The boondoggle

Earlier this week, Kiwirail released its most recent half-yearly financial result.  Once again, the taxpayer was poorer for their operations.   They make great play of a modest “operating surplus” but I rather liked this summary table from their latest Annual Report

kiwirail

In other words, no returns to shareholders at all; in fact losses in one year of a third of the (periodically replenished) shareholders’ funds

Last year, they had operating revenues of $595 million, and an overall loss of $197 million (much the same as the year before).  So roughly a quarter of their overall costs are not covered by income.   As an organisation –  and with all due respect to the energies of individual employees (including the five earning in excess of $500000 per annum) – it has all the appearance of being a sinkhole, absorbing more of the scarce resources of taxpayers each year.

And before people start objecting that roads don’t make a profit, it is worth remembering that airlines do and coastal shipping operations do –  and, if they don’t, they usually go out of business.

An organisation that operates such large losses (acquiesced in by successive shareholder governments) clearly isn’t one that applies the most demanding tests possible to the question of whether individual lines should be opened or closed.  Occasionally people attempt to justify government intervention in this or that activity on (questionable) grounds that the private sector is applying too high a cost of capital.  But in this case, the state operator’s average return on capital (ie over all its operations) is substantially negative, and it has no expectation of changing that.

A few years ago, Kiwirail closed the Gisborne to Napier line.  Rail volumes had been low and falling –  some trivial portion of the volume that Kiwirail estimated would have been required to make the line viable.  But ever since, there have been people hankering for the line to be reopened.

And yesterday, as part of the first wave of projects approved under the new Provincial Growth Fund, the Minister of Regional Development announced that

“We’re also providing $5 million to Kiwirail to reopen the Wairoa-Napier line for logging trains, taking more than 5700 trucks off the road each year.”

 In the more detailed material released with the announcement there is a suggestion that the Hawkes Bay Regional Council may also be putting in money.

There is no sign of any cost-benefit analysis of this proposal having been released at all. But we can assume that the proposal wouldn’t pass any standard (weak) Kiwirail commercial test since otherwise Kiwirail would have reopened the line without taxpayers’ having to chip in more money directly.

There used to be some logs/timber carried on the Gisborne-Napier line, but a reader pointed me to the numbers: in the final full three years of operation, a total of 327 tonnes of it.

There are, apparently, going to be a lot more logs to move in the coming years.  In the Minister’s words

“The wall of wood is expected to reach peak harvest by 2032 so reopening this line will get logging trucks off the road and give those exporting timber options that they currently do not have,” Mr Jones says.

“It makes sense to consolidate that timber in Wairoa and use rail to take it to the Port of Napier.

Except that apparently officials and Kiwrail had already looked at this option a few years ago.  In a report released only a few year ago it was noted that

“We note that Kiwirail was not convinced this would be finanically viable for users given the relatively short distance involved and the need to double-handle the logs.  Industry feedback has also indicated that transport of logs on rail across the study area was unlikely to be economic.”

Perhaps the economics has suddenly changed?  But, if so, where is evidence?  None was published yesterday.   We aren’t even told what assumptions are being made about how much of the logging business will be captured.

The Minister’s release also argued that there were climate change benefits from this move

“It will also mean 1,292 fewer tonnes of carbon dioxide released into the atmosphere each year.”

Even if this were relevant –  don’t we have an ETS supposed to deal directly with pricing emissions? –  and accurate (what assumptions are being made, including about the carbon costs of the double-handling?), it sound doesn’t terribly impressive.  A single 747 flying to London and back once apparently emits 1100 tonnes of carbon dioxide.

This is just one of the numerous projects the government is going to spend money on in the next few years.  I’ve only looked through the Gisborne/Hawke’s Bay list, and none of it fills me any confidence.   What, for example, is central government doing on this?

The Provincial Growth Fund will provide $2.3 million to redevelop the Gisborne Inner Harbour as part of a wider tourism investment programme.

