TRANSPORTING OURSELVES A Discussion Paper on Issues for a revised New Zealand Transport Strategy
March 2009
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New Zealand Automobile Association
Towards a new Transport Strategy
Transport is the glue that binds economies and societies together. The cost of inadequate transport planning is measured in both lives and dollars. The AA published a 163 page critique of the draft New Zealand Transport Strategy in March 2008. This booklet condenses much of that argument and explains why New Zealand needs a new Transport Strategy which makes greater provision for growth. This booklet is multi-modal in that it takes into account modes such as rail, sea and air. However by any measure these modes involve far less Government investment and planning than do our roads - and the booklet reflects that. What this booklet is attempting to do is to frame the transport task over a long time-frame (15-20 years). It looks at the way New Zealand has developed from the original six colonies in transport pockets and how geographical features still dominate our economic and social horizons today. It looks at trends in population and technology which will affect us no matter how deep the recession. Finally this booklet will address particular issues with the way we plan and manage transport development in New Zealand. Some of these are long term, others are short term, some are relatively trivial and others are deeply embedded in our planning systems. We hope you find the booklet interesting and useful. What about the Recession ? Given that the current crisis has seen the largest destruction of credit in history it is easy to draw comparisons with the Great Depression. But many imagine the Great Depression lasted a good deal longer than it did. In fact four years after the October 1929 crash the economies of most of the developed world were in strong recovery. It was the unconnected second slump of 1937 that led to the perception that the Depression lasted a decade.The current contraction is indeed severe but a greater risk is to miss the long expansion that always follows. Contents of this section
Global trends
p3
World trade over a long period is unlikely to be suppressed for long Looking to the longer term shows just how important Asia will be.
Technology trends
p4
Technology changes economic fortunes. The irreversible trend is towards greater efficiency by moving more passengers and freight for less.
New Zealand transport snapshot
p5
Drawn from the latest freight and tourism research the picture of New Zealand is of regional economic islands of activity poorly linked together.
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Keeping New Zealanders Moving
1.0 Transport in a Pacific context To understand New Zealand’s future transport needs it is essential to place it in a regional context. While traditionally New Zealand has looked to Europe (still our second largest trading partner) the extraordinary growth in the Asia-Pacific region for the past quarter century shows that our transport trading links can be expected to shorten considerably over the next quarter century.
Europe is tiny compared to the Pacific and is likely to be eclipsed by Asia in future.
Sometime this century China will eclipse the United States as the world’s largest economy, while India will close rapidly with Europe. Japan will remain an important technological leader but SE Asia (Vietnam, Cambodia, Thailand, Malaysia, Singapore) will grow rapidly in importance. To date only Brazil in Latin America shows any signs of rapid growth. Of some concern is the apparent stagnation of Oceania itself which will only change if Asia invests more in it. By 2030 China’s economy will be six times larger than it is today and its population will be 1.5 billion (up 131 million) By 2030 India’s economy will be 3 times larger and its population will be 1.4 billion
By 2030 Japan’s economy will be 1.2 times larger than it is today and its population will be 116 million (down 11 million)
To scale of Pacific below
By 2030 The Phillipines economy will be 1.6 times larger than it is today and its population will be 126 million
By 2030 the Canadian economy will be 1.6 times larger and its population will be 39 million. By 2030 the United State’s economy will be 1.6 times larger and its population will be 364 million.
Shenzhen China
By 2030 SE Asia’s economy will be 2.5 times larger than it is today and its population will be 245 million By 2030 Indonesia’s economy will be 1.5 times larger than it is today and its population will be 285 million
By 2030 the Mexican economy will be 1.4 times larger and its population will be 135 million. By 2030 the Pacific Islands (including Papua) economy will be smaller and its population will be 2 million larger. Kaiteriteri, New Zealand
By 2030 Australia’s economy will be 1.7 times larger than it is today and its population will be 23 million
By 2030 New Zealand’s economy will be 1.5 times larger than it is today and its population will be 4.7 million
By 2030 the Chilean economy will be 2.2 times larger and its population will be 18 million. Latin America has yet to produce true El Tigre economies
Two points stand out from this map. The first is that Asia is growing rapidly both in wealth and population while New Zealand remains relatively static. While New Zealand’s main trading partners are likely to remain those with whom we share a language (Australia and the United States) South East Asia and India have long spoken English and that association is likely to grow on the basis of family and educational connections. China will eclipse the United States as the world’s largest economy and the sheer scale of that nation must inevitably increase our trade and tourism with her. New Zealand’s ability to provide high quality food and low density tourism will inevitably attract a premium. Technology will only increase the interconnectedness of Australasia and increase the opportunities for a single Australasian aviation market.
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New Zealand Automobile Association
1.1 International Transport Technology Trends
Getting more people and freight moving for less. That is the imperative driving those designing international transport machines. In some cases that means carrying more per transport unit in giant hub and spoke arrangements. In other cases that means hitting the sweet spot in the relationship between payload, range, terminal service requirement and crew that allows for profitable multi-point networks. An after-thought to international networks New Zealand’s challenge is to balance volume and competition between service providers. The Boeing 787 Dreamliner 220 seater capable of flying direct from any Asian city into any larger New Zealand airport capable of handling the Boeing 767. The A350 XWB is Airbuses response, due in 2011.
The Brazilian Embraer E-190 is a new generation of 100seater regional jet. Half the price of a new 737 but able to fly from Sydney, Melbourne or Brisbane to any NZ airport able to accept the 737 (eg Queenstown) and with new levels of economy both in flight and maintenance. Aircraft such as these must reduce the cost of Australasian air travel.
The A380 double-decker will accomodate 555 to 850 passengers for long haul flights similar to those used with the 787. Began operation in 2007. Only Auckland and Christchurch can service a jet of this size at present. World Shipping 2026
Despite costing hundreds of millions to build Cruise liners have enjoyed a renaissance. Liners range from small 700 passenger, to large 3,000 passenger ships. Their impact on arrival is huge. Emma Maersk to scale in Lyttleton
Now
Although the 11,000 TEU container ship Emma Maersk will not be seen in New Zealand waters she represents the trend among international shipping lines towards very large container vessels, With a draft of 15 metres only the largest and deepest ports will be able to handle her 397 metre length and 171,000 gross tonnage. With only 13 crew such vessels reduce the cost of moving a container around the world to less than the cost of trucking it 100km. This ship cost US$145 million to build representing an excellent return on capital. This is less than the list price of a 787 Dreamliner. Only Auckland and Tauranga can handle such large vessels.
