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Govt to waste $400 million on white elephant highway

Written By: - Date published: 11:24 am, January 7th, 2010 - 132 comments
Categories: transport - Tags: ,

Steven Joyce has finally revealed the benefit/cost ratio for the billion dollar Transmission Gully project. A few weeks ago he was mocking Sue Kedgley for saying that the costs would outweigh the benefits and claiming that the BCR would be about 1.5 ($1.50 benefit for each $1 spent). It turns out Joyce was lying. There is just 60 cents of benefit for every dollar that will be spent building the highway.

Joyce, apparently, is a businessman. So he knows damn well that its nonsense to say:

“You’ve got to look at it longer term. I wouldn’t want to see us just do one part without the other part. On that basis, it stacks up OK.”

The benefit/cost analysis takes into account the ‘longer term’ and the consequent benefits, and costs, of doing Transmission Gully as part of wider upgrades. It does not ‘stack up OK’ it comes out at 60 cents of benefit for every dollar we spend.

Fiscal responsibility, Nat-style

What the hell is wrong with this government? We’re borrowing $240 million a week, 250,000 Kiwis are out of work, there are endless demands on health and education. And that best thing these idiots can come up with to spend a billion dollars on is a project that will give the country $600 million of benefit? Put that money into early childhood education, or at-risk children, or preventative health and you get pay-offs of $10 plus for every dollar spent.

Spend it on bloody Transmission Gully and you’re just flushing 40 cents in every dollar down the toilet. This government is planning to take a billion dollars of our money, and burn $400 million of it.

Stupid, stupid, stupid.

132 comments on “Govt to waste $400 million on white elephant highway ”

  1. Gosman 1

    Push for this to be an election issue for Labour/Greens next time then. See how well they do in the Wellington electorates.

    • Rural 1.1

      Or see how well it goes down in the rest of the country.

      The only people who benefit from TG are a few thousand commuters comign from Kapiti, not the bulk of Wellingtonians.

      The rest of us are just seeing our money pissed away.

      Interesting that your only defence for this decision is political, not economic or practical. Seems you think it’s good to bribe taxpayers with other taxpayers’ money, with your money dickhead. And I thought the Right was all about cutting wasteful spending, here they are defending it.

      • Lew 1.1.1

        I guess you didn’t try to drive upcountry from Wellington any time between December 22 and 27, right?


        • Rural

          No I didn’t, and that’s the point.

          It’s not worth building a billion dollar highway just to ease congestion for a couple of days a year, and a slightly faster ride for a few commuters. Those benefits are taken into account in the BCR and they don’t come anywhere near meeting the cost.

          Maybe you live there and you want a great big highway for yourself and your few mates but it’s the rest of the coutnry that pays for it, and there’s plenty of other things that are a better use of the money. I’m sure you could think of some that would personally benefit you, if you are incapable of thinking beyond personal interest.

          We can’t afford to have everything that would be mildly nice to have. We should spend our limited resources on the things with the greatest benefits.

          • Lew

            Steady on. I’m pretty ambivalent about it, actually — but then, I actually live out on the coast and commute by train to the city, so I wouldn’t use the gully route very much in any case.

            The point is that a single arterial land route into and out of a capital city is unsustainable. This is true of any major city; Wellington’s just got worse geography than most to deal with, and something needs to be done to mitigate against it. TG, while a bit of a dog, is rather less of a dog than any of the proposed alternatives.

            Quite agree that there are probably more substantial priorities — but then, there always are, aren’t there?


            • Zaphod Beeblebrox

              By the time TG is finished the congestion problem will be well and truly fixed. The price of oil will see to that.

              By then it will be a Land Use Planning/Housing problem as everybody tries to live closer and closer to their workplaces.

        • Clarke

          If building more roads was the solution to the problem, how come the roads north of Auckland were just as congested as they’ve ever been over the same Christmas period, despite the billions of dollars spent in new capacity?

          • mickysavage

            To be fair the carpark had moved a few kilometers up the road but I doubt there were any time savings …

          • Rob Carr

            Because building more roads increases the number of cars travelling and people tend to flock to new roads and abandon old ones.

            • Diana Cudby

              in reply to this comment … “Because building more roads increases the number of cars travelling and people tend to flock to new roads and abandon old ones.”
              Roads don’t increase traffic, the traffic is already there. Better roads facilitate vehicles getting more efficiently from A to B.
              Old roads need not be abandonded, you can still use them … the new roads are for people going places.

        • Neep

          I went up on the afternoon of dec 24, by bus no less, to palmerston north from wellington.

          There was no traffic delay.

          hoist with your own something, there lew.

          • Lew

            Funny. I was headed down the same road (South) that day and observed gridlock from about QEII to Waikanae. On Boxing Day I made the same trip (to PN) and it took an extra hour on account of same gridlock.


            • bill brown

              QEII to Waikanae is north of the TG route

              • Lew

                Correct, and I can only assume that it was worse at Mana and Pukerua Bay, as it usually is.


              • “QEII to Waikanae is north of the TG route”
                … the Northern end of the proposed Akatarawa motorway is an expressway that would rejoin the existing SH1 at Peka Peka, 5 km north of Waikanae.
                Small Kapiti towns that slow long-distance traffic on SH1 would be bypassed.
                People who like the current slow route of SH1 can still use it of course …
                The new Akatarawa Motorway may be called the SH1a

        • Rob Carr

          I went from Wellington to Palmerston North on the 22nd and got there maybe 10 mins later than usual? I travel on that costal road a good 20 times a year and it is fine. A new one is a waste of money and I like the view along the coast.