If, as the Minister claims,

“Tairāwhiti is brimming with potential and untapped opportunities

you would have to wonder why the private sector, and the local authorities, don’t seem to think them worth spending money on.  (On my story, a materially lower real exchange rate would help quite a bit, but the government shows no sign of addressing that.)

A couple of weeks ago, I commented on the Minister of Finance’s underwhelming exposition of what the government was going to do to transform the productivity outlook in New Zealand.   The Minister noted

A major example of this is the Provincial Growth Fund developed as part of our coalition agreement with New Zealand First.  This will see significant investments in the regions of New Zealand to grow sustainable and productive job opportunities.

To which my response was

If it ends up less bad than a boondoggle we should probably be grateful.  It isn’t the sort of policy that has a great track record, and it is hard to be optimistic that one new minister –  with a vote base to maintain –  is going to transform the sort of flabby thinking around regional development presented at Treasury late last year.  

hen again, the Secretary to the Treasury might quite like the idea of paying to reopen the Napier-Wairoa line.  I’ve told previously the story of Gabs Makhlouf, fresh off the plane from the UK, lamenting that the one thing New Zealand hadn’t sufficiently taken from the British Empire experience was to invest more heavily in rail (in response, assembled Treasury officials were not quite being sure where to look).

Sometimes economic policy in this country seems almost designed to defy reason and evidence in an effort to make us poorer, to hold back national productivity prospects.  Spraying around $5m here and $5m there –  $3 billion over three years, in some scheme reminscent of congressional earmarks in the United States – not backed, it seems, by any robust supporting analysis, seems just another  step along that path.

39 thoughts on “The boondoggle

  1. Michael I gave up on your article at this point;
    “And before people start objecting that roads don’t make a profit, it is worth remembering that airlines do and coastal shipping operations do”.

    If you are genuinely concerned about ‘transport boondoggles” of poorly allocated resources and wasted taxpayers funds you would look a lot closer at the $billions that have been thrown to the truck and car lobby over the decades.

    For clarity sake here is how transport is funded in NZ. Over 60 cents per litre on fuel tax, plus ratepayers contribution -around $1000 a year from the average Auckland ratepayer, plus vehicle licensing fees of over $100 per year per vehicle, and a fairly big chunk of funding from general taxation too.

    So the bulk of the transport network in no way resembles commercial firms working in a competitive environment with all those hidden assumptions -ease of entry/exit of competing firms etc.

    Lets be clear -roads are massively subsidised and while that exists competing forms of transport like rail will struggle. Politically there will always be some subsidised roads e.g. no Minister of Transport will ever close down roads to small towns like Reefton and Ruatoria, even if traffic is so low the road doesn’t pay for itself (by fuel taxes etc).

    I am not particularly interested in regional economies -my concern is more urban areas and my advice would be to remove subsidies where possible to address misallocations of resources, rather than adding more subsidies to even up the playing field created by the previous subsidies.

    But lets do this with our eyes open not blinkered. Rail is not a uniquely subsidised form of transport in NZ and I don’t know why it continues to get singled out when other forms of subsidised transport are causing far more trouble.

    I have recently updated my Cities Spatial Economics paper which explains the difficulties a lot of this creates wrt cities.
    View story at Medium.com

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    • In addition to some of Tim’s points, I’d note that the absence of congestion charging in the inner cities is a material issue, which may have led to overspending on motorways and similar roads (esp in Auckland). Goldplating – eg turning waterview into a tunnel – also adds to the spend. Those are mostly urban issues.

      But I’d also note that in a sense the point of my post was to recognise that Kiwirail operates on sub-economic returns (rightly – as perhaps you might argue – or not), and even against that standard they thought Gisborne_napier (and presumably Wairoa-Napier) didn’t measure up.