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Keeping New Zealanders Moving
1.2 New Zealand Transport Links 2009
New Zealand’s economy is growing fastest in the North and is lagging in much of the South. At the same time there are clear signs that infrastructure investment throughout the country is, and has been, starved for many decades. The Auckland, Waikato and Bay of Plenty regions dominate the entire country but are poorly served by roads which are congested and/or unsafe. The rest of the economy remains predominantly sea focused with pockets of growth in areas such as New Plymouth, Napier, Christchurch and Queenstown based around specific industries. Geographical features impede efficiency (eg the Kaimais and Cook Strait) or create deprivation “shadows” which create costs for the whole country.
Queenstown/Fiordland Growing like topsy, this region has caught Wellington completely by surprise. In many respects the area remains underdeveloped with plenty of capacity to improve its tourism offering. Road safety a serious issue. Primary tourism regions Deprivation Regions
Exports
Ex (h por o lo rt & ts g)
Tourism
Deprivation zone
Exports (oil & dairy)
BoP/Waikato The nations breadbasket has the worst road safety as growing demand from freight, tourism, retirees vie for inadequate roads. East Coast The entire East Coast is effectively cut off from the rest of the country. In the North deprivation is high. Wellington Poor access to the North and East, An inefficient diversion for the ferries to the South. Wellington is cut off in more ways than one.
(C
oa
l&
Ag
)
Exports (logs)
Ex
po
rts
Christchurch With a good port and airport Christchurch’s main challenge is avoiding Auckland style growth pangs. Best placed to succeed.
zon
e
Tourism
y) air (D rts Ex po
West Coast Wild, cut-off and loving it. Relatively deprived but still enjoying benefits of mining. Plenty more opportunities in mining if allowed to exploit them.
Exports
ion
Nelson/Marlborough Wine and horticulture dominate a region which is growing. Access remains a problem with dangerous link roads all around and no rail.
Deprivation zone
Dep riva t
Taranaki/Manawatu Oil and milk keep this regional economy pumping but with no clear tourism offer direct flights to Palmerston North that might carry horticultural exports are limited.
Deprivation zone
Imports
Auckland A study in congestion - through poor structures and injudicious planning. With low internal efficiency the benefits of economic concentration are reduced.
Oil
Imports
Northland Northland continues to struggle with access issues and suffers economically and socially as a result.
Tourism
Southland Transforming from sheep to dairy has created new challenges and new wealth. With cheap land, tonnes of coal Southland has significant potential. Can it realise it?
Exports (aluminium & ag)
Tourism zone/flow Geographical transport barriers
Otago Remains a hub for bulk shipping but struggling industrially. Too far from tourism meccas. Dangerous roads a concern.
Export zone/flow
Import zone/flow
High risk roads
Congestion
Sources: National Freight Demands Study; MoH Deprivation Atlas; KiwiRAP; Tourism Research Council database
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New Zealand Automobile Association
2.0 Change within New Zealand
Predicting the future in detail is impossible. But if one stands back far enough some long term trends become clearer. The spikes and sags blur into a trend-line which can be surprisingly constant. In the following pages we look at New Zealand’s predicted demographic trends, economic trends, technological trends and our ability thus far to respond. What emerges, we think, is that the challenges before New Zealand over the next 15 to 20 years are considerable and that business-as-usual is not an option which will keep pace with the world that is emerging around us. Population drift is putting excessive pressure on Auckland and the aging population is unlikely to result in reduced demand for transport. While we may expect the recession to last four years, past experience shows that even taking this into account the long term growth rate can be expected to be higher than is currently being projected by the Ministries of Transport and Economic Development, which have been far more pessimistic than private sector forecasters. New technology is developing all the time and while revolutionary transport technology is unlikely the impact of improved tracking and communication technology cannot be underestimated. Finally we need to examine why New Zealand appears to be stuck in the slow lane when it comes to national competitiveness through infrastructure investment. Contents of this section
Population/vehicle trends
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The drift north can only exaccerbate existing pressures. The increasing longevity of New Zealanders will create new ones.
Economic trends
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The current crisis is certainly significant. However New Zealand has bounced back from deep recession before with surprising resilence
Technological trends in domestic transport
p9
Transport is undergoing a period of unprecedented change. Core to the transition is information and communications technology.
Deep policy settings
p10
New Zealand’s transport infrastructure reflects a culture of incrementalism. The result is high costs and slow progress.
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Keeping New Zealanders Moving
2.0 Domestic Population and Mobility Trends to 2025
Current projections strongly suggest today’s infrastructure is insufficient to meet the challenges posed by the next 17 years of growth - especially in the North. Demographic and age distribution shifts do not suggest there will be any diminishing demand for transport services. Indeed there is good reason to suppose such trends will only increase as people live longer and combine expectations of independence with demand for personal security.
Applying current vehicle ownership rates to Statistics New Zealand population projections for Auckland gives some indication of the scale of the growth problem confronting our largest city. Today the city is home to more than 780,000 cars. If Auckland grows slowly it will have to accomodate another 125,000 by 2026. If it grows quickly the number is another 375,000, while the middle rate is 250,000. As Auckland can barely cope with the vehicles it has now, it is obvious investment is essential. Change in Age Distribution to 2021
New Zealand’s population is projected to age with an increasing proportion of “empty nester” families toward 2021. Older people living longer will still want to enjoy the benefits of automobility but will be at greater risk due to increasing frailty and health-related issues. Hours per Week Spent Travelling
source: MOT travel survey
Statistics New Zealand high (green) medium (blue) and low (red) population growth projections show much higher growth in the North than in the South.
Population growth rates by region to 2026
If we assume car ownership is approaching saturation today then human population is a good proxy for vehicle numbers Transport Strategy Targets The New Zealand Transport Strategy’s approach to personal mobility is to set targets for mode share in line with the overall objective to halve Greenhouse Gas Emissions from Transport by 2040. These targets include: • Increase walking, cycling and other active modes to 30 percent of total trips in urban areas by 2040. Currently 16% of all trip legs ( where a leg is part of an overall trip e.g walk to the bus stop, catch a bus, walk to destination). • Increase use of public transport to seven percent of all trips by 2040. Currently this is 3% of all trip legs. If the Strategy is interpreted in terms of trip legs this effectively means people choosing to walk or use public transport on twice as many occassions as they do now. If it is interpreted as entire trips then the target is even further removed from current trends. years
The increase in travelling time is as much an indicator of congestion as mode preference.
