Nats blow $216m (so far) planning unneeded roads that won’t be built

Written By: - Date published: 10:05 am, July 16th, 2012 - 31 comments
Categories: transport - Tags: ,

RNZ is reporting that National has spent $216m just on the investigation and design stage of its Roads of National Significance so far (and that’s only 5 of the 7 projects). Most of it on outside contractors Look, I get this kind of shit can be surprisingly expensive. But nearly quarter of a billion dollars just for investigation and design? With these projects involving a 260km of highways that’s nearly a million dollars per kilometre, a thousand dollars per metre, just on planning!

$216m would employ around 4,500 average workers fulltime for a year. Even if a transport planner is worth the same as a cabinet minister (and I don’t doubt many of them are worth a lot more than this current lot) then that’s still 1,000 person/years of planning work in just 3 years, which would mean that every kilometre of RoNS has had a planner working on it fulltime for 3 years!

Actually, I suspect there’s far less work actually been done than that – the papers on the NZTA website certainly don’t suggest millions of work/hours have gone into them.

The reason the cost is so high is the nature of National’s RoNS programme. The biggest motorway building project in the country’s history, all in the next 8 years. Transmission Gully, I’m told would require all the earth-digging equipment currently in the country, which means that all the simultaneous projects would necessitate importing more equipment at huge cost for a one-off bulge in demand. The strain that trying to do everything at once brings means inflated costs per unit of output. The same will be true with skilled people.

This is a golden era for transport planners where NZTA has an open chequebook and the Government only wants to hear the answers it wants to hear – the country’s entire capacity for road planning consultancy work must be soaked up and I don’t doubt that the government is contracting in foreign consultants too. It’s a classic recipe for inflation. If you were a transport consultant, you would be hiking your rates while the hiking was good too. Hell, the amount we’ve paid them, they’ll all be able to retire in the next couple of years once the work dries up.

By compacting all these projects into a very short timeframe, the Government is stoking sector inflation and we the taxpayer get to pay the price.

That might be OK, if the projects themselves were worthwhile and urgently needed. But they’re not. Most of them don’t make economic sense under the official, optimistic (cf above) benefit cost ratios. They definitely don’t make sense in reality.

And, of course, we know that many of these projects will never be built. The Otaki to Levin Expressway (who knows how much was spent on investigation and design for that but the Wellington Northern Corridor, of which this was part, has had $92m spent on planning) won’t be built. More RoNS will be chopped in the next couple of years too – and then the Labour+Green government will can most of the rest.

31 comments on “Nats blow $216m (so far) planning unneeded roads that won’t be built ”

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  1. Lanthanide 1
    16 July 2012 at 10:38 am

    That $216m includes money spent on the Chirstchurch motorway extension, which is about half way through completion. So your headline is wrong.

    • David C 1.1
      16 July 2012 at 11:01 am

      It would really surprise me if James was wrong.
      Oh wait ! last post of his I read he was out by a factor of 10 on motorway costs too!

    • Tom Gould 1.2
      16 July 2012 at 11:17 am

      So they didn’t spend $216m on consultants? Phew, that’s a relief. If they had, it would have been a huge waste of taxpayers money. How many paper boys paying tax does it take to raise $216m, I wonder?

      • Lanthanide 1.2.1
        16 July 2012 at 11:30 am

        They didn’t spend $216m on “unneeded roads that won’t be built”.

        • Deano 1.2.1.1
          16 July 2012 at 12:03 pm

          How about “spent $16m on unneeded roads that won’t be built apart from some of the unneeded roads, which they’ve half built already because they’re idiots”

          Seems a bit long for a title, lanth,

          • Lanthanide 1.2.1.1.1
            16 July 2012 at 12:52 pm

            I believe the cost-benefit ratio on the CHCH motorway extensions were over 1, and that was before the earthquake. The city is now going to drift westwards, which will only increase the business case for building the road.

            • Colonial Viper 1.2.1.1.1.1
              16 July 2012 at 1:27 pm

              I believe the cost-benefit ratio on the CHCH motorway extensions were over 1

              But limited funding needs to go to projects with the very best payback. And that would require a cost-benefit ratio of at least 2:1.