      • Diana Cudby 1.1.2

        Hello? The existing main route North from the Wellington region is totally inadequate. TG is far too steep a road, Look at Kevin’s blog, the result of thorough research is a route through Akatarawa, check it out: http://wellington-transport.blogspot.com/ Last holiday weekend we were delayed in a 7km long queue of cars that took 1hr & 40min to crawl from Levin to Otaki. It’s very naiive to say a better road will only benefit commuters from Kapiti. What about all the recreational weekend and holiday traffic, and the hundreds of trucks that long haul freight to Wellington?? This freight is stock for supermarket shelves to feed us, goods for wholesalers and retailers so productive companies can build repair and maintain commercial and residential buildings, factories and plant. We need a good road and TG is NOT IT.

    • Clarke 1.2

      Leaving aside the obvious flaw in your logic – i.e. National don’t hold a single Wellington electorate – according to NZTA’s own projections, TG will result in much higher congestion in Wellington city.

      That’s a National Party vote winner, is it?

    • outofbed 1.3

      one in five vote Green in Wellington

  2. John Ansell 2

    But you – and they – want the world to spend $45 trillion lowering the world’s average temperature by an inconsequential amount that will produce no benefit and a great deal of harm.

    To be credible cost/benefit analysts, our politicians really need to address that one – and scientifically, not politically.

    • John can't count 2.2

      John, stupid.

      I’m not sure I should bother debating with the flithy racist behind the Iwi/Kiwi billboards but, anyway, read the Stern Review, the best BCR there is on climate change.

      “It proposes that one percent of global gross domestic product (GDP) per annum is required to be invested in order to avoid the worst effects of climate change, and that failure to do so could risk global GDP being up to twenty percent lower than it otherwise might be”

      20 to 1 payoff.

      • mickysavage 2.2.1

        Good point and TG is 0.6 to 1. It used to actually be a lot lower. Someone should do an OIA and ask for historical estimates and see where the difference is.

      • John Ansell 2.2.2

        1. On what grounds do you label me a filthy racist? All you know about me is that I once wrote a billboard that pointed out the obvious fact that voters could not rely on Labour to deal with Treaty issues impartially because they depended on the Maori vote. That was just a fact. (Today it’s probably Kiwi/Iwi).

        Is the other 85% of New Zealand not allowed to have a view on these matters without being called a filthy racist?

        2. Why do you say the Stern Report is the best BCR (whatever that is) there is?

        • John Ansell

          Benefit/Cost Ratio, got it.

        • Rob Carr

          BCR is benefit-cost ratio. It is where someone calculates the monetary costs of a decision vs the monetary benefits of it. The Stern report is one of the most detailed attempts at doing it for climate change. Due to the massive uncertainty in the area it obviously has some defects but it a generally good account of the cost.

          • ben

            Even if you accept the horrible, horrible assumptions of the Stern report (the headline figures were based on the most arbitrary, tortured, frankly incompetent analysis I have ever seen in my work), the BCR of New Zealand is massively negative at the margin because we are small. No BCR could ever show a net positive contribution for New Zealand entering because, being small, we capture about none of the benefits of our own participation but bear all our own costs. And in anticipation of your response to the effect we have a moral obligation to play our part, etc – perhaps, but the BCR being (correctly) held up here as saying something relevant is still deeply negative.

            • Rob Carr

              Well I would assume you would measure CBR across the whole spectrum of who would pay for things. We could simply only do a cost benefit analysis of what it costs the Wellington councils and ignore what the government would contribute but that would not give a reliable measure would it? Because Climate Change requires world participation it is somewhat fruitless to have individual CBRs for each country. Countries are unlikely to enter willingly into reducing emissions unless all countries do so equally at the end of the day so New Zealand won’t get away with making no contribution and reaping the benefits no matter how much it may want to.

              As I said it had flaws but it is the best attempt I have seen. No CBR is perfect.

              • ben

                I hope you will take a moment to read just how appalling the Stern methodology was. Nobody can criticise Stern for problems in such a monumentally difficult analysis. But what Stern did was produce a number that was in essence made up. After 3 years I am still shocked at the contortions required to produce that report’s headline figure. Yet to this day Stern is somehow still held up as an authority.

  3. Armchair Critic 3

    A little over ten or so years ago the threshold to fund roading projects was a B/C of 5, i.e. a return of $5 for every dollar spent.

  4. Lew 4

    Unfortunately, the alternatives (particularly those proferred by Sue Kedgley) are worse. The problem is not a lack of transportation options so much as a road-traffic bottleneck during peak times. To an extent this is a problem during daily peaks (at Mana and Pukerua Bay morning and evening) but where it really hurts is at this time of year, and at Wellington Anniversary, Waitangi, Easter, Queen’s Birthday and Labour Weekend.

    The inadequacy of Centennial Highway and the two alternatives of Paekakariki Hill Road and Akatarawa Road — if they can be called alternatives, since they crawl to a standstill with a twentieth of the traffic, and neither are suitable for heavy vehicles or passenger services — is not something which will be solved by additional or expanded rail services. Although these are important to solve the daily bottlenecks, that’s not the main problem.


    • Clarke 4.1

      This is exactly the same kind of flawed logic that has resulted in Auckland spending more per capita on roads than any other city in the developed world, yet still being awash in congestion. So you want to repeat the same failed experiment in Wellington?

      • Lew 4.1.1

        Actually, I’m not arguing for TG — I’m arguing for something which will provide more than one arterial access route to Wellington. I agree that TG is probably a dog — but no preferable alternatives seem to be in evidence.