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New Zealand Automobile Association
2.1 Domestic Transport - Economic Challenges to 2025
While the current economic crisis must unavoidably delay national development, in the longer term New Zealand’s position in the world is enviable. Our principle advantages are low population density, intensifying agriculture and a rapidly developing market in Asia and India. If past experience is any guide this suggests that freight volumes will double by 2025. Most of this additional freight will travel by road, although rail and coastal shipping are important alternatives for heavier commodities needing to be transported over longer distances. There is little doubt that every mode will be required if we are to meet this daunting challenge. Economic Growth Projections - A Contentious Issue
Tourism Projections - pressure from overseas
Despite the 1989-1993 recession, growth for the period 1989 to 2004, in fact, averaged 2.99%. Despite this MoT has based its GDP projections on a value of 2% while MED has based its energy projections on 2.5%. Freight growth has typically out-paced GDP for the simple reason that the sectors that grow faster than average require more transport. Studies have proposed a variety of scaling factors from 1.96 (NZIER), 1.4 (TERNZ), 1.4 down to 1.15 by 2040 (MoT). In terms of demand growth this makes the MoT the most optimistic (that the freight task can be met with existing infrastructure) and NZIER the most pessimistic. Various attempts have been made to forecast future domestic freight volumes. The National Freight Demands Study 2008 identified two thirds of current freight volume (but not value) moved. Based on that study’s findings mined and quarried material accounts for 30% of the commodity volume by tonne-kilometres moved; forestry, paper and timber accounts for 20% ; dairy 10%; other farming and horticulture 10%. But as these numbers are based on two-thirds of the total this means roughly a half of today’s freight volume is still ‘other’ or unidentified. Currently economic prices provide a clear incentive to land use change toward dairy from forestry and meat farming. However Government policy is a significant driver in freight demand. Increased expenditure on infrastructure will have implications for quarried material volumes while climate change policy may have highly significant implications for the forestry industry, the cement industry and the farming industry which are sensitive at the margin. Based on the experience of 1989-2004 the AA suggests a figure of 3% GDP growth to 2025 with a 1.4 scaling factor for freight or 4.2% freight growth. This means it will double by 2025. This recognises the possibility of negative growth years in the immediate term but anticipates a recovery based on New Zealand’s geographical proximity to rapidly growing and resilient markets. As a reality check this is still less than the historical 1988-2004 average for transport growth but is more or less in line with the TERNZ projection.
Current Levels
Tourism Research Council projection
source:Reserve Bank of New Zealand
Quarterly Growth 1989-2004
AA projection based on IATA and Japanese Aircraft Development Corporation forecast long-term growth rates
While the history of international tourism inflows has been marked by the rise and fall of various target markets the overall trend has been an inexorable increase in visitor numbers. At the current rate of 3.5% per annum the number of international visitors can be expected to reach around 4.5 million per year by 2025. While airport and port capacity will require significant expansion and rethinking it must be pointed out that the attractions and ancillary businesses these visitors will be drawn to will still rely on domestic tourists who currently out-number international visitors by a factor of 2:1. Energy Projections - Efficiency vs Growth
MED and MoT forecasts project a 2.1% per annum increase in diesel and a slight dip in the consumption of petrol over time. AA observation of the period between 2004 and 2008 has found transport diesel fuel growth has averaged 0.7% and petrol growth 0.6% per annum. Over the medium term diesel consumption will depend on economic growth, while petrol growth will depend on population and demographics. While fuel efficiency of vehicles can be expected to improve steadily the impact of the trend toward electric drive-trains will not be felt until after 2030. Perhaps the most interesting fact from the 2004-2008 series is that despite diesel prices tripling and petrol prices doubling during that period demand for fuel has remained fairly constant.
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Keeping New Zealanders Moving
2.2 Domestic Transport - Technology trends to 2025
While international transport technology developments are focused on the reduction in payload costs per kilometre the changes anticipated in domestic technology are far more involved. Across all modes the increasing role of embedded Global Position System chips in technologies such as cellular phones and navigation and communication systems is crucial to understanding future development. In land transport vehicle design is transitioning from mechanical drive-trains to electric drive-trains with hybrid intermediate steps such as the Toyota Synergy hybrid engine and Electronic Stability Control imposing electronic control over a mechanical drive. Embedded intelligence in vehicles is not only supplementing the driving or flying task but in some applications actually replacing it. It is also allowing for the creation of vehicles such as the Segway able to balance in ways previously considered impossible. In the longer term the electric drive-train will dominate with only the original source fuel still at issue. Tracking technology becoming ubiquitous The Global Positioning System is gradually embedding itself in every aspect of our lives. According to ABI Research and Berg Insight, GPS will become the standard function of cellular phones by 2012. Already 10-15% of heavy transport operators use GPS-cellular fleet management systems to reduce their Road User Charge costs and improve operational efficiency. The technology is also used to monitor road congestion to provide travel-time forecasts and suggest route changes and to enhance vehicle security by providing tracking of stolen vehicles.
The use of GPS transponders for air-traffic control (ADS-B) in addition to radar will allow for greater air traffic densities and automation of air traffic control. Vehicle technology in transition
IBM’s Automotive 2020 study
RFID labels are read by a remote scanner to allow shippers to keep track of consignments even when these are stacked
The combination of GPS and (RFID) technologies allows for huge improvements in the ability of shippers to track and trace freight.
Short Term Technology Improvements Direct injection and lean burn Variable valve actuation Engine size reduction + turbo/super charging Dual clutch transmission Engine off at stop Engine off at stop plus regenerative braking Electric motor assist Reduced friction components Lightweight shell Reduced resistance tyres
Radio Frequency ID tags are already used to identify vehicle parts for assembly and for automated security applications in ports and airports.