            • Deano 1.2.1.1.1.2
              16 July 2012 at 1:37 pm

              Time was, and it wasn’t too long ago, that you didn’t build anything with a BCR below 4.

              • Colonial Viper …
                16 July 2012 at 1:45 pm

                yeah that’s about right. Because once the fudge factors in the business case don’t work out as plan it’ll drift back towards 1:1.

                If you start out close to 1:1 the chances of ending up toast are so much higher.

        • mike e 1.2.1.2
          16 July 2012 at 4:48 pm

          The conservative govt in the UK has canned all motorway builds and is investing $30 billion on improving rail efficiency.
          Funny that.

  2. Bored 2
    16 July 2012 at 12:26 pm

    They are building our Cycleway…they just dont realise it. Ten abreast, here we come. It is about the only tangible use for these roads in the mid term future apart from being stock routes to the nearest rail head.

  3. weka 3
    16 July 2012 at 12:42 pm

    Imagine if that $216m had been spent on planning for peak oil.
     
    How much of the planning is being done inhouse (and is this covered in the $216m)? Does the govt no longer have the expertise within its own departments?

    • marsman 3.1
      16 July 2012 at 1:26 pm

      Imagine if that money had been spent on Kiwirail then 200 vital jobs would not need to be axed and possibly the doubling of the cost of Wellington to Auckland fares could have been avoided allowing ordinary New Zealanders to still afford to use the service.

      • Colonial Viper 3.1.1
        16 July 2012 at 1:28 pm

        National has more road consulting mates than railway mates. Hence where the money gets spent.

    • xtasy 3.2
      16 July 2012 at 2:11 pm

      Ha, heard Brownlee on National Radio this morning, admitting such work used to be done by the ‘Ministry of Works’. “We don’t have such ministry anymore”, he conceded, hence they were hiring consultants.

      Naturally he tried to portray it in a way, as if maintaining a ministry for works related projects, which the former ministry was, would cost too much, as too many would be sitting around 24/7 or lean on shovels chatting to each other, thus costing the country more than consultants.

      I wonder, I wonder, since the ‘Ministry of Works’ is no longer, how are we supposed to make an objective cost-benefit analysis now, having no material alternative to look at.

      I fear the NZ public have been conned again just once more, so guess, who will fork out the 200 plus millions for consultants?

      • davidw 3.2.1
        16 July 2012 at 4:09 pm

        The MOW once also built dams and police stations. You wouldn’t want structural engineers designing earth dams or geotechnical engineers designing high rise buildings or bridges. There is merit in the concept of contracting in the specialist skills required fro particular projects particularly when those skills can be used in export work when Government doesn’t require them.

        We now have some very successful multinational technical consultancies in areas like earthquake design and geothermal which would never be earning foreign dollars of MOW was still beavering away dreaming up projects to utilise their skills.

        • weka 3.2.1.1
          16 July 2012 at 5:50 pm

          Are you saying that the MoW didn’t have specialist skills in designing and building roads?

          • Colonial Viper 3.2.1.1.1
            16 July 2012 at 6:55 pm

            They had specialist skills in designing and building EVERYTHING. From state houses, to schools to powerstations.

            These private consultancies, relatively speaking, have N.F.I.

            • weka 3.2.1.1.1.1
              16 July 2012 at 7:33 pm

              Yeah, that’s what I thought.
               
              One big problem with using external consulting companies is where they don’t have direct experience in the location where the road is being built. It makes more sense to have design expertise within the same organisation that does the build.

        • Draco T Bastard 3.2.1.2
          16 July 2012 at 11:47 pm

          There is merit in the concept of contracting in the specialist skills required fro particular projects particularly when those skills can be used in export work when Government doesn’t require them.

          That’s the theory. There’s one problem with that theory – government always requires them. There is never a time when government doesn’t need those skills and so contracting out just ends up costing more.

          Government isn’t just one firm working in a small location for a short time – it’s the entire country where work is always ongoing.

  4. xtasy 4
    16 July 2012 at 2:02 pm

    This is all highly “significant”.

    It is part of the government’s strategy to develop and “build” “roads of national significance”.

    It must be seen in a more symbolic and wider way, because for Key and his faithful cabinet followers this is a major, core project, creating “real” jobs for the boys and girls they try to look after.