        • Rob Carr

          I don’t see why we need an alternative. Make more people take public transport and move freight to rail both of which are more cost effective than cars. That solves all regular traffic. On holidays I have seen no issue. I regularly travel on holidays and the traffic problems I get are all in Otaki. A long way away from that road.

          • Lew

            You can’t make people take public transport. You can only make public transport more appealing and useful to them — a much more difficult and complicated prospect than you make out in a long skinny mountainous sparsely-populated country.

            Moreover, it requires a complete rethink of travelling habits — a move away from the tradition of packing the kids and dog into the car, loading up the roof rack and setting out for Kia Ora Bay or wherever. That’s not just going to change because you want it to — and nor should it. Denying people access to their preferred means of getting places will have the primary effect of pissing people off, and a secondary effect of needing to roll out a lot of transportation links which peiople won’t use because, although they’re pissed off about the traffic, it’s better than the alternative.

            We’ve got a choice country and it’d be a damned shame if people could only get to the parts of it which were easy and economical to service by public transport — as if the Mount and such places aren’t already overpopular. I’ve lived in countries where everyone goes to the same places for holidays because they’re the only venues serviced by public transport, and it’s horrible. So horrible that, despite the horrific expense, six of us pitched in to hire a car and go elsewhere. It was worth it.


            • Rob Carr

              I don’t think its that hard to make it appealing to people. If I want to take a train from Palmerston North to Wellington I have to get up at 6am. If I want to come back again I cannot do so until teatime. Tell me how many people are going to take public transport when those are the options? We don’t need to increase public transport routes much either. Most of them are already built they are simply not used often enough.

              By increasing the number of them travelling each day to various locations around Wellington and keeping prices as low as possible people will move to them. If trains were upgraded to high speed as well they would take the cake as it makes them significantly faster than cars for travelling long distance. A billion dollars would go a long way towards public transport upgrades and could well reduce traffic far better than transmission gulley.

              I am not trying to discourage people from driving on public holidays I don’t think the roads are much of an issue for that. Given that I leave Wellington on pretty much every public holiday and have not encountered any significant problems thus far I would say that is a fairly safe assumption to make.

              This road is being built for trucking companies and commuters not for public holidays. We have alternatives for that which would be far better in the long run and more cost-effective.

              • Lew

                Rob of the ironical name, I think our positions are rather closer than first thought then. The problem is a mindset (not exhibited by you) which seeks to substitute public transport for private vehicle transport as if it’s a drop-in replacement when the emphasis should be on delineating which are the uses of private transport which can be most easily replaced by public transport (such as commuting).

                Until public transport can accomodate several of: kayak, bikes, dog, fishing rods, barbecues, etc. per family and make it easier and more efficient and less expensive than loading up the roof rack, there’s simply no use trying to convince people to go on holiday by public transport and any effort to do so would be better expended on more achievable goals.

                This does not discount the utility of better and more frequent arterial public transport, though, and especially freight. I was horrified after returning from three years of using public transport for intra and inter-country travel that, between major regional centres, there were one or two buses leaving at inconvenient times which cost more than driving and that was it. Enough to make us a country of hitchhikers. But you can’t do that with a kayak either.


              • Rob Carr

                I agree and I actually don’t think public transport will ever be a good replacement for cars as transport for family holidays due to the fact the cars are pretty much as full as they can get and half the point is to go to places where there aren’t many people. Public transport by its nature needs a decent amount of people to be going to its location.

                However I don’t think preventing holiday traffic is a good use of our money. There are much better things we can be spending it on.

            • Draco T Bastard

              That’s not just going to change because you want it to — and nor should it.

              If it’s unsustainable, which it is, it should.

              • Lew

                DTB, if it is, you should have no trouble making your case for it, right?


              • gitmo

                The welfare state is unsustainable at $250 million a week I, are you calling for that to be scrapped as well ?

              • Rob Carr

                The welfare state is not unsustainable because it creates wealth rather than destroying it as holidays do. Without it people who become unemployed or sick would find it much harder to get back into work and would pose larger health costs on the state if they were to become homeless.

              • Draco T Bastard

                Lew: Peak Oil, AGW – that makes driving unsustainable. Not much more case than that and it’s not needed. Unfortunately, no one will listen because they want to keep driving, to keep the convenience.

                The welfare state is unsustainable at $250 million a week I, are you calling for that to be scrapped as well ?

                Actually Gitmo, the welfare state is a function of capitalism due to it requiring poverty of the masses and subsidies to the rich. To get rid of the welfare state you’d have to get rid of capitalism.

            • jcuknz

              I can remember in my childhood when everybody took public transport to go to places like Blackpool and Brighton and sat cheek by jowl on the beach in deck chairs.
              I compare that with the normal NZ beach scene, ignoring one motorcamp near Motueka which was like Blackpool, and I ask which do I want.
              As I see it even when oil get too expensive for the average person to use the alternatives, electric/battery/ power will power the individual transportation vehicles we are used to. Public transport carrying masses from the working slums to the slum beaches is something I would hate to see come to NZ.
              Comuting to work by public transport increases one’s leisure time compared to DIY private driving but for holidays no thanks. Then as suggested, I suspect they think it is a bad capitalistic rort, the truckies and the country will benefit from the reduced milage they do and reduced idling on the existing roads which were built for the horse and buggy days..

  5. tsmithfield 5

    As I understand it, the cost benefit analysis calculation for highways includes an arbitrary value for the cost of lives lost. I think its something like $1.5mil per life saved by making the change. If the figure for the cost of a life was arbitrarily higher or lower then it would change the result of the calculation.