Efficiency Saving Improvement 10-13% 5-7% 10-15% 4-5% 3-4% ~7% ~7% 3-5% ~10% 2-4%
Cost per vehicle ($NZ) 600-1200 525-750 450-900 1200-1800 300-600 1000-1350 ~3000 ~0 750-1500 150-300
While completely electric cars will remain a novelty for Source: UK Government King Review the foreseeable future the overall trend toward electrification is irresistable. Hybridisation will play an increasing role in this transition. Vehicle manufacturers believe they have gone about as far as they can to improve vehicle ‘crashworthiness’. The next stage is collision avoidance. This involves equipping vehicles with radar and intelligence to avoid collisions. Such technology is already available in luxury vehicles but will gradually permeate the entire fleet. Autonomous vehicles on the way Fully autonomous vehicles are no longer science fiction. These Kohmatsu trucks working in a mine in Chile do not require drivers. The US Congress has required the US Army to have 1/3 of its trucks robotic by 2015. In the air the combination of low cost computing and model aircraft has created a plethora of robot surveillance aircraft able to patrol for hours longer than human crews.
Vehicles in new places Although the Gibbs Aqada will be outside most New Zealanders’ price range the technology is potentially a paradigm shifter. Another New Zealand innovation, the Martin Aerospace jetpack is another expensive toy which could potentially change transport futures. At four times the price of a jetski it will still attract some.
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New Zealand Automobile Association
2.3 National Competitiveness and Transport
The New Zealand Transport Strategy is unique among documents of its kind in that its primary objective is not national competitiveness but reducing transport greenhouse gas emissions by 2040. Even the British transport strategy - which is far from silent on climate change - still retains an overwhelming focus on economic development first and foremost. With all policy cascading from the Transport Strategy this fundamental objective has become embedded in the entire process of transport decision-making from central to local Government. While it is always tempting to attempt to maximise return on capital for the State the real issue is what investments will lead to the greatest added value in economic activity and hence fiscal return? In 2004 The Allen Consulting Group in conjunction with Infometrics found positive fiscal return for four packages of roading projects. Despite this fiscal return is not part of the Economic Evaluation Manual used to assess the benefit of roading projects. Moreover in recent years the targets of the Transport Strategy have largely replaced economic rationalism in the manual.
Transport barriers Airports Ports
Spatial Strategy In its research into transport strategies the AA found that internationally many transport strategies were designed to distribute economic advantage spatially around the nation. France is a nation that has outperformed the OECD in growth and has pursued a deliberate strategy of breaking barriers. While there are benefits from concentrating economic activity in one centre managing congestion then becomes the primary concern of planners. New Zealand has adopted a spatial strategy of Northern concentration rather than distribution.
Consent Cycles limit what can be done in 21 years
Studies by Adrienne Young Cooper and the Ministerial Review on Road Construction Costs have found the consent cycle for an average road is seven years. But It would be wrong to assume the problem of planning cycles only applies to roads. It applies equally to rail, airport and port construction. The issue of delays is simply better understood in the context of roading. Most nations have recognised the benefits of reducing planning cycles as a competitive tool.
Discount Rates and Transport Goals The principal goal of the New Zealand Transport Strategy is to halve domestic greenhouse gas emissions from transport by 2040. To do this it sets a series of targets on the ways people will get to work, or shift freight by this time. The six-yearly Government Policy Statement translates these goals into interim targets which underpin project funding. At the same time however the Treasury sets a high (8%) discount rate. This contrasts with the Official Cash Rate which is now 3%. The high discount rate favours projects which will produce the most immediate return but discounts the value of investments which have a longer life. This locks New Zealand into a shortterm transport outlook which is why infrastructure is built with a short design lifetime in anticipation of high levels of maintenance expenditure.Curiously a high discount rate actually favours the New Zealand Transport Strategy because it favours high levels of annual operational expenditure on maintenance and passenger transport instead of longer term infrastructure investment expenditure. Ports
Airports
Railways
Roads
Public vs Private Investment Internationally Governments have endeavoured to raise capital for infrastructure development through full or (more usually) partial privitisation of transport assets. Experiences have ranged from positive to disastrous depending very much on the quality of the deal. In many cases transport infrastructure operates in a virtual monopoly while part of an interconnected network. Private capital naturally wishes to obtain monopoly benefits while maximising return on capital which can be to the detriment of network optimisation. It is simply not the case that corporatisation or privitisation (partial or full) will result in optimal allocation of monopoly resources. Taxpayer liabilities must be watched closely.
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Keeping New Zealanders Moving Why do New Zealand Roads Cost So Much ?
Japan
Phillipines
Italy
Project Country Location Alpurt B2 New Zealand Rural Costanera Norte Chile Urban Egnatia Odos Greece Rural Tagus River Crossing Portugal Urban M4/M6 Ireland Rural North Luzon Expressway Phillipines Urban Senai Desaru Expressway Malaysia Urban
Cost (US$m) 240 442 9,000 243 418 371 419
Length (km) 7.5 30.4 1,390 17 39 84 77
Bridges (km) 1 2 40 11.9 1.8 4 2
Tunnels (km) 0.69 6.7 49.5 0 0 0 0
Order Completion Years Year Year 2002 2009 7 1999 2004 5 1996 2008 12 2004 2007 3 1999 2006 7 2000 2005 5 2004 2008 4
Cost per km (US) $32m $14m $6.4m $14.3m $10.7m $4.4m $5.4m
Km/ yr 1 6 115 5.6 5.6 16.8 19.25
While it would be pleasant to imagine that New Zealand road construction is competitive, cost comparisons show otherwise. Comparing projects in nations with similar levels of per capita income shows the inflated nature of construction costs in New Zealand. Engineers in other nations seem to be able to deliver more for less in far less time. Using Portuguese or Chilean rates Alpurt should have taken two years to build and cost US$105m (less than a half of its actual final cost). The excessive costs of New Zealand road construction cost the country’s economy and lives. The Ministerial Review of Road Construction Costs (see page 13) made numerous observations on the process of road construction but its refreshingly frank report was overshadowed by agency reshuffling. National Land Transport Programme Expenditure 2000-2008
Understanding Surface Costs and Charges The Understanding Surface Costs and Charges Study is intended to determine how costs are allocated to users of the transport system. Key objectives of the project are to internalise external costs such as air pollution and capital opportunity costs. In the case of transport air pollution the most important source is diesel sulphur content set by Government standard. Recovering capital opportunity costs make no sense with pay-as-yougo funding and the value roads add. In most cases external costs are borne by society and Government has no business intervening other than by resolving its own internal policy contradictions. The study is connected to the objective of the 2040 Transport Strategy to reverse current mode share.
