Published 1 June 2011
The Government cast doubt on the business case for an inner-city rail loop in Auckland yesterday, and at the same time mayor Len Brown announced the next steps for the project, saying an independent review concluded it would have transformative benefits to the region.
The key word in the statement issued by Transport Minister Steven Joyce was “yet”: “The review of the business case for the cbd rail link finds that the case for funding & building the rail link has not yet been made, and that the mix of options for meeting transport needs in the cbd have not been sufficiently explored.”
There have been 2 separate reviews of the loop, one by the Government and one by a range of parties brought in by the Auckland Council & its partners.
When ARTA (the regional transport authority taken over on 1 November by the new council-controlled organisation, Auckland Transport) presented the loop proposal early last year, it showed a cost:benefit ratio of 1.3-1.6 for the loop. The completed report released last November gave ratios of 1:1.1 at an 8% discount rate (the standard), 1:1.6 at a 6% discount rate and 1:2.4 at a 4% discount rate. That report said lower discount rates should be considered because the NZ Transport Agency uses lower rates in its modelling for the roads of national significance. Including the net value added from increased cbd productivity, the cost: benefit ratio rose to 1:3.5 at an 8% discount rate and to 1:4.7 at a 6% discount rate.
The council-Auckland Transport review out yesterday came up with a benefit:cost ratio ranging from 1.1-2.3 (including wider economic benefits).
The review by the Ministry of Transport and Treasury screwed the benefit:cost ratio down to 0.4 “when wider economic benefits currently not included in the NZ Transport Agency’s assessment manual are added”.
The proposed city centre rail link is a 3.5km double-track underground rail line running beneath the cbd from Britomart to the western line near the existing Mt Eden station, with underground stations proposed at Symonds St/Khyber Pass Rd, Karangahape Rd/Pitt St and on Albert St between Victoria & Wellesley Sts. Current cost estimate is $2.4 billion.
For the Government review, officials from the Ministry of Transport and Treasury worked with the NZ Transport Agency, KiwiRail, Auckland Transport, the Auckland Council & other agencies.
The Government agencies concluded:
the case for investigating funding & construction of the rail link has not yet been made, but the Auckland Council could undertake a range of actions to provide greater confidence about the growth projections needed to make the project viablethe wider mix of options for meeting transport needs in the Auckland cbd hasn’t been sufficiently exploredthere’s a strategic case for lodging a notice of requirement to protect the rail link route and it would make sense for the Auckland Council to proceed with thisthe estimated construction costs are largely sound – a total cost of $2.4 billion, andthe project has an overall benefit:cost ratio of 0.4. Mr Joyce commented: “In short, the review says more work needs to be done to determine the full future transport needs of central Auckland before proceeding with a project like the cbd rail link. However, the review suggests that, in the meantime, it makes strategic sense for Auckland Council to move to protect the route, and I agree with that.”
Specifically, the Government review found:
the estimated construction costs were largely sound at a total $2.4 billionthe transport benefits are estimated at $387 million rather than the $1.319 billion assessed in the business casethe project would have only a modest impact on traffic volumes and likely remove up to 1400 cars (2000 people) of the estimated 29,000 cars (41,000 people) travelling into the cbd during the morning peak in 2041the wider economic benefits of the project as estimated in the business case ($3.3 billion) were very significantly overstated and were in fact more like $305 million – which was still high relative to the transport benefits when compared with similar large international transport projectsthe recalculated benefit:cost ratio consistent with the NZ Transport Agency economic evaluation manual used for roading projects was 0.3, with the additional wider economic benefits taking it to 0.4.
The Government review suggested the following steps could be taken by the Auckland Council to improve the future case for development of the link:
finalisation & implementation of the Auckland spatial plan & city centre masterplan to establish achievable growth projections for the cbd and to quantify where the growth projected for the cbd will occurdevelopment of a robust multi-modal plan for future transport into the cbd, which includes a thorough analysis of all the alternativesbegin implementation of large-scale residential developments along the rail corridors to capitalise on the current upgrade & electrificationimplement additional park-&-ride sites & bus feeder services to drive further increases in public transport demand.
The Government review noted that, late in the process, the Auckland Council & Auckland Transport provided a new alternative policy case which added a range of new assumptions & policy considerations to the previous business case.
Mr Joyce said officials didn’t assess the new policy case provided as there was insufficient time: “It appears to contain some things that are specifically related to the cbd rail link and some things that would improve transport in Auckland, regardless of any decision to build the link.
“I think the timing of the latest policy proposal underscores the need to go carefully through the spatial plan process and the various transport options, to make sure that together we make the right investments in future Auckland transport projects at the right time.
“In the meantime, we continue to invest $1.6 billion to electrify & modernise Auckland’s commuter rail network to provide for the next stage of growth in rail patronage. This Crown investment will help deliver a modern, fast & superior commuter rail experience from 2013-14.“
Also yesterday, the mayor announced the next steps in the construction of the link after the council’s “concluded it would have transformative benefits to the region”.
This review was prepared with the assistance of Aecom NZ Ltd, Ascari, Beca Ltd, GHD Ltd, John Bolland Consulting Ltd, Market Economics Ltd, Parsons Brinkerhoff, PricewaterhouseCoopers & UC Berkeley Transportation Centre.
Mayor says evaluation numbers robust Mr Brown said: “Auckland Council, Auckland Transport & our independent advisors are strongly of the view that the overall evaluation numbers are sufficiently robust to justify the immediate commencement of the designation process for the route. The process needs to commence as soon as possible to minimise the potential for any cost increases or project delays. “In addition to progressing the designations, the Auckland Council needs to immediately commence the process to secure & protect the route of the rail link. This work is being funded in the 2011-2012 annual plan.” Mr Brown said he would propose funding to start the acquisition of properties necessary to make this project a reality in the draft long-term plan: "The need for the tunnel is now urgent. Within 2 years, most of the useable train paths in & out of Britomart will be in use, providing virtually no room to add future services at a time when public transport patronage is going through the roof. "The rail tunnel will unlock unused capacity across the whole rail network. It will double the number of trains that can go through Britomart, let Aucklanders & freight move around the region more easily and reduce congestion on our roads. The rail tunnel would include 3 stations at key locations to ensure most of the inner city is no further than 500m from any station and would mean more & faster services out to West & South Auckland.. "The potential urban redevelopment & additional growth derived from investment in this infrastructure would make the project transformational, not just for Auckland, but for New Zealand as a whole."
Links: Ministry of Transport release
Earlier stories:
26 November 2010: Brewer casts doubt on cbd growth predictions in rail loop case
25 November 2010: CBD rail loop business case unveiled
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Attribution: Ministerial, Ministry of Transport & mayoral releases, Government reports, story written by Bob Dey for the Bob Dey Property Report.
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