Posts by Joshua Arbury
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There may come a point when the Waterview Connection makes economic sense again. However, I cannot see that point being now or any time in the next 10 years.
There are other projects that need this money more, and are more justifiable. This is turning into a tunnel v surface option debate, when it should be a "can we justify spending at least $2.2 billion on a 4.5 km road" argument.
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Gareth, electric cars will still be congested. Auckland's population will be 2.3 million by 2050 - that's a lot of electric cars stuck in traffic jams.
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Sacha, there are two ways that one could answer that question.
Firstly, this is what Steven Joyce said in parliament yesterday:
Hon Darren Hughes: Minus financing costs, what is the cost of the twin two-lane tunnel option for the Waterview Connection that Labour proposed, and how does it compare with the same project—again, without finance costs—of August 2008?
Hon STEVEN JOYCE: The cost of $2.77 billion provided in the business case that was sought by the previous Government and provided to the incoming Government after the election included financing costs of $200 million. For the member’s benefit—I have some concern at his skill level—I tell him that without those financing costs the cost is $2.57 billion.
Hon Darren Hughes: Why will the Minister not just front up about the actual cost of the Waterview project without the extra things he has included in it, which no other project faces—like financing costs or the additional scoping of the project—and tell us that the cost of the project is not $2.77 billion, as he keeps claming publicly, but rather $1.98 billion if finance costs, which no other project faces, are not included?
Hon STEVEN JOYCE: That is much better. I have been quite upfront about this matter, and the business case has been published. The $2.77 billion includes $240 million of costs for increasing capacity on State Highway 16, and financing costs of around $200 million, which are simply for during the period of construction. Under the business case sought by the previous Government, that funding was added because there was an understanding that the project would not be completed from within the National Land Transport Fund, and that therefore those funding costs would need to be provided during the project’s construction. I can tell the member, in order to alleviate his concerns, that any alternative options for advancement of the Waterview Connection will include comparisons on a like-with-like basis.
The other possibility is that Joyce wants a 6 lane link and realises that getting that built as a tunnel is impossible ($3.2 billion I think). So he wanted to make all tunnel options seem unfeasibly expensive. Now, in some ways I think that what he has done is justifiable - as financing will be required (as it will be funded from debt, not from the NLTP), SH16 will need to be upgraded and costs may have escalated.
Yet all these additional costs will have to be added to EACH AND EVERY OPTION considered. You will still get financing costs on the open cut option and you'll still need to upgrade SH16. So this may backfire on him and make every option unaffordable.
If the cost was $1.9 billion still I would say "let's think about it", but at $2.8 billion for a tunnel option (and $2.2 billion for a cheap and nasty open cut option) I say "forget about it".
Too expensive. Look for alternatives.
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Sacha, in terms of a $3 billion project $200 million is only 7%. Nothing like the "halving the cost" rubbish that is spouted by McShane, Joyce etc. Furthermore, the "cut & partial cover" option is going to still have significant social and environmental effects - that could be more than $200 million. In which case our cost-benefit analysis heads even closer to the negative.
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Gareth, the Waterview Connection will be funded by a crown grant (if it is funded). There are no other ways to fund something so big, as neither NZTA nor ARTA consider it to be a priority in their plans that spend petrol tax dollars.
Given that the government has recently removed rail from the NLTP (which decides where petrol tax dollars are spent) and made it reliant upon crown grants we are actually in a situation where you can compare the Waterview Connection with rail improvements - as they would both be funded out of the same pot.
Time for a cost-benefit analysis to be done on the CBD rail loop and rail to the airport I think. Oh, and also time to stop the rort that are time-savings benefits.
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There is no significantly cheaper and better value option. For a start, the cost difference between a full tunnel option and other potential options is not nearly as big as people make it out to be. The Ministry of Transport’s review of the Waterview Connection clearly pointed that out (see page 18 of that document):
http://www.transport.govt.nz/assets/Katrina-09/Business-case-for-the-Waterview-Connection.pdfTo paraphrase (all costs in 2015 dollars)
1) Cost of full tunnel option: $2.005 billion for 4 lanes, $2.335 billion for 6 lanes
2) Cost of cut and partial cover options: $1.790 billion for 4 lanes, $1.813 for 6 lanes
3) Cut and extended cover: $1.988 billion for 4 lanes, $2.205 billion for 6 lanes
4) Open cut (no tunnel at all): $1.456 billion for 4 lanes, $1.585 billion for 6 lanesSo therefore, there is no cheap option. If we compare apples with apples we see that a cut & partial cover option is only around $200 million cheap than a full tunnel option, a cut & extended cover option is around the same cost. An open cut option is $500 million cheaper, but that must be counter-balanced against the huge environmental and social costs that this option would generate. These environmental and social costs would be included in a cost benefit ratio analysis, and may well outweigh the $200-500 million in saved construction costs.
Given the expense of completing the gap I think we need to make sure it’s value for money. I’m very very much not convinced that it is.
What looks pretty on a map isn’t what matters in the end. There are a lot of pressing transport projects in Auckland at the moment - including the rail projects like the CBD tunnel and rail to the airport. Given peak oil uncertainty in the future (and all your biofuel & fairy dust cars won’t become affordable to the masses for decades) and the fact that motorway simply induce travel (and therefore congestion) we need to look at alternatives that can provide better value for money than this project.
I truly believe that the benefits of this project have been overstated. The traffic modelling expects 98% of people travelling from the North Shore to the airport to use this connection, which seems truly bizarre. It also expects to remove 28,000 cars per day from the CMJ - in which case why are we about to spend $600 million on the Victoria Park Tunnel and the Newmarket Viaduct? Time savings benefits have been proven overseas to simply not exist in the longer term (as people drive further rather than travel times being shortened), yet these time savings make up 73% of the benefits of the Waterview Connection.
There are just too many flaws.
If we leave things for a decade, the MoT report says the cost benefit ratio will rise to 1.7 - which is a lot better than 1.15. Furthermore, if we spend that decade building a CBD rail tunnel, rail to the airport and other public transport projects we may find that we don’t need the Waterview Connection anyway. Particularly if petrol is over $3 a litre by then (which is what the NZTA and the ARC anticipate it to be in a decade [in today's dollars] - which I think is conservative).
Wouldn’t it be better to find that out before we spend $2.5-3 billion?
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When will we find out more about the Waterview Connection? Supposedly an alternative went to Steven Joyce earlier in the week.