While the construction budget for roading has increased significantly so too have maintenance and passenger transport costs. Indeed maintenance costs on both the local and state highway networks have doubled in eight years - an increase of around 8.75%. At the same time expenditure on “other” items has quadrupled. The net result is that while before 2003 construction was around a third of the total land transport budget, for all the increases it is now only 40% of total annual expenditure. This is almost entirely a consequence of asphalt construction compared to concrete. Unlike Japan, Italy and the Phillipines, New Zealand uses lower cost high maintenance construction. Growth
The NZ Transport Strategy seeks to reverse actual mode growth by favouring some modes (green arrows) over others (red arrows)
Decline Competition
Monopoly 11
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New Zealand Automobile Association
3.0 Selected Issues in New Zealand Transport
There are many issues surrounding transport in New Zealand. In the short term the most pressing issues surround the Government Policy Statement and its interpretation by the New Zealand Transport Agency and the Regional Transport Committees. However the Government must also deal with the fact that in all liklihood the 2010 Road Safety Strategy Targets will not be achieved. Taking a longer view, however, we believe there are some essential areas for further work which will have the greatest impact on the development of our transport system. The Automobile Association is a long-standing partner of Government in matters ranging from tourism to driver licensing. The AA welcomes any opportunity to represent its Members interests to Government in order to facillitate policy with the greatest posible level of public acceptance. Contents of this section
Road safety issues For many New Zealanders the risk of death or serious injury is greatest on our roads than anywhere else. This need not be so.
Transport myths
Economic evaluation
Construction costs
p16
New Zealand road construction costs four times more and takes several times longer than in other nations. We need to know how to fix it.
Road user charges
p17
New Zealand’s transport strategy was developed in haste and is measurably more concerned with sustainability over competitiveness - in contrast to other nations.
p18
We need to take another look at the way we charge for roads both in the short term and into the future.
Transporting NZ to 2026 New Zealand has done a poor job of visualising where it wants to go in
p15
Investing in transport infrastructure is not simply a sop to unemployment. Its good business fiscally for Government. New evaluation tools are needed.
Strategic errors
p14
Over the years a number of claims have been made which simply don’t stack up. We look at the flaws in the cliches..
p13
p19
concrete terms of transport development over the medium term. We offer one potential such view.
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Keeping New Zealanders Moving
3.1 Transport Safety - A Tolerable Level of Pain and Grief ?
There is no transport mode as significant in causing pain and suffering as land transport. The New Zealand Land Transport Safety Strategy to 2010 was formulated in 2001 and aspired to achieve British levels of transport safety by the end of the decade. Despite the low road toll of 2008 this is highly unlikely to occur. In fact we are likely to kill 100 more people than the target and hospitalise 5,000 more. The social cost of this is estimated at $4.5 billion. The state-of-the-art thinking in transport safety comes from Sweden where it is maintained that it is not ethical to countenance killing anyone at all with a Government run system. The Swedes lead the world with the notion of a “failsafe” land transport system whereby even in the event of human error the system reduces the consequences from catastrophy to educational experience. The safe system is based on the concept of “safer drivers in safer cars on safer roads”. Engineers in both Sweden and Japan have made significant strides in improving vehicle safety characteristics and road design. The AA supports this approach through ANCAP car safety standards and KiwiRAP road assessment. By contrast New Zealand’s approach has been enforcement, spending $250 million a year on road traffic policing to issue between $160 and $180 million worth of fines of which, on average, $110 million is collected. Compliance levels on speed and seat-belts average 90% but there has been a slight rise in alcohol non-compliance after significant gains since the 1980s. Despite this Duignan found that most of the road safety performance improvement over the past decade were attributable to safer automotive designs. This is not to denigrate Police efforts but to simply point out that Police are not generally present to prevent crashes - they deal with the consequences. The largest and most expensive group in our crash statistics are young people. While many decry our young driving age research shows that young people driving under adult supervision are in fact among the safest drivers on the road. Extending the period of supervision and changing the emphasis from skills training to judgement education are all part of the proposals for change to the Graduated Driver License Scheme, endorsed by the AA. There is evidence that driver education programmes can mitigate for the lack of frontal lobe development in drivers under 25.
Graduated Driver Licence System
Alcolocks
Hazards
Rumblestrips
SWATT 2010 proved that “Rumblestrips” are an inexpensive way to greatly reduce our most common crash type.
Cell phones Repeat drink-drivers Waikato University are addicts and cannot research has confirmed be trusted to exercise crash risk increase from judgement. Alcolocks and the use of a cell phone compulsory treatment while driving is similar are all needed to break to alcohol consumption. through the deadly habit While a ban on handhelds which causes as much is a start, education is the havoc on roads as off. only lasting solution. If the pole had been frangible this man would not be fighting for his life. In the United States a collision with roadside furniture would see the utility sued. Here the pole will be replaced, and the ACC will pick up the pieces. While exemplary in many ways the flaw of the ACC “no fault” legislation is that it shields organisations who could do more to protect the public. The public is largely unaware of the number and danger of roadside hazards close by state highways and local roads. The AA in conjunction with NZTA has begun a road safety auditing process called KiwiRAP (Kiwi Road Assessment Programme) to improve this. Median barriers
Low cost wire-rope median barriers stop collisions. They have stopped trucks while Monash found no extra risk to motorcyclists.
Right-hand rule
ESC
Adopting international standards for driving rules, as well as signs helps reduce confusion as the driving public becomes international.
Electronic Stability Control measurably improves crash avoidance. While expensive it is a lifesaver. 13
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New Zealand Automobile Association
3.1 Busting Transport Myths
In recent years a number of myths have become established as ‘fact’ among New Zealand transport planners. Many have little basis in reality and are actually codified prejudices. It is essential that these myths are challenged and that assertions are anchored in relevant and verifiable study. Myth 1: You can’t build out of congestion.
Myth 4: Rail will get trucks off the roads
This myth seems to stem from the British experience with the M25 ring road around London. However research by the Texas Transport Institute has found that congestion in US cities is worst in those that have spent the least on construction and reduced by those that spend the most. Despite being famous for cycling the Dutch are also inveterate motorway builders.