    • Clarke 5.1

      This is more or less correct, but BCRs are just a way of providing post-hoc rationalisation for decisions that have already been made at the political level, and they don’t account for many of the real costs.

      For instance, BCRs don’t include the devaluation of neighbouring houses next to the new road, the loss of amenity value from noise and vehicle pollution, the additional costs to the health sector from the extra crashes due to higher traffic volumes, the greater number of deaths and illnesses due to higher pollution loads, loss of heritage values in sensitive sites, or a whole host of similar factors.

      When challenged on these and a few other issues, one traffic engineer told me that “if we include all the actual costs, then we’d never be able to build any new roads …” Which pretty much sums up the lack of intellectual rigor (and basic honesty) behind a BCR.

      • mickysavage 5.1.1

        BCRs are good for comparing different projects of the same sort. A high BCR should result in preference for that project. There are dozens of projects with higher BCRs than TG. The only justification IMHO is the strategic need to ensure there are two routes out of the capital in case of earthquake but it is built on top of a fault …

        Two further comments. Firstly there is a well known concept called “induced demand”. If you build a road then after a while humans tend to adjust their driving habits and drive more. Often all that you will achieve after a while is people taking longer trips and driving more. Secondly there was a very strong warning given to Greater Wellington that TG will result in canibalisation of train passengers. The numbers will go down and the subsidy will increase.

        • Clarke

          If you build a road then after a while humans tend to adjust their driving habits and drive more. Often all that you will achieve after a while is people taking longer trips and driving more.

          There is a technical term for this effect: it’s called “Auckland”.

          [lprent: Splutter…. That did nasty things to my coffee when I read it. But so true. That has got to be the quip of the day. ]

          • jarbury

            Yes induced demand is generally ignored by road engineers, which leads to horrific amounts of money being wasted on projects that don’t make a blind bit of difference. Auckland is about to spend $860 million widening the northwest motorway between St Lukes and Westgate.

            Everyone knows it’ll be just as congested within a few years.

    • Draco T Bastard 5.2

      The value of a life isn’t exactly arbitrary – it’s based upon what 1 working persons value is to the economy.

      And what Clarke said.

  6. Rural 6

    You would need huge adjustments to that weighting to make a difference in a BCR for a project of this size, especially when deaths are relatively infrequent.

    And it’s not like the cost of a death is just pulled out of the actuary’s arse

  7. Hilary 7

    I drive that route regularly, including over the holiday season when it has been a clear run. There are only a couple of hours a day when there are any holdups. If there was a fast and regular train service between Palmerston North and Wellington (it could go through to the airport) I would use that. You could built a wonderful public transport system for the money tagged for Transmission Gully and the State highway expressway.

    • Lew 7.1

      Hilary, hell yeah. A significant problem with the public transport network is a lack of integration — the need to change services and such once in the city. Add to which the fact that the rail service has been a bit crap historically (hopefully to be improved in the coming months).

      But that still won’t change the seasonal bottlenecks — or what happens when there’s a severe accident, etc. That requires one of two things: either building an alternative route, or changing peoples’ internal transportation habits. The scope of the latter project is well beyond the scope of the former. It will take a generation and require a complete rethink of our internal roading and rail networks. It should proceed alongside, not instead of, the former course of action, which should be treated as an interim solution (but one which is needed nonetheless).


  8. Bill 8

    Putting aside the peripheral too-ing and fo-ing for a moment.


    It will cost the roading contractor(s) nothing.


    The roading contractor(s) will benefit rather substantially.

    Any stabs in the dark about who gets the contract? Any stabs in the dark about how much it is worth to the contractor? And any stabs in the dark about what shape and direction any ‘thankyou’ from the grateful contractor might take?

    • Clarke 8.1

      It’s a good question … and based on National’s experience with the trucking lobby, the result is likely to be at least a $55,000 donation to Party coffers.

      Steven Joyce: the best Transport Minister money can buy.

      • Tim Ellis 8.1.1

        Or maybe it was the RTF’s $45,000 donation to the Labour Party that got Transmission Gully approved Clarke. If Mr Joyce can be bought for $55,000 then it seems Ms Clark could be bought for $45,000.

        • mickysavage

          Labour did not approve TG. It put money up for engineering and investigation and tagged $400m in a crown grant for a highway project in the region that could have been TG. The Wellington region had to come up with the balance. It would be interesting to see if the crown is now coming up with all of the funds and if so is somewhere else missing out.

          • Tim Ellis

            sorry Micky I meant waterview

            • Bright Red

              Labour didn’t approve waterview, it was still undecided when they left office.

              I assume since you think the BCR on the waterview tunnel option wasn’t high enough, Tim.

              It was 1.16. Twice the TG’s BCR



              • ben

                So BCR is now the standard for judging a project’s merit at The Standard.

                Hear hear, I say.

                Now, about that horribly uneconomic rail network, ACC, all the public electricity companies not recovering their cost of capital, Air New Zealand, and TVNZ…

  9. Tim Ellis 9

    It would be much more expensive if the Government ignored all economic sense and tried to tunnel it.

    • Clarke 9.1

      That’s exactly what they’re doing, Tim …. at the other end of the “Road of National Significance” your beloved National Party is going to add a tunnel at The Terrace and another one at Mt Victoria – both of which have heavily negative BCRs and which, therefore, make no economic sense at all.

      I know you were trying to play that one for irony, but it’s pretty damn difficult when there’s a 1970’s era dinosaur like Joyce driving the agenda.

      • Tim Ellis 9.1.1

        Good on them, Clarke, Wellington needs much better road infrastructure. It’s a pity the last government didn’t just get on and do it, instead faffing around with a $3 billion waterview connection.

        • Clarke

          Good on them, Clarke, Wellington needs much better road infrastructure.

          Very good, that’s a superb example of using irony to illustrate an illogical and contradictory argument. Go to the top of the class.

        • Bright Red

          Benefit/Cost ratio for waterview tunnel: 1.16
          Benefit/Cost ratio for transmission gully: 0.6

          honestly, you make a bigger idiot of yourself every day.

          • Tim Ellis

            BR, this would be why Labour proposed spending an extra billion and a half dollars on a Waterview tunnel rather than the surface option.

            Transmission Gully is paid for right there, by reprioritising Labour’s poor fiscal management.

            • Bright Red

              Tim. For god’s sake, you claim to work in a bank – either you don’t really or you know what you’re saying it crap (I refuse to believe a bank could employ someone who really thinks what you wrote is sensible).

              You could claim that ‘well, they saved a billion from waterview’ but that doesn’t mean they should go and waste that money (especially as its borrowed money) on a stupid project when there are much more beneficial projects the money could be spent on.

              The BCR for the new waterview option is only slightly higher than the tunnel one (lower building costs but higher costs to the community), but that’s beside the point.

              The point is that the money for TG will only creat benefit worth 60 cents for every dollar spent.

              • Tim Ellis

                BR, since you are so concerned you might express such concerns to Mr Cunliffe, who recently said that with debt projections easing the Government should spend more money. Or perhaps you might also talk to Mr Cunliffe about the many billions of dollars of extra spending that Labour has proposed so far.

            • jarbury

              Tim, the latest option for Waterview is very similar to Labour’s option that supposedly cost $2.77 billion.

              Joyce says he can now do the same thing for $1.16 billion. Are you not a bit suspicious?

  10. Ministry of Justice 10

    It’s a pity they can’t employ some of those exploited Indian contractors from Dubai – they could probably build it much quicker, for less money and improve the lives of the Indian contractors.

  11. randal 11

    410,000 jobs.
    catch up to australia after we first overtake gemany france and spain in the oecd rankings
    last but not least transmission gully.
    yeah right.
    if you fall for this then you would fall for anything.
    anybody want to buy the brooklyn bridge?

  12. BLiP 12

    I have no faith in this government’s financial information – especially the shit they dribble out to their pet media repeaters. I expect that this set of figures, or a variation thereof, will form the basis for the wholesale introduction of toll booths every hundred meters from the Cenotaph to spaghetti junction. No doubt some private company will be contracted to collect the cash and the tax payer will get back 20 percent over a thousand years paid via the issuing of shares on future developments of said private company. Yippee.

  13. tc 13

    Joyce’s a total plonker….and he’s one of their better ministers….LOL !

    Not only has he approved a project that will not deliver any significant benefit, on an earthquake fault for a city with the best public transport in NZ…

    He’s also given telecom another 9 months to complete separation….WTF ! They should have done it by now by declaring $1m less profit (any of the last few years chairman Boyd) and spend that on separation but hey that’s what you get with this ‘business can do no wrong’ govt….suffer the consumers.

    Where’s my superfast broadband Joyce ? I’d settle for a coherent plan.

    Now watch the media do a detailed intelligent dissection of the TG issue….yeah right !

  14. Transmission Gully is a much needed egress for our capital city. We would all be looking pretty silly after a major earthquake wondering why we hadn’t gone ahead with it on the basis of some “funding formula” Joyce has made the absolutely correct decision and I am sure 99% of Wellingtonians would agree with him.

    • Bright Red 14.1

      BCR takes into account benefits democracymum. You can’t say ‘oh, but what about this benefit’ because it is accounted for.

      All the benefits of TG put together only come to $600 million, $400 million less than the cost.

      I hope none of you rightards are running businesses with the same attitude that you would have the government spend borrowed money.

      • ben 14.1.1

        Red, you are probably right about this, at least in principle (governments are not known for high quality BCR analysis – but I digress). The problem is that a BCR for the bits of government spending which is actually measurable (you generally need market prices, which makes health and education, for instance, hard or impossible to evaluate) would be massively negative. Air NZ, all the government power companies, TVNZ and ACC do not earn anything like their cost of capital. So, using your perfectly correct TG logic, they are projects that should also be shut down. Welcome to the dark side.

    • outofbed 14.2

      99% of Wellingtonians would agree with him.

      Not I suspect the majority of Green voters in Welly (20%+)

    • Armchair Critic 14.3

      TG won’t save Wellington after an earthquake, however vivid your imagination is.
      Back in the real world, most of the population won’t be evacuated. Urgent evacuations will be by air. Mass evacuations will occur either by sea, or by land once road access is restored. In short, roads are not built to be earthquake-proof.
      The people who are not evacuated will need supplies of food, water, shelter, clothes, electricity etc. and delivering these will be done by sea, until the land and air links can be restored.
      The “we need it in case there is an earthquake” argument is bunk.
      If you are really concerned about what will happen after the big one strikes either focus on the port facilities or move out of Wellington.

  15. Bored 15

    I look forward to cruising up and down the Kapiti Coast highways on completion in 2030. Hardly a car or truck will disturb my bicycle, only other cyclists and the occasional jay walking sheep. I can visit the vintage auto museum where Porsches etc will have been sent to hibernate until the Ressurection when the wells will gush oil again. At various points I will watch the believers in the Church of Technological Rapture in angry posturing as I free wheeel past their latest attempts to break the laws of physics through blind faith.

    • Daveski 15.1

      You may well be right. On the other hand, there’s every chance that at some stage in the C19 the futurists were wondering how they would navigate through the knee high roads full of horse shit on the assumption that nothing would replace horse powered transportation.

  16. Bored 16

    I would be delighted to be wrong. If we go back to horse shit days atleast my rhubarb will prosper.

  17. jarbury 17

    There are two massive issues here:

    1) What precedent this sets. This basically means that cost-benefit analyses are worthless if the project is what Steven Joyce wants to do. Expect the same arguments when it comes to whether or not the Puhoi-Wellsford “holiday highway” should go ahead.

    2) Joyce is constantly demanding that public transport projects “stack up” and have good cost-benefit ratios. Hypocrite.

    • Clarke 17.1

      The reason given for approving TG is that it’s a “Road of National Significance”. According to a mate who’s trying to stop the Basin Reserve flyover, a RoNS is effectively defined by the Minister as “anything I say it is”, based on the OIA response. So no actual calculators were harmed in the making of the decision.

      And yes, it does set a precedent for the Minister to make arbitrary and capricious decisions about the use of public funds, which is not exactly encouraging from a party that makes no bones about taking money from lobbyists. In my view the $11 billion Joyce wants to spend on roads in the next decade is just Muldoon-era Think Big cronyism in a new wrapper.

      Captcha: upsetting. Sheesh.

      • jarbury 17.1.1

        Yup you’ve got it. Roads of National (big N) significance have hugely politicised transport policy, to the point where basically Joyce can pick and choose what projects he wants to happen regardless of the advice he receives and the analysis of what “stacks up” economically.

        The problem is that Joyce gets lauded for “getting stuff done”.

  18. burt 18

    Can anyone tell me where I can find the cost benefit analysis for buying KiwiRail for hundreds of millions over book value ?

    • quenchino 18.1

      Yeah… remind us burt how Dr Cullen bought KiwiRail as an alternative to lining the pockets of an Australian owned private company with a subsidy of several hundreds of millions every year.

      • gitmo 18.1.1

        ‘Reminder to quechino’

        Dr Cullen was bent over and done up the cak by an Australian owner private company…….. then proceeded to crow about how the cupboard was bare to the incoming government…….. unfortunately the diddles in parliament look after their own so he’s now got a plush job on the taxpayer doing SFA until he’s in his dottage.

      • burt 18.1.2


        Have a look at this chart and let me know how much more you want to discuss the issue.

        I’m not excusing National’s pathetic handling of the ‘cost/value’ questions where clearly Joyce was shooting from the hip. But I would like to know what standard we are to measure such projects against. I would also like to know more about the timeframes used in the evaluation.

    • Marty G 18.2

      burt. you don’t understand what a BCR is.

      It’s the measure of the benefits of the asset existing vs the cost of constructing it to the whole country. In the case of Kiwirail, sure the value on the government’s books is lower than the purchase price but the value to the wider economy of having a working rail system (that the government is investing in, rather than being asset-stripped) is far beyond that narrow measure.

      Anyway, if you’re against Kiwirail, you should certainly be against TG. Simple as that. You’re just trying to make excuses and deflect from National’s uselessness.

      • ben 18.2.1

        Oh please. Name a single thing about Kiwirail that makes it unsuitable for a cost benefit analysis while leaving TG suitable. If rail is going to have value to the wider economy with such a small share of passenger trips and cargo, then explain how road, which gets so much, could not. You are simply making things up.

        • Armchair Critic

          Oh please, KiwiRail is a network, TG is a component of a network. Surely you know the difference.
          Your argument is tantamount to saying that it is a good idea to buy a new clutch (with a blow-off valve that goes whoosh), but buying a car to put it in is stupid.
          Sure, Kiwirail and its purchase could be subject to a B/C analysis, but it would be a quite different B/C analysis to the one used to show TG is a dumb idea. And the two would only be comparable to people who don’t understand what a B/C is. You seem to be one of them.
          A link to the methodology used for TG was posted by jarbury @ 8.21. I read it a few years ago when it was several hundred pages and I doubt it has slimmed down much in the interim. I recommend you read it too, before you spout off any more undereducated crap.

          • ben

            Utter tosh. All of it. So what if rail is a network and TG is a part of another network? Since when did the value of cost benefit analysis per se depend on the share of the network being considered? Since about never.

            • Armchair Critic

              So you think you can just compare BCs at face value without needing to understand either:
              – the nature of the subject of the BC, or
              – the methodology used to determine the BC.
              Good luck with that.

  19. jarbury 19

    Certainly there’s no doubt Cullen paid too much for KiwiRail. However, that’s kind of different to this issue.

    The point is that NZTA have an enormously long and complex way of analysing the costs and benefits of transport projects through the Economic Evaluation Manual. The system certainly has its flaws (like its ignorance of induced demand and its over-reliance on time-savings benefits (which there is a huge debate over whether these exist in the long-run or not) but the point is that it’s a system that NZTA uses to work out whether a project is “worth it”.

    That system clearly shows that Transmission Gully is not “worth it”. Perhaps that’s because it’s the kind of project that has benefits outside of what the EEM measures. The big point is that the government has decided to completely ignore this process – effectively saying they don’t care whether the project is “worth it” or not. This is at the same time as increased pressure is being put on public transport funding – through the “farebox recovery policy” that is being universally criticised by councils. This Transmission Gully decision shows that Joyce is actually not interested in working out what transport projects best stack up economically, he’s just what we feared worst – either ideologically in favour of road spending, or a puppet figure for the Road Transport Forum.

  20. Swampy 20

    Well you know
    This is fiscal stimulus
    The government is in the hock for $10 billion worth of spending commitments that Labour lumbered them with
    And if they cut $10 b out of the budget you would scream 10 b x louder.

    And I think you should really ask the people who live in Kapiti Coast because probably 95% of them who don’t vote Green support this project because they have the current highway stuffing up their communities as well as everyone who drives north out of Wellington.

    Plus Jeanette goes on about public transport, well public transport is no good if it can’t take you to where you want to go and quite often it cannot.

    • jarbury 20.1

      National certainly do not HAVE to spend $10 billion on state highways over the next 10 years. In fact, Labour was slowing down spending on state highways because traffic volumes on them have been steady or falling for the past few years and Labour realised it’s pretty silly to build more roads when the number of cars isn’t going up.

      Of course public transport doesn’t work for all trips. However, the Kapiti Coast does have a pretty good rail connection to Wellington; a lot of Wellington’s jobs are located in the CBD, so for a lot of people public transport would work for the kind of trip they want to take.

      It’s hard to know what to do about peak holiday times. Perhaps better communication that’s “up to the minute” so people are encouraged to travel at off-peak times. Unlike going to work in the morning, you have a lot of flexibility about when to go on holiday and generally there’s nothing stopping more people from travelling at 8am or 10pm, when I bet the road is fairly empty. Maybe peak-time tolling to “spread the load”?

    • Marty G 20.2

      It’s an incredibly bad form of stimulus that creates only 60 cents of benefit for every dollar spent. And its not stimulus because spending won’t start for four years.

      I don’t care if the money is budgeted, if it comes from cutting something else or if they found it at the end of a rainbow – building Transmission Gully is a wasteful and stupid thing to do with it.

    • outofbed 20.3

      95% who dont vote Green
      Paekakariki 30% Green
      Raumati South 21 % Green

      Probably averages out to about 10% along the Kapati

      • Pascal's bookie 20.3.1

        Can’t help but notice how the arguments from regular righties amount to a forthright and unashamed defence of pork barrel politics at it’s most venal.

        • ben

          I can’t speak for Righties since I am not from the right wing, but I can only ask for consistency: that ALL government spending with a BCR of < 1 be immediately stopped. Cancel TG. Cancel government involvement in ACC and Air NZ. Put those projects in the hands of people who do not have the right to endlessly milk and raise taxes and who lose their shirt if it doesn't work (aka the private sector) and either watch those BCRs take off or those projects quickly disappear. And – christ – get rid of pork barrel. PLEASE.

          • Marty G

            I haven’t seen anything to suggest that the BCR for ACC or AirNZ is less than 1. And I struggle to think how they possibly could be.

          • Clarke

            Yeah, give Kiwirail back to Fay/Richwhite like ben says – they were really efficient at running it into the ground.

            • ben

              No. Shut down the parts making no money, about 3/4 of the network. Nobody, private or public, has been able to get rail to earn an economic return since about 1930. Marty is perfectly correct that TG has to pay its way to justify invstment: assuming the BCR analysis is good, New Zealand is poorer by the shortfall.

              • Lew

                ben, what a great idea! Then we’ll have four or five independent rail lines — one from Christchurch to Picton, one from Wellington to Palmerston North, one from Hamilton to Auckland, and one (I guess) from Tauranga to somewhere out in kiwifruit country. They’ll all be economical because there won’t be any of that pesky uneconomical stuff used to connect them up into a network!


              • ben

                Well actually Lew that is exactly how rail used to be organised in this country, back when the proposition was economic.

                Your argument is around the wrong way. Even with the network effects you seem to think are so valuable and which are present, most of the rail network is uneconomic. So we’re in the best case scenario right now. Network effects are not saving rail.

                It turns out, for New Zealand, that the very large cost of rail exceeds by some margin the value that rail creates. So close the bits that lose money and make us all poorer.

              • Clarke

                Shut down the parts making no money, about 3/4 of the network.

                And using the same criteria, I presume that you’d be happy to shut down the parts of the roading network that are equally fiscally inefficient, such as the road around East Cape, which doesn’t generate enough traffic to even pay for the upkeep on a full cost allocation model.

                After all, the direct revenue from private motorists only covers 68% of the costs they impose on society, and truckies only 55%. So if we’re going to be consistent with your “efficiency” argument then a whole bunch of rural dwellers are going to have to get used to no road access to their properties …

  21. Nick C 21

    I think theres another question that needs to be answered: Dont socialists like pissing money away on stupid projects which survive no reasonable cost/benefit analysis in order to stimulate the economy? Havent they been telling John Key to do that for the past 12 months?

    • jarbury 21.1

      From memory one of the main things Labour kicked up a fuss about during 2009 was funding cuts to adult and community education. A large reason for that was because a study showed it had a huge return on investment.

      • Nick C 21.1.1

        Just because one spending cut opposed had a return on investment doesnt mean all spending cuts opposed had a large return on investment. Look what Obama is doing in the US for example, spending $700,000,000,000 on a stimulus package. Do you object to that on the grounds that most of it would have had a weak return on investment?

        • Marty G

          who says it has a weak return on investment or BCR? All the evidence is that the stimulus packages saved us from a much longer lasting global recession.

        • Mac Hall

          Obama is bankrupting the US. He promised no earmarks, yet there are more than 8,500 earmarks in the stimulus package. They are blowing through money on things like $22,000 for a toilet or putting up a guardrail around a dry lake. http://www.stimuluscigars.com/whatsburning The return on investment you discuss is abysmal and generations will pay for this gross mismanagement of money.