    In itself the consultation, planning and financing of the actual material projects are a separate ground laying project with separate huge significance. Yes, maybe the consultations are themeselves a combined, symbolic “road of national significance” type of project. It is the “path” for the Nat ACT government to follow out of purest ideological idealism.

    Pump some money into consultation, hire boys and girls committed to the same cause, look after them and thus “stimulate” the economy and create real, well paid jobs.

    Why can nobody see this?

    It is all with so good and honest intentions. John Key is merely looking after the ultimate benefits of the nation, investing into the future, and this is his or “their” path to it, a “symbolic”, job creating “road of national significance”, stimulating the economy and leading to endless trickling down along its way.

  5. xtasy 5
    16 July 2012 at 2:15 pm

    216 million for expensive consultants, employed to look into matters, make calculations, projections and so forth, about specialist areas they have little or no direct insight in, as they are all outsourced contractors, that is no problem for Key and the government.

    Yet there were no 16 million or so available to keep a public broadcasting channel like TVNZ7 alive.

  6. paul andersen 6
    16 July 2012 at 2:33 pm

    whether the roads needed to be built(some do, some dont) is besides the point, and so is pointless arguing about costs-versus benefits. the real issue here is the amount wasted on consulting. designing roads is NOT rocket science. consulting on this is a scam and a copout by those in power. the ministry of works designed and built amazing roads and bridges with no consultants. its a bloody rort. we all know that many overcharging consultants(in all areas) are former state trained personel who have left or been pushed out and now suck on the states tit, while fleecing the taxpayer.

  7. Majella 7
    16 July 2012 at 4:03 pm

    Hear, Hear, paul andersen. In fact, it’s worse than that even; As businesses, consultancy firms have a vested interest in continuing the flow of “work”, so I’m prepared to bet that there is always an element of future opportunity in mind when submitting their work. And with the public service utterly stripped of any real expertise (in engineering, design, costing & the like), who in these various client Govt Depts will have the wit or sense (or balls, if it comes to it) to call these rorts out? No-one, for sure…

  8. Kent Duston 8
    16 July 2012 at 4:34 pm

    I can spot where some of the money went.

    When NZTA ran an “engagement” day last year on the Basin Reserve flyover here in Wellington with local community groups – one of which I represented – the entire room was full of consultants. The day was fronted by a bloke from Opus Consulting, the agenda was stocked with contracted-in “experts” on all manner of subjects, and actual NZTA staff were remarkably thin on the ground.

    Given the contention around the project, I would have thought that the two senior regional NZTA managers who are relentless in their media statements – Jenny Chetwynd and Rod James – would have fronted up to answer questions from the communities that are going to be affected by their roads. But no – they were nowhere to be found. Instead, we had a whole pile of people whose sole role was to act as a firewall between the Agency and the public.

    I would expect the costs of that one “engagement” session to have run somewhere between $10K and $20K, based on the typical daily rates of the consultants in the room – which may be a small price for NZTA to pay to keep accountability away from their management team.

  9. Macro 9
    16 July 2012 at 5:21 pm

    If it was a Whanau Ora project – you can bet there would be all sorts of questions. The Auditor General would be involved already.

  10. Afewknowthetruth 10
    17 July 2012 at 5:12 am

    I think NZ should investigate constructing a tunnel under the Cook Strait. That should keep trough-feeders in work for several years. Never mind that Peak Oil was 2005/6 and that the world is into net energy decline and about to fall off the EROEI cliff. (I see that Brent has risen again overnight, despite the IMF’s ‘grim’ economic growth forecasts, in line with the ‘Long Emergency’, otherwise known as the reversal of the Industrial Revolution.)

  11. DH 11
    18 July 2012 at 12:07 pm

    Where’s the audit office when you need them. The average salary of road designers wouldn’t run higher than $100k, the top engineers would be on a good wicket but most of them would be in the lower brackets so the labour costs wouldn’t be that excessive. I expect a good 80% of that $216m would be time-sheet labour charges, there’s bugger-all capital outlay in actual design work. 80% is equivalent to the wages of 576 road designers & planners working fulltime for 3years. Certainly looks like another scam to me.