Rail is excellent for hauling heavy loads long distances on a regular basis. Unfortunately this is simply not the kind of freight task that has been growing in New Zealand. Work by TERNZ and the National Freight Demand Study strongly suggests that much of the work performed by trucks can only be performed by trucks. This is partly due to just-in-time logistics but also to consumer demand for competitive, more responsive service.
Myth 2: Public Transport is Greenest
Myth 5: Urban Density improves Efficiency
Public transport is very green when it has 100% occupancy. The problem is that it usually doesn’t. An empty bus is not only an unnecessary emitter itself but also delays other traffic. The problem with public transport is its lack of responsiveness to demand. While public transport is popular as a solution for others it is rarely first choice for commuters. Improving responsiveness both to patrons and funders is crucial to the success of public transport. While public transport has a role it is notable that Melbourne’s 2020 goal is 20% mode share of commuters - double its current level. This still leaves 80% using other modes. The Council of European Transport Ministers found PT one of the least effective ways to reduce Greenhouse gas emissions.
The problem with this assertion is that it measures the outcome in terms of only one variable - transport energy efficiency. People do not live their lives merely to reduce their transport consumption. Urban density may reduce commute energy consumption but demand for energy for clothes driers, entertainment systems and air conditioning increases. And while the commute may be substituted with walking or public transport the pressure to escape leads to increased transport use during weekends. The main effect of increasing urban density is to inflate urban land values. In many parts of Europe the alternative is peri-urban villages which have park-andride access to public transport but preserve the benefits of lower density living - especially for children.
Myth 3: Peak Oil is upon us. The 2008 oil price spike was certainly not a sign that we are running out of oil. If anything the spike triggered the premature development of alternative resources which will now suffer in the low price environment we are experiencing after the spike. Every oil price spike since World War Two has been the result of geo-political tension. Starting with the Yom Kippur War (1973), the Iran-Iraq War (1980s) and most recently the US-Iranian nuclear stand-off. While oil prices can be expected to increase over time there is little need for panic.
Myth 6: Transport Education needs Enforcement The European Council of Transport Ministers concluded that driver education offered one of the best opportunities for Greenhouse gas reductions. Moreover driving to reduce fuel consumption also improves safety. The success of the anti-drink driving advertising is a seachange in public attitudes not just fear of enforcement. Public education campaigns on domestic violence, smoking, depression and mental illness are not based on enforcement. It is inconsistent to suggest that public education needs enforcement only for road safety.
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Keeping New Zealanders Moving
3.2 Evaluating Transport for Growth - The 2004 Allen Report
The Allen Consulting Group is a well respected international economic consulting agency based in Melbourne Australia. This organisation had been instrumental in convincing the Victorian Government of the merits of investing in its transport infrastructure to improve the “connectedness” of major roads in Melbourne. The results of the investment lived up to predictions resulting in significant growth in Victoria, which had been stagnating. The New Zealand Automobile Association commissioned Allen Consulting and Infometrics to carry out an economic evaluation of roading projects in Auckland, Tauranga, Wellington and a passing lane strategy. The evaluation would use the same inputs as those used in the Land Transport Agency Economic Evaluation Manual but would use the Infometrics ESSAM (Energy Substitution, Social Accounting Matrix) general equilibrium model to calculate the economic ( and most importantly fiscal returns on borrowing $2.4 billion at 6%. The model concluded that the economic returns were significant and that the investment was fiscally positive - i.e if the Government looked at the projects purely in term of its own fiscal benefit they were worth doing. Each dollar on the Tauranga package Each dollar on the Western Ring Route generated $1.23 in immediate economic return generated $1.37 in immediate economic return
Connectedness The Allen Consulting methodology emphasises that physical connectedness is required to obtain economic value from large transport investments
Each dollar on the Passing Lanes generated $1.41 in immediate economic return
Allen Report Results The Allen-Infometrics study evaluated four projects. Passing Lanes: the construction of 402 passing lanes in accordance with Transit New Zealand’s policy to provide a passing lane every 5km for roads carrying 4000 vehicles per day. This had a capital cost of $213 million. The Auckland Western Ring Route: the completion of State Highways 18 & 20 from Manukau, through Mt Roskill and Avondale to reconnect with State Highway 1 south of Albany. This had a capital cost of $1.29 billion. The Tauranga Strategic Roading Network. A programme of twelve inter-related projects providing a ring-road linking Tauranga, Mt Maunganui and the Port of Tauranga. This had a capital cost of $482 million.
Auckland’s disconnected network Motorways built or underway Motorways needed soon
Rail links Busway Ferries
Motorways not under active consideration Motorways that may be needed eventually
Traffic doubled in 19 years
3.68% year on year growth d Tren
The Wellington Regional Land Transport Package: a mixture of roading, public transport and walking and cycling projects. This had a capital cost of $415 million. All four projects were assumed to be funded by Government borrowing at an interest rate of 6% and completed by 2012.In total the study concluded all four projects would cost $2.4 billion in total capital outlay but increase New Zealand’s Gross Domestic Product from 2012 by $1 billion per year. Exports would increase by $158 million per year. In addition to maintain the same levels of expenditure the Government’s tax take could be reduced by $467 million per year even while covering the costs of interest payments. Put another way these figures also represent the drag on the economy of not making this investment. Lessons still to be learned The Allen Report demonstrated that investment in transport infrastructure is not only economically stimulatory but fiscally good business for Government. Fiscal economic evaluation of transport investment projects is still not a feature of an evaluation system oriented towards small maintenance projects. 15
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New Zealand Automobile Association
3.3 The 2007 Ministerial Review on Road Construction Costs - Unfinished Business
The AA had a significant role in calling into question road construction costs in New Zealand. This was based on the observation that the cost per kilometre of completed highway in New Zealand was (and remains) significantly greater than that observed in Europe, SE Asia or Australia. The Minister of Transport therefore commissioned an independent review of Roading costs in March 2006. Its report was completed in August 2007 and released in February 2008.
“ Several of the case studies commissioned by the Advisory Group indicate that changes in project scope through the investigation, design, and, to a lesser extent, construction phases have been the major contributor to increased cost forecasts. Evidence, including comment from both Land Transport NZ and Transit NZ, indicates that scope containment has in recent years been a lower priority when balanced against the time imperatives for early construction starts.
