Region and the Auckland Regional Public Health Service, has come online in the past couple of years. Safeswim provides real-time advice about the quality of water for about 100 sites around Auckland. It advises in real time whether the water quality is good enough for swimming, as well as a 3-day forecast.

Safeswim doesn’t fix the wastewater overflow issue, but it is a massive improvement in service quality. Before, Aucklanders had to guess if the water was safe or wait for specific warnings. Now, it’s as easy as pulling up a website on your phone.

The more we know, the more we want

Yet, Safeswim has also had the side-effect of putting the issue of water quality front and centre, just like the issue of road congestion.

Rather than having a vague sense of where and when water quality suffers, anyone can access a map of real-time water quality ratings. Every time you open the map, you see that there are several areas of the city where there are long-term alerts about unsafe levels of faecal indicator bacteria. If it has recently rained, you see clusters of red icons in the area, indicating that the water quality is unsafe for swimming.

This transparency, which is a good thing and a major improvement in the level of service, has had the further effect of increasing service level expectations. Because they are more aware, Aucklanders are expecting improvements to water quality to solve this problem.

To reduce the number of combined sewer overflows, Watercare has several ongoing capital projects including the Central Interceptor, which is expected to reduce annual overflow volume into the harbours by up to 80%. In Ponsonby, the combined sewers are being separated, and in other areas, storage tanks are being used to store excess sewage during wet-weather events. These are part of at least $6 billion of investment to improve water infrastructure in Auckland over the next 20 years.

Learning lessons from the past

Solving Auckland’s congestion and water quality problems is taking considerable effort and a massive amount of money. These solutions highlight the constant tension between keeping rates low, correcting decisions that were made decades ago at costs of billions of dollars, and delivering ever higher levels of service.

Considering the environmental impacts and huge cost to fix the decisions made in the past highlights two things.

First, the growth of Auckland has inevitably exceeded the expectations of the planners of the day. We need to think big in our infrastructure and city planning. It’s easier to slow down the rate at which we deliver infrastructure than to speed up or try to retrofit. If our forebears had thought about the fact that people might live in large numbers near the Manukau Harbour, they wouldn’t have run slaughterhouse effluent directly into it. We’d have built a bigger cross-harbour bridge if we thought about how it would induce demand for travel to the north of the city.

Second, we need to make good, economically rigorous decisions today. And by “economic”, we mean the real definition of the word – decisions that maximise the financial, environmental, social, cultural and community wellbeing of all Aucklanders today and into the future. In many cases, this will mean taking the long view and avoiding the cheap and dirty decisions that we may later regret.

*Shane Martin is an economist in the chief economist unit at the Auckland Council. This article was first published here.

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nice article and I agree,
as someone who started at the MOW I have seen many many deferred projects that when they finally get done cost 5 times what they would have cost and by the time they are completed are already under sized for the current situation let alone built for any future growth.
it all comes back to our political masters looking after their careers before the country or city they serve

Former MOW boss Bob Norman was interviewed just before Christmas on RNZ by Kathryn Ryan. Still alive and very much kicking at '95 not out’ (the title of his latest book). A delightful gentleman, I hope Shane Jones has put a call through to Bob to glean what he can from his years at the coal-face.

In the past decade there has been the decision to relocate new suburbs of Auckland away from adjacent lands. So today a much more spread out sprawling cityscape is being developed, with its own observable challenges to transportation. The current approach of pro-sprawl step change is bold and adventurous, most reminiscent of LA in the 1940's.

I sympathise with the author's point of view but:

"Second, we need to make good, economically rigorous decisions today. And by “economic”, we mean the real definition of the word – decisions that maximise the financial, environmental, social, cultural and community wellbeing of all Aucklanders today and into the future. In many cases, this will mean taking the long view and avoiding the cheap and dirty decisions that we may later regret."

Proper economic & financial decisions require us to put a value on money, i.e. a discount rate or hurdle rate a government project should meet. The typical rate is NZ is circa 6%, vs a commercial project return rate which is more likely 10% + (& one could argue is the rate of return the government should actually seek.) This value of money does inherently "discount" the future so makes it difficult to do good long term planning.

One possible way around this is to do proper population planning for urban growth. i.e. It what do we need & what is optimal at population w,x,y,z for a city (with proper rigorous analysis of urban the transport, water, wastewater effects / costs etc). Regional and district plans currently do this really badly - the analysis would need to be substantially more robust. Projects would then be staged on an economic & financial basis.

The difficulty with this approach is that the background context always changes. E.g. climate change is now an issue which wasn't even considered historically, earthquakes happen (Christchurch), Government allows in excessive immigration faster than houses can be built (Auckland), regulations change (RMA) etc etc.

Also what planners plan doesn't necessarily align with what the market wants & costs & technologies change over time as well.

Article précis:
We Plannerz and Economistz are So Essential to Getting Things Right that you need to stump up for More of Us, because We Alone can Get Things Right for the next coupla Centuries.

Surprised an economist is suggesting that spending a minimum of $3.9B on a train tunnel is an 'economically rigorous decision" Maybe they were right in the 1920's.

And Auckland wouldn't be the only city or town to be in that situation in this Country. I think it affects the entire country and is symptomatic of our miserly victorian mindset inherited from the mother country since our days of colonization. This country for some bizarre reason is encouraged to sing the virtues of our quaint number 8 wire mentality which is just another way of avoiding investing upfront at any cost...and we should be ashamed of that not proud of it.