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Boring into the numbers

Written By: - Date published: 8:15 am, May 13th, 2009 - 32 comments
Categories: transport - Tags:

Here’s a trick you can all play at home. You’ll need several different plans for a major motorway project produced by NZTA and a compliant Treasury ready and willing to alter figures to make your preferred option look better than it is.

Now, you want to save a little money by going for the cheapest option but that’s also really unpopular because there are pesky people in the way and they don’t want their homes and schools and businesses bulldozed. So, this is where you get your Treasury to ramp up the price and make it seem much the popular tunnel option is much more expensive than the other options.

The tunnel option is really only a few hundred million more than some the above ground options (actually cheaper than some) but if you add in some costs that apply to any of the options but only count them towards the cost of the tunnel option you can make that gap look bigger.

– add $240 million for changes to adjoining motorways that have to happen whichever option is taken
– add $500 million for financing costs to the tunnel option only
– start talking about the tunnel option in 2015 dollars and add $250 million for inflation
– don’t talk about the benefits of a tunnel over above ground in terms of amenity value to the community

Hey presto, you’ve added nearly a billion dollars to the cost of the tunnel option. Pretty neat huh? Now it looks to the casual or lazy observer/journalist like it is much much more expensive than the other options.

Then to top it off, just make up a plausible sounding cap for the cost of the other options that is actually a lot less than any of them are projected to cost even before including changes to adjoining motorways, financing costs, inflation, and costs to the community.

Oh and keep quiet about the fact that you don’t have resource consents for any of the above ground options, which will delay the project by years as the community strenuously fights you every step of the way.
Marty G (formerly mathemagician)

32 comments on “Boring into the numbers ”

  1. Good succinct post.

    This is not a right verses left debate, rather one about a slightly more expensive option that has considerable extra community benefit and the tightwads wanting to get away with the least cost option.

    The media are lazy. Sean Plunkett this morning ran the line of “$1b extra cost” and David Shearer responded well.

    Now prepare for the wingnut onslaught …

  2. TightyRighty 2

    There are two tunnels in wellington on major arterial routes. both tunnels cause no end of trouble for vehicle traffic, and one is disgusting for foot traffic. They are also prohibitivley expensive to expand. wellington also has a bypass impacted by the village idiots in te aro. the bypass is a great example of good intentions ruined by bad interjections. don’t just think of the cost now, consider the problems in the future from not being able to expand capacity easily, both financially and physically whatever option is chosen.

    • Maynard J 2.1

      Do you think they should have had an ‘open cut’ through Mt Vic instead of a tunnel, or done the same with the terrace tunnel?

      I’m not sure I see the relevance of either, short of some reflexive ‘tunnels bad’.

      Foot traffic is not relevant at all, and the plan is to build two two-lane tunnels that would be easily expandable to three so the Wellington traffic problems aren’t relevant either, especially when you consider that one is at the end of a motorway and the other is fully urban, while waterview is a motorway-motorway connection.

      The bypass seems to work well, and you have not specified any problem with it so I cannot comment on its relevance.

      Since the tunnels’ capacity is expandable you can’t really have an objection to them.

  3. I’m indifferent to the different road choices, but it seems to me quite the conspiracy theory to suggest that Treasury would doctor its numbers so heavily! Certainly if they were, it would deserve a far more serious treatment than you’ve given it here.

    • There is no conspiracy by Treasury in doctoring the figures, if you read the reports the figures are clear.

      The problem is National spinning it inappropriately and the mainstream media not picking them up on it.

      • Tom Mathews 3.1.1

        Perhaps, but that then makes this statement from the post false:

        “a compliant Treasury ready and willing to alter figures to make your preferred option look better than it is.”

  4. MikeG 4

    This is the first time in the recent phase of the debate that I have heard amenity value mentioned. It is unfortunately very hard to define, and even harder to put a dollar figure on, but is key to why the tunnel option should be the preferred one.

    The noise effects on the surrounding area for the life of the motorway, and the loss of green space in an increasingly crowded city are surely worth more than difference in cost – whatever way the Government tries to fudge the dollars.

  5. I think a big problem is that government is making sure that resource consents won’t be a problem here. By ‘calling in’ this project as one of ‘national significance’ it will be more difficult to have one’s voice heard in opposition.

    • Pat 5.1

      To be fair Jarbury, Mt Albert was the Prime Minister’s electorate for the past 9 years. The now Opposition had plenty of time in Government to settle the Waterview Connection proposal, and it is a sad indictment on Helen that she never got around to it.

      A fair comparison is the uncertainty that Whenuapai Airbase faced for over 10 years. Key comes in and the Airbase’s future is settled. Helen had the chance to have the Waterview connection construction underway when her government was enjoying large surpluses.

      • Maynard J 5.1.1

        That would make great sense, build the connection before the parts it is connecting are built. I can not see a single problem with that.