“ “ Ten-year forecast maintenance expenditure levels have been increasing significantly faster than inflation
page 5
HED S I IN UNF SINESS BU
since 2003/04 for both local roads and state highways. The reasons for increases in forecast expenditure primarily relate to higher forecasts of heavy commercial vehicle growth. The increased expenditure has generally been expected and allowed for in most maintenance categories, but cost increases have been most noticeable in area-wide pavement treatment. This is primarily related to the traffic control and other costs of working in an urban environment and the increased use of asphaltic concrete on heavily trafficked road networks..
“
page 6
“ In New Zealand, overall competition levels for both road construction and maintenance are less than ideal. However, there is no evidence that this in itself
has increased input costs significantly. Capacity constraints in a buoyant market, rather than a fundamental lack of competition, are considered to have been more important in driving recent cost increases.
“
page 6
Concerns Among the Ministerial Review’s many findings was the observation that there was a disjunction between the New Zealand Transport Strategy and the Planning and Expenditure process. This was seized upon by the Government and led to the merging of Transit and Land Transport New Zealand to form the New Zealand Transport Agency. The fundamendal conflict however could not be resolved by simply merging Government Agencies. The problem in essense was that the New Zealand Transport Strategy was (and is still) not fundamentally concerned with value for money in any economic sense. The definition of “Value for Money” is now an operational one: that is the best use of money to achieve Government Policy Statement objectives - regardless of whether these are economically sensible or not. Market discipline core to the Benefit Cost Ratio process has been replaced with policy discipline which discounts the benefits of automobility regardless of actual market preferences. An example is the recent change to the travel time values used to calculate a BC ratio. These are now set in principle the same for motor vehicle users, public transport users or walkers or cyclists in stark contrast to actual survey findings. But in addition to striking out at a tangent to the Review’s findings in order to carry out agency reform, the question remains open as to whether the main findings and recommendations of the Review have actually been addressed. The problem of project scope creep remains as valid today as ever and will only improve if amendments to the Resource Management and Local Government Acts are put in place. The problem of maintenance cost escalation is also highly significant. In theory the benefit of ashphalt pavement is that it has low construction costs but high maintenance costs. New Zealand,however, seems to suffer from high construction costs and high maintenance costs. The Review team carried out an excellent examination but its findings came second to a structural “solution”. The AA recommends the Government return to the original Review to seek value-for-money solutions. 16
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Keeping New Zealanders Moving
3.4 Update of the New Zealand Transport Strategy
The Automobile Association’s letter to the Ministry of Transport on its update of the New Zealand Transport Strategy could not have been plainer. The development of the Strategy was rushed, ill-considered and the result does not stand any scrutiny at all when contrasted with similar strategies from comparable nations. The AA believes that a new Strategy, and a new Government Policy Statement on transport, are essential. Because of the importance of this document, the NZAA has a number of serious concerns regarding the process being used for its development. The discussion document was released as a discussion document for consultation on 11 December 2007, with a deadline for submissions of 15 February 2008. Given the annual New Zealand summer close-down, this, in effect, allowed a minimum of time for submitters to consider this very important document. The NZAA was unable to follow our full policy development process with our 17 Districts due to the time constraints. The NZAA was advised on the 5th of February that the deadline for submissions had been extended to 29 February but also that the document was not an update but was now classified as a full rewrite of the New Zealand Transport Strategy. Even with an extension of the submission deadline until 29 February 2008, it has taken an enormous amount of our available time to develop a considered and thorough response. It has also proved to be an extremely difficult task to respond to the discussion document, this is largely due to the quality of the discussion document itself – and the need for submissions to provide the substantive content that is required to have a final strategy that is robust, strategic and well accepted by the industry. We are particularly concerned that the Draft does not meet the NZTS criteria of being Collaborative, Accountable and Evidence-based. We are even more concerned that the requirement to develop policy which is Collaborative, Accountable and Evidence-based has not been included in the Strategy update. This leads to a less rigorous and contestable strategy that in the NZAA’s view does not include the analysis and completeness required. In our view, the draft discussion document does not constitute a near-finished product. Submitters will be finding it very difficult to comment on targets for which we have not been provided with the background information as to why they are appropriate and achievable. In the absence of this information, submitters have to do their own analysis, which would take more time and resources than many have, and also within the timeframe given. Together, these two issues give rise to the distinct possibility that the final strategy will be significantly different than that released on 11 December. This seriously compromises the purpose of the consultation. Due to these concerns that the NZAA has regarding the process used for developing a revised NZTS we believe that the correct course of action is for the submissions received to be analysed by the Ministry of Transport, and further work and analysis undertaken to ensure completeness. A new draft strategy should then be issued for a second round of consultation. This, of course, means that the target date for adoption of the strategy currently set for April 2008 will need to be deferred. - AA Submission (Feb, 2008)
A Cascade of Priority The New Zealand Transport Strategy is referred to directly in the Land Transport Management Act. It governs what can be put in the Government’s Policy Statement on Transport which in turn governs what Regional Councils can put in their Regional Transport Strategies. While in most nations such an influential document is generally based on research and fact-finding toward a concensus view reached through a multi-party agreement. Ireland and Japan are the best examples of this. But in Ireland, Britain, Japan, Norway and Victoria the Transport Strategy is seen as an instrument of economic competitiveness. This may include an element of climate change policy but first and foremost the ability of a nation to move people and freight efficiently and safely are the drivers of foreign transport policy. This is simply not the emphasis of the New Zealand Transport Stategy. The New Zealand Transport Strategy to 2040 was a policy-making rush to cement in the target of halving transport Greenhouse Gas emissions by 2040. The research and fact-finding needed to make such a Startegy work is now driven by its ideological imperatives. Moreover the Strategy makes policy assertions which are very much opinions rather undisputed fact. Like the original 2010 Stategy It is, to a large extent a policy statement rather than a Strategy. The AA is unhappy that such an important document has become the subject of ideology rather than a balanced examination of our issues and options.
The AA carried out a thorough analysis of five published Transport Strategies from other nations. The nations were selected either because they were comparable to New Zealand geographically or in terms of population and because they had published their strategies in English. The strategies were compared to the New Zealand draft against all the New Zealand criteria. In general terms they were all better than the New Zealand strategy. The State of Victoria has an extensive transport strategy predominantly designed to improve the State’s economic standing. Emphasis on livability and reducing ‘red tape’ abound. Ireland’s Strategy is part of a concensus plan for Ireland incorporating economic and social development. There is a strong emphasis on infrastructural development with billions invested Japan’s strategy is part of a long term economic plan to transfom the economic superpower into a post-industrial nation. The plan emphasises the environment as part of economic growth in extremely practical ways. Oil rich Norway’s strategy has a environmental flavour but has concrete policy where New Zealand has aspirations. It nevertheless remains strongly an economic and safety driven document. New Zealand has almost as many transport strategies to cover each mode as Britain but Britain’s strategies are far better researched and much more practical. While Britain’s Government drives climate change policy globally, her transport strategies remain firmly driven by competitiveness in a European context. All is subordinated to this.
Textual Analysis The AA carried out a textual analysis of the NZTS draft and found it was highly biased by mode and by objective. Its principle concerns were quantitatively shown to be rail and emissions. Key issues such as competitiveness and equity were, and remain under-represented in the strategy 17
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New Zealand Automobile Association
3.5 Ministerial Review of the Road User Charges System
The hypothecation of excise to the National Land Transport Programme created a significant change in the balance of cost burden onto motorists. The AA believes this imbalance is not justified and should be rectified. The 2008/9 National Land Transport Programme allocation has seen a change from the 2007/8 Programme in funding share from Road User Charges slip from 45% to 37%. Under the current cost allocation model this constitutes a subsidy worth $744 million to RUC users. Alternately it means Excise users are paying approximately 8.3 cents per litre too much and RUC users are under-paying by $289 million. The first figure assumes the NLTP proportions are fixed and the total programme climbs from $2.4 billion to $3.1 billion. The alternative is that the NLTP programme funding is fixed at $2.4 billion. The AA believes that increasing the National Land Transport Programme would be a sensible as the Government moves to increase infrastructure spending. Making RUC avoidance impossible can do this. Rationalising Excise Moving diesel taxation from a road user charge to an excise reduces administration costs for the majority of diesel users. It would also eliminate the tax disadvantage to the latest generation of small ultra-efficient diesels .Every other jurisdiction in the world has systems of claim-back (for example linked to GST returns) and non charge for offroad users. A November 2008 survey of 809 AA Members found 73% of AA Members either supported or strongly supported the suggestion. That said the concept of introducing an excise to diesel merely throws into stark relief the inconsistency of the fuel excise regime. For example a Ford Falcon using petrol and one using LPG have precisely the same road user costs. But one is subsidised and the other is not. In the presence of a carbon charge this is irrational. Fuel Tax Petrol* 43.229 cents per litre Diesel / Biodiesel B10 $36 per 1000km plus 0.375 cents per litre LPG* 10.4 cents per litre CNG* 10.5 cents per litre Ethanol e10* 38.976 cents per litre Ethanol e85 (notional)†*7.0836 cents per litre Electric $36 per 1000km (RUC) Hydrogen Not yet stipulated *includes PFML & LAFT, excludes ACC levies, † e85 is not currently allowed under fuel specifications
Flex-Fuel Ford Focus (e85 compatible)
Future Proofing Road User Income While switching to a diesel excise is a useful interim measure in the longer term the transition from liquid fuel direct drive to electric drive will confound this form of tax collection. Already trucking companies are using GPS navigation systems to claim back off-road milage from odometer based road user charges. It makes good sense to piggy-back on this technology by specifying an electronic road user charge system for implementation by private network companies to collect the revenue gap between excise and the road wear costs created by larger vehicles. Heavy users This has two benefits. First the must pay the technology is developed in the private sector so no “big brother” connotations gap worth about $441 apply. Second it can be expanded later as liquid fuels are replaced by electric. million. 73% of AA Members support switching from RUC to a diesel excise.
Summary of the AA Proposal
40c a litre excise on all fuels ($2b) nett non-levied and rebates via GST returns • Registration on vehicles ($217m) Vehicles over 6T pay distance based simplified and averaged paper RUC or opt for e-RUC ($441m) = NLTP $2.65b 18
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Keeping New Zealanders Moving
3.7 Some Ideas for Transport Planning toward 2030
Imports
Imports
Oil
Exports
The future of New Zealand depends on transforming our economy and the best way the Government can do this is to lay the infrastructural foundations for such transformation. In a time of crisis it is natural to look at what can be done immediately, but we also need to remain aware of the future. As we believe we have shown the rates of growth anticipated internationally and nationally over the next 17 years have the potential to swamp us if we do not look to the horizon. Unlike Asia and Europe New Zealand has done a poor job of visualising what might be based on what we know of current technology and trends and then developing a plan to improve into the future. If New Zealand achieved world standards in its rate of development transport based transformations are achievable.
Exports
Tunnels through the Kaimais and Rimutakas would transform local economies. Built in addition to rail tunnels and all at once the price would reduce.
Tourism
Auckland needs its bypasses and a second bridge. But it also needs to plan ahead intelligently so it doesn’t keep repeating past mistakes. We need to plan ahead now so that we are not perpetually catching up.
Direct flights to Rotorua Exports (oil & dairy)
Ex
po
rts
(C
oa
l&
Ag
)
Exports (logs)
New Zealand needs to upgrade its main highway standard with median barriers, rumble-strips and wider shoulders. Safety need not be prohibitively expensive.
Establishing a ferry terminal at Clifford Bay would increase sailings and reduce costs linking our two main islands more efficiently
Ex po
rts
(D
air
y)
Tourism
Tourism
787 capable airports at Rotorua and in Southland could provide future short-stay asian tourists with access to our iconic attractions, as well as making them more accessible to Northeners.
86% of AA Members believe planting forests is NZ’s best answer to climate change.
Exports (aluminium & ag)
New capabilities using information technology work best when adoption is voluntary and development incremental. That said without low telecommunications cost structures potential benefits will be delayed.
Tourism zone/flow Upgraded main highway
Export zone/flow
New Zealand needs to learn from planning and development agencies in other nations.
Import zone/flow
Expressway, viaducts or tunnels
New Cook Strait route
Sources: National Freight Demands Study; MoH Deprivation Atlas; KiwiRAP; Tourism Research Council database
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Produced by New Zealand Automobile Association Motoring Affairs PO Box 1 Wellington Tel +64 4 931 0000 Fax +64 4 931 9960 http://www.aa.co.nz/about/issues
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