      Liked by 1 person

  2. Brendon
    According to NZTA, fuel tax, RUCs and misc other commercial revenues are forecast to amount to $10.6B over the three year period 2015-2018. Spending on roads is forecast to be $10.4B and policing $1.1B over the same period.
    Where is the “massive subsidy”?
    I note that a further $2B is forecast to go on PT and $3m on walking and cycling, while $2.7B comes from local authorities. So there does seem to be a massive subsidy on PT and walking/cycling.
    Tim

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    • NZTA only fully pays for the state highway network, which is only part of the road network. The greater part of the road network is owned and maintained by local government, which is roughly 50% funded by ratepayers and 50% funded from the Land transport fund.

      Even if NZTA paid for every single road from fuel taxes and road user charges there would still be subsidies from some road users to others. Drivers who mainly use busy arterial roads are probably subsidising infrequently travelled rural roads. Trucks recently were allowed to increase their size but there was no increase in road user charges. Given damage to the road is from the cube of axle weight -there is likely to be a subsidy from lighter to heavier vehicles. For a 10 year period from 2003 to 2013 Canterbury only received back 50% of its fuel taxes and road user charges, while Auckland and Wellington received back 125% -so there is another subsidy.

      As I said there are massive subsidies within transport system and a bit of honesty about this would be nice.

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      • Hmmm… well lets not forget the CRL in Auckland… pushing up past $4 billion in cost at the moment…

        More to the point – road financing in NZ is largely user pays, although Government of all stripes allocate exta funds for strategic reasons. There are inevitably subsidies within the roading sector because some people can free load (looking at you electric cars) and others have quite low costs (motorcycles and small cars)…

        However, the discussion is missing the point – its a bit like arguing about how you want your eggs cooked after they have been cooked.

        KiwiRail is a terrible business because largely it is not fit for purpose. There are certainly good people inside the business, but the business is fundamentally flawed.

        its a technology problem. Over the years trucks have become larger, faster and capable of carrying larger loads, while rail has… well not really advanced much, if at all in terms of freight. Passenger yes, but that is a subsidy story all day long like everywhere else in the world.

        The point about sea freight and airlines is specious because they don’t have to pay for the sea or the air they travel on/in. Rail is a specialist ‘road’ with a very narrow set of possible uses, while roads do need cash, the range of uses is far wider than rail.

        The issues for rail are ruling grade (steepest part of the track) and the axle weight. Compared to overseas rail networks NZ has far too many steep sections and a stupidly light axle weight – also the narrow gauge line is expensive to operate in terms of equipment as narrow gauge is now very rare in most commercial settings.

        As compared to road haulage, which has seen significant technology change (and ongoing) which has increased efficiency and lower unit costs (bigger, faster, more fuel efficiency) the rail network has not really changed in 50+ years…

        So what to do? Well you can’t easily scrap the rail network – it does wonders for the Govt accounts by would increase the freight on road by almost 20% over night… so that would significantly increase the building of new roads. Over time you can, but then there is a Govt that want to reopen lines and a noisy part of the Green party agitating for loads of new rail.

        So its either rail remains a festering sore or it gets fixed – which will be billions… but compared to the CRL in Auckland the comparative cost may not be that much higher – $10 billion on rail sounds massive… but its the return not the cost.

        So this implies lots of double tracking between centres, increasing axle loads to 35 tonnes from the current 14 – 16 and laying a new outer track on the existing lines to move to wide gauge… then you can double stacked 40′ containers at over 160km/h… not that is the sort of efficiency that is needed on rail to make it ‘work’…

        The only way forward to make rail freight viable is to chuck a huge amount of $$ at it to deliver the technology change in one hit… or retain it as a festering sore…

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      • Interesting perspectives thanks. But under none of those scenarios is a Napier to Wairoa line likely to make economic sense.

        It would be interesting to know if four-laning the Auckland/Wgtn and Akld/Tauranga road would be more economic (less uneconomic) than the rail option you mention.