  22. ben 22

    It is hilarious watching Lefties moan about government pork barrel. Because pork barrel is what you call for in your daily calls for government action against the private sector. There is no way around it. Your call for government spending on some problem necessarily attracts special interests, who will lobby the government to get a cut, and when they get it will lobby the government for more. And try cutting that funding in the future, long after whatever problem the government was meant to solve has been forgotten, and watch industry groups form overnnight and hire PR companies by 9am the next day.

    • Clarke 22.1

      Using your absurdly wide (and delightfully inaccurate) definition, all government spending would be classed as pork barrel – including the entire education and health sectors. Which does tend to render your analysis somewhat meaningless.

      You’ll recall that the Marty’s original point was not that TG has a negative BCR – anyone with ten minutes experience in the transport sector and a pocket calculator could have told you that – but that Steven Joyce deliberately lied about it.

      I would point out that in this respect, Labour was much more intellectually consistent than National. At least they didn’t bullshit about TG paying its way when it clearly doesn’t.

  23. jarbury 23

    I think an interesting question to pose here is whether the problem is actually with the cost-benefit analysis process. Why is it that a project that “seems” as necessary as Transmission Gully can barely make back 60c of each dollar spent on it? What’s the process missing?

    It will be interesting to see Joyce’s response to the cost-benefit analysis of the Auckland CBD Rail tunnel later this year. He’s kind of backing himself into a corner where he pretty much has to fund it no matter what the BCR is. After all, it’s a critical project.

    • Lew 23.1

      That really IS the question, Jarbury. For all that the numbers for such things can (supposedly) be massaged, you’d think that something which so easily passes the public sniff-test could at least me MADE to look worthwhile on paper.


      • Clarke 23.1.1

        In my view much of the problem is that transport BCRs were originally designed to provide a yardstick to measure the differences between transport projects – i.e. if the government decides to spend x billion, what are the projects that should be prioritised?

        The problems arise when people (and Ministers) take the internal transport BCRs and use them as a mechanism for justifying the expenditure in the wider economy, so many of the omissions and abstractions become nonsensical, such as the decisions to ignore the health impacts of increased road spending.

        In effect, politicians are now misusing an internal allocation model to provide the justification for the efficient allocation of resources in society – something the BCRs were never designed to do.

        • jarbury

          Yes that’s right Clarke. Transport decisions have been progressively more politicised in the last few years. The last government made a big mistake bringing in the “Government Policy Statement” for transport, which has been used as a way for Steven Joyce to shift massive amounts of money to building new motorways from just about every other corner of the transport budget.

          Politicisation is not necessarily a bad thing, as it means you might end up with somewhat more visionary thinking than is likely from a bureaucratic approach, however it is certainly risky that you’ll end up with poor decisions being made. My worry is Joyce is holding public transport projects to account in terms of their cost-benefit analyses, yet at the same time he’s letting his “roads of National significance” bypass that process altogether.

          Really it’s utter hypocrisy.

  24. Kevin 24

    Let’s get some facts right here:
    1. Future generations have more options for long-term renewable road transport energy than you can shake a cricket bat at. My forthcoming book surveys the strengths and weaknesses of them, in the NZ context. The point is that there is no technical reason why road transport should contribute to climate change. We know how to carbon-neutralise road transport, and its realistic to expect several promising technologies to more than cover present transport energy requirements.
    2. Most of the daytime traffic on Wellington’s main roads, including SH1, consists of people who are working. They are tradespeople, freelance writers (like me), reps, transport operators, and so on. No matter how good the public transport system, they will not use it.
    3. Transmission Gully is crap anyway. It’s far to steep to ever be called a motorway – the northern end is as steep as Ngauranga Gorge and twice as long. Once the road’s been opened for a while, they’ll slap an eighty K speed limit on it.
    4. The most practical option is a motorway, and it would be a real motorway, through the Akatarawa Valley. This splits northbound traffic so it should work very well for normal daytime demand. It might not suit regular commuters, but so what? We have electric trains for them.
    5. As for BCR. Considering Wellington’s never had a decent roading network, I would say that BCR is totally irrelevant.

    • Bored 24.1

      Please elucidate on point 1. without breaking the fundamental laws of physics and the carrying capacity of earth to provide both food and fuel crops in sufficient quantites..

  25. Ben 25

    The governments commitment to “Holiday Highway” in Auckland is a waste of money in my opinion not too mention the proposed Transmission Gulley motorway.

    It’s true that New Zealand does need a decent road systems I 100% agree with the people on this issue but does the government really need to pour billions of dollars of your money on roads. The population of New Zealand isn’t large enough to commit that much spending on highways. Why can’t the government aim for a more evenly balanced approach to transport spending that favours both sides. Surely NZ needs a much more varied choice of transport options. The governments commit will do nothing to solve congestion but will instead make the country more in debt.

  26. I agree.

    The evaluation framework was watered down heavily by the last government, when using cost/benefit criteria to ration road building was sacrificed in favour of multi-criteria analysis. That meant a lot of poor quality spending was advanced ahead of better projects.

    The Nats have taken the rot and made it worse. Before 1999 the Nats strongly supported Transfund having an independent board and a very high standard of economic efficiency for major road projects to be advanced. Now it’s all gone out the door, free market economics replaced with old fashioned Muldoonist Think Big.

    The only part of SH1 between Paremata and Kapiti that isn’t efficient to upgrade is the coastal route, because it isn’t congested and accidents have largely been addressed by the median barrier. Given the figures before for this work suggested the coastal route upgrade was 2/3rds the cost of Transmission Gully, you seriously have to wonder how much gold plating and risk assessment is being done by the engineers.

    At some point it simply has to be accepted that some roads some of the time will have mild congestion, and until there is time and location based road pricing, it will always be so. Public transport is a red herring that wont make a sizeable impact.

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