        Whenuapai is a useless comparison, because it does not form part of a network, the other parts of which must be completed for Whenuapai to be of use.

        • Pat 5.1.1.1

          It would have made more sense to me to complete Waterview before (or at the latest, at the same time) as Greenhithe/Hobsonville. At least the there would have been a connection between West Auckland and Manukau for Westie commuters to go to work.

          • Maynard J 5.1.1.1.1

            Fair enough there, but for that to make sense you will need to tell me what you would have delayed. Saying there was nine years to do it means nothing, because Labour spent vast sums on roads. We can therefore discount blase inaction as a reason Waterview wasn’t built. So what major project should have been delayed?

  6. Jared 6

    Back in October 2008, under Labour, it was estimated that a tunnel would cost around “$1.89 billion for two-lane tunnels or $2.14 million for three lanes each way”, and is currently costed at $2.77 Billion including financing costs considering it WASNT budgeted for, and debt will need to be incurred, but you know, debt is ok when it benefits a less than a percentage of NZ’s voters. Joyce noted that a cheaper above ground option would cost between 1 and 1.4 Billion and whilst you might ignore the financing costs, it is an unavoidable cost. Seeing as the 1-1.4 Billion option can already be funded out of existing funds you cannot compare the two options without factoring the financing costs for the tunnel option. Including the $240 Million in the cheaper option still results in a saving of $1.13 Billion. Chump change for trying to buy a reelection.

    • Zaphod Beeblebrox 6.1

      I’m not sure you can claim that it is funded out of existing funds when NLTF has made no provision for this money. The end effect of this will inevitably be that other road or PT projects will get the chop. Thats good for Aucklanders who don’t want to pay tolls or fuel levies but bad for everyone else.

  7. Pat 7

    Maynard – it becomes a philosophical economic argument and depends on your politics. If it was me holding the reins, I would have consisdered the Western Ring Route too important to be delayed. So instead of banking surpluses I would have used some of the funds to get this major infrastructure underway. It does not mean something else had to be delayed to enable them to get started on Waterview.

    I don’t think you can use the argument that Labour never had the chance to get their tunnel project underway. They found the money out of the blue to buy Kiwirail, remember.

    If Labour were dead keen on a tunnel, they could have been halfway through it by now. The cynic in me suggests Helen wasn’t sold on the idea as a priority, or like other icky tricky decisions such as Whenuapai airbase, kept kicking it for touch.

    • Maynard J 7.1

      So your argument becomes a question; whether Waterview was more important than reducing our debt to manageable levels, or the impossible idea of comparing Waterview with every other single thing Labour spent money on. All I see coming out of this is that Labour were not determined to get it started by a certain date that is some time in the past.

      Also consider road building capacity. Could this be done at the same time as all the other Auckland projects including the rather large toll road project? Not necessarily – or at a much greater cost.

      You are obviously right about it not being a priority. Other projects were given a higher priority and are nearing completion. That hardly is a ‘sad indictment’.

      • Pat 7.1.1

        The sad indictment, in my view, is that Mt Albert had Helen for 27 years and 9 years as PM. You would expect that large projects in the PM’s electorate might get priority. The logical conclusion is that Helen kept it in the too hard basket.

        Perhaps another comparison. If Key gets to be PM for 6 years (even an ardent leftie might concede that as a possibility) then as someone living in his electorate I would expect him to have dealt with the two biggest unresolved issues – Whenuapai Airbase and Hobsonville airbase redevelopment. He has already dealt with one. If he kicks the second for touch, then he deserves the same criticsm. Hobsonville is an icky issue for him because he has to deal with the Housing Corp housing proposal. In 6 years time I expect Hobsonville will be well underway.

        • Eddie 7.1.1.1

          Pat. that’s called corruption.

          Funny because when Clark was PM the righties were complaining that Waterview was Clark interfering in NZTA decisions. Now you’re saying she didn’t interfere enough.

          • Pat 7.1.1.1.1

            Bollocks. Surely an electorate MP’s job is to promote important issues in their electorate. A PM would be in the best position of all to promote and advance issues in their electorate. See Whenuapai Airbase as an example.

        • Maynard J 7.1.1.2

          Of the two basic ideas, which do you think is more likely?

          a – prioritisation and cost meant Waterview wasn’t built as of 2009

          b – clark though it was too difficult a decision to make and so nothing happened.

          Given Key thinks state houses are ‘economic vandalism’ it’s no wonder some decisions come easy to him.

          • Pat 7.1.1.2.1

            In my view, b. But that’s the beauty of having different views and opinions, I suppose.

        • Draco T Bastard 7.1.1.3

          Why should electorates that have the PM as minister have a higher priority than other electorates?

          Such a state of affairs is base corruption.

  8. Jared 8

    Labour love to entice voters with clearly unaffordable bribes, just like universal student allowances that was promised before the election, a tunnel was clearly unaffordable.