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    • Much seems to depend on how you look at this issue. Tim’s $3m for walking and cycling is peanuts compared to the $2B for PT and the $10.4B or $11.4B for roads. Walking came first and should be considered the base state; there would be no need to spend anything on walking if roads, railways and cycle paths did not exist. Therefore in my mind there can never be a subsidy for walking.

      Having driven my wife to work (Birkdale to Albany) three times last week and watching the cars crawling to the city she said “they should be using Public Transport then there would be less congestion”; she is not alone in expressing that view. PT in Auckland is subsidised by about half; that was probably a reasonable figure up to three years ago but now my gut feeling is something more like 100% subsidy would be the best way of spending in Auckland now. Waterview was a minor help but with an extra 700 cars per week congestion will get worse and there is no major road building will make any significant difference.

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      • My own preference would be to implement urban road/congestion pricing, and then to scale back on the public transport subsidies (which exist partly to offset issues around not pricing marginal (congested) road usage. That would also shift the balance to some extent re preferences to live more densely nearer city centres, rather than in outer suburbs with more space (which is an aspect of Brendon’s issues).

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      • I am enthusiastic for a modern intelligent congestion charge. Tie it to the Rego with a computer App so you know what you owe or pre-pay to get a discount. The central software has to be produced now by the government and it can cover parking and speeding fines too. Then the individual councils can build the link to number plate recognition cameras. It could be tailored day by day rather similar to the way TradeMe evolved their software.
        I think a flexible congestion charge would change how people travel and where they chose to live. You think it to. We might both be wrong but it is certainly worth a try and given Auckland’s problems: housing and transport show no sign of any other a quick fix. However Auckland council produced a report on congestion charging last November but have kept it secret for 3 months so they produce it at some big-wig meeting; apparently it details various forms of congestion charging (by region, by road, by time, etc) rather than saying lets go ahead get something working and just find out what works best. For example I would start with a simple $2 for using the bridge or the tunnel and then adjust it up or down and adjust the time of day it applies until the desired change in road usage is achieved. Then add more motorways and roads.
        If congestion charges are high enough bus use will increase so they will become more profitable and require less subsidy. The profits from the congestion charge would permit reduction of transport charges in Auckland rates which would be a bonus for me.

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  3. Michael, I’d be keen to see a piece of analysis of Tiwai Point.

    my suspicion is that once you factor in the potential for a substantial drop in electricity tariffs across the country that would arise from the closure of the smelter, and potential environmental impacts, this project is possibly the worst of the big industrialisation projects we’ve undertaken and maintained… but I have no data to support this hypothesis.

    It would be interesting to have an idea of the economic value destruction it’s created.

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    • Seem quite plausible, altho an evaluation of that scale is well beyond my capabilities (ideally you’d need a proper formal multi-sectoral model, including the ability to distinguish between the situation in the 70s (marginal cost of new electricity generation to the rest of the economy may have been lower) and that now.

      There is, of course, a lot of competition for the title of worst state-supported enterprise (Kiwirail may not even come close), incl the Glenbrook extension in the 80s.

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    • The problem with Tiwai Point is that the environment al costs are likely higher than the losses that might result from a downturn in aluminium prices… probably up around the $400 – $500m mark that would have to be paid by the smelter owner… so it would be cheaper to run it at a loss for 2 – 3 years than trigger those costs….

      I doubt there would be a drop in electricity charges as the generation costs are not rising as the market is well flooded with capacity and the vast majority of the increases in power prices have come from Transpower and the lines companies… and Govt edict… so adding the capacity from Tiwai into the market would drive down prices (and probably cause some generation to be mothballed) but not to the extent you might think because of the large increases in the cost of transmission and line charges, which are invariant to the supply/demand mix.

      There were some reports done a few years back by Treasury on Tiwai when it last threatened to close down (a standard negotiating tactic) but I don’t know what the result was. One thing… if Tiwai did shut down there would suddenly be a lot of unemployed people in Invercargill…

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  4. Given GGS’s arguments about the benefits of tourism (despite declining incomes in the sector), what sort of a subsidy do they receive via spