An election-defining clash: road vs rail

Road Transport Forum CEO Ken Shirley addresses its Election 2017 conference. At the end, he showed the results of a survey of attendees' preferred party policy on transport.

National plans to splash another $10.5 billion on new regional motorways. But do they make economic sense and should that money be spent on rail instead? Meriana Johnsen reports.

An election debate is brewing between National and the Opposition parties that cuts to the heart of their different approaches to Government’s role in building infrastructure – and who their supporters are. National wants to spend big on roads in the regions. Labour, Green and New Zealand First want to spend big on rail and buses in both Auckland and the regions.

It is shaping up as a battle between car owners and truck drivers in the regions and younger bus and train passengers in Auckland. It pits young and urban against old and provincial; green versus grey. It is also a battle between those prioritising climate change policies over regional economic growth, and between those who want to super-charge Auckland’s growth and those who see provincial areas as being neglected.

National has become the roading Government since 2008, increasing fuel taxes by nine cents a litre to pump investment into the economy and the Christchurch rebuild through its Roads of National Significance (RoNS). They included the Victoria Park Tunnel, the Waterview Tunnel and the Waikato Expressway. These projects were mostly welcomed as improving links between and within the biggest cities. They were seen as economically justifiable and popular with drivers. But National is now planning to roll out 10 new RoNS in regional areas that handle much less traffic and produce much lower benefits for each extra dollar spent.

Public transport advocates and opposition parties argue the money would be much better spent improving rail and bus services in Auckland and the regions, both for passengers and freight.

“There are only so many large-scale roading projects that provide good value and a bunch of the current RoNS seem to be scraping the barrel,” Lowrie said in blog post highlighting that the new projects had traffic volumes that were less than half that of Auckland’s main roads.

“These projects will save a few minutes here and there, but nothing like the 40 minutes the whole Waikato Expressway will save along New Zealand’s busiest inter-regional corridor; nothing like the impact of Waterview Connection on completing Auckland’s motorway network,” he said.

“Instead more and more money is getting shovelled into projects that provide less and less return.”

National's Transport Minister Simon Bridges instead saw the new roads as being critical for growing regional economies, even if they were not needed immediately.

“They are lead infrastructure projects meaning we are investing now to encourage future economic growth, rather than waiting until the strain on the network becomes a handbrake on progress,” he said.

The numbers at stake are huge. At the current growth rates, the Government will be spending around $4.5 billion a year on new roads and road maintenance through its National Land Transport Fund by 2024/5, up nearly 30 percent over a 10 year period. That’s thanks to a growing pipeline of fuel taxes, road user charges and vehicle registration fees that are flowing into the fund from a fast-growing fleet of new and used cars. The Government built a money raising machine with its fuel levy increase announced quietly on the last Sunday before Christmas of 2012. It is now scrambling to spend it as fuel usage grows quickly with more and bigger cars on the road travelling more and more kilometres. Over 800 cars a week are currently joining Auckland's motorways.

But the debate over the RoNS, which are paid for from a mix of the Land Transport Fund, direct Government funding and Public Private Partnerships, is shifting to whether this fast-growing pot of gold should be used to build and run railways and more busways as well.

Labour and the Greens are pushing to use the fund to pay for rail infrastructure, which KiwiRail and freight operators such as Mainfreight have also called for. New Zealand First is also a fan of using rail to move freight and passengers off the roads, as well as to develop better links with the regions. This debate could be a crucial one in any Government-forming negotiations.

“The transport budget should go towards projects that move people and freight the fastest and reduce congestion – and that’s rail,” Greens Transport spokeswoman Julie-Anne Genter said in calling to use the fund to pay for rail.

“Spending the money on motorways is wasteful because it won’t solve the problems in the medium term. Most likely it will make them worse,” she said.

What are the RoNS?

The RoNS have been identified as the essential transportation routes nationwide. They are typically 4-lane highways, with 2-lanes of traffic flowing either way.

There are currently seven RoNS, only 2 of which have been completed: Tauranga’s Eastern Link toll road and Victoria Park Tunnel. Construction has begun on the remaining four RoNS: Ara Tūhono – Pūhoi to Wellsford; Western Ring Route including the Waterview Tunnel, Auckland; Waikato expressway from the Bombay Hills to Cambridge; Wellington Northern Corridor from the Airport to Levin and including Transmission Gully, and Christchurch Motorway connecting the CBD with the airport and the Port of Lyttelton.

Where does the funding come from?

RoNS are funded through The National Land Transport Fund. This fund is mostly made up of two sources of revenue: road user charges and the fuel excise tax. The former is paid by all diesel vehicle owners, whilst the latter taxes you every time you fill up with petrol at the pump.

The fuel excise tax currently makes up third of the price of fuel. The government has raised the fuel excise tax by nine cents a litre since 2012. The tax hike was used to increase the Land Transport Fund, which was announced by Transport Minister of the time, Gerry Brownlee.

The National party’s proposed 10 new highways will be funded through a combination of The National Land Transport Fund ($10.5 billion) and Public-Private Partnerships.

Existing RoNS performing poorly – but as expected

The RoNS have been heavily criticised for their low Benefit-cost-ratio (BCR).

Minister of Transport Simon Bridges said this year the benefit-cost ratio for the Warkworth to Wellsford part of the Ara Tuhono RoNs was as little as 0.25. This puts the project at a loss of 75c for every dollar.

Bridges also came under heat this year by the Green’s Transport Minister Julie-Anne Genter over failure to provide an updated BCR for the Auckland East-West link. A 2015 estimate put the BCR at 1.9. Although in this case the benefits do outweigh the costs, a BCR under 2 is still considered weak.

Public transport advocacy group, Greater Auckand, believed a number of the highways were built with the knowledge that the benefit to cost ratio was very low.

“Some of them were never expected to work well in the first place, a good example is the Tauranga link, there are only 5000 cars a day using it,” said Greater Auckland’s Lowrie.

Lowrie said that the business case put forward for the Wellsford to Whangarei link only had a BCR of between 0.3 – 0.5. The file has since been removed from the NZTA website.

“One of the problems we are seeing is an inconsistent argument. Where the business case has been done and shows that it doesn’t stack up, they just ignore it,” he said.

Whilst the economic performance of the RoNS are subject to contention, they have proven themselves in safety. To date, there have been no fatalities on any of the RoNS.

Industry reps weigh in

Many transport industry leaders at the 2017 Election Transport Forum welcomed National’s plan to build more motorways.

New Zealand Road Carriers’ Calven Bonney said the newly announced RoNS would provide much needed roading infrastructure.

“It’s very much needed. We’re struggling with road maintenance, mainly because of the weather,” Bonney said.

Many industry representatives believed a benefit-cost-ratio did not accurately reflect the economic benefits the RoNS presented.

However, representatives from both Road Transport Forum NZ and the Motor Industry Association were also confident that the existing RoNS met a BCR of at least one.

Road Transport CEO Ken Shirley was skeptical that the BCR methodology captured the full economic advantages of the RoNS.

“A good example is when they first proposed the Harbour Bridge in Auckland back in 1959. It didn’t meet one in cost benefit – in other words it wasn’t going to pay its way -- well who would take away the Habour bridge today?”

“That is the problem with that tool, the measuring tool of benefit to cost ratio, because what wasn’t factored in the incredible growth along the foreshore because of the bridge.”