  9. Maynard J 9

    Jared and yet all their other ‘bribes’ were clearly affordable – WFF, interest free loans, Northern Motorway, childcare, doctors subsidies and such, and such. Yet the only unaffordable ones are the ones they never got the chance to implement. You would almost think that your comment is deeply flawed in some way.

    Pat – you see a damning indictment, I see a solid process. I can go and dig out the decisions if I had the time – do you think they would say that other projects went ahead due to time and cost constraints, or do you think they would say that they are going ahead because the PM said so? This is starting to sound a bit conspirational. PM meddling in LTNZ affairs.

    • Pat 9.1

      A “solid process” got stymied by Helen’s “over my dead body” position on the issue, forcing the tunnel option to the forefront. I would argue that Joyce has demonstrated a solid process by throwing all options back on the table, making a decision and giving it a completion date. I doubt you would agree, but really both our opinions are clouded by our political bias.

      At the end of the day, I’m not sure that a half tunnel option is worth opponents lying in front of a bulldozer for.

    • Jared 9.2

      Labour had 9 years to propose a tunnel, and yet they only made it public months out from the election as their preferred option. Just like universal student allowances, announced just a month out from an unwinable election
      “Helen Clark yesterday chose Otago University to reveal the policy, pitching for the student vote the same way she did in 2005 by scrapping interest on student loans. It will be phased in by 2012, when the means test for parents’ income will be abolished.” conveniently phased in after the 2011 elections, almost assuring the student vote. Just like interest free student loans announced in 2005 months out from the election, blatant election bribes to a vulnerable group who most could really only afford to vote with their wallets than their political conscience.

      There was no way the labour government could have consciously followed through with this style of pork barrel electioneering in such an adverse economic climate, not at such an adverse impact to the governments bottom line. June last year then Finance Minister Michael Cullen himself admitted that “it would be difficult to pay for the project from fuel taxes alone, and the Government is waiting for a report from a steering group on the feasibility of establishing a PPP to dig and operate the tunnels.” So please don’t harp on to me about Labour assurances that it was affordable, it wasn’t, they even admitted it.

  10. r0b 10

    There was no way the labour government could have consciously followed through with this style of pork barrel electioneering

    You can say that with a straight face after however many years of National campaigning on nothing but tax cuts?

    • Jared 10.1

      Make no mistake, National did not campaign purely on Tax Cuts. It was an integral aspect of their strategy sure, and they have subsequently delivered on the first round, but economic conditions have constrained the governments fiscal ability to further fund tax cuts without jeopardising treasury accounts for the long term. Labour made a point of holding National accountable for expenditure that would require debt funding, so I hardly see why you are trumpeting the party line when National is being fiscally responsible in these trying times. Or would rather National stuck to promises it can no longer deliver merely to “keep” its promises? Where you would chastise them for reckless spending regardless. Make your mind up. Labour could not afford the tunnel, nor could it afford universal student allowances, both promised under Labour, both impossible under Labour.

  11. r0b 11

    National did not campaign purely on Tax Cuts.

    No that’s true, their other policy was “time for a change”. Well, they sure delivered on that one.

    As to the rest of your comment, you seem a bit agitated and confused. I think National is quite right to drop their unaffordable tax cuts. What was wrong of National was to run them, long after it was obvious that there were impossible, as a blatant campaign bribe (the “pork barrel electioneering” that you accuse Labour of!).

    • Jared 11.1

      Oh come off it. Labour promised tax cuts of more than $10.6 Billion over the next 3 years, so please don’t try and take the high ground by insinuating Labour didn’t campaign on tax cuts. They thought the economy in the short to medium term would provide the opportunity to provide a similar level of tax cuts to that of National and you think they would still be affordable? Both parties thought tax cuts of varying forms were affordable, and now they aren’t.

      • r0b 11.1.1

        Labour promised tax cuts of more than $10.6 Billion over the next 3 years, so please don’t try and take the high ground by insinuating Labour didn’t campaign on tax cuts.

        Where have you been for the last 6 years Jared? Key derided Labour’s tax cuts as “too little too late”. Key promised to better Labour’s tax cuts with “meaningful” cuts that were “North of $50”. Do you really want to argue, against the evidence of the last 6 years of sustained National Party bleating about tax cuts (remember “Iwi : Kiwi”, “Tax : Cut”?), that Labour were the guilty party? Seriously?

        • Jared 11.1.1.1

          Key promised something he expected he could deliver but considering the economic circumstances, is unable to. Labour would have been in the same position with their proposed tax cuts, and introducing pork barrel roading projects like an expensive tunnelling option further serves to undermine the incoming government considering they knew they couldnt provide the funding to see it through. I am not denying the National Party have campaigned on Tax Cuts, and I am still of the belief it was too little, too late, but I live in the here and now, and regardless of election promises, at the moment, tax cuts are unaffordable. It is that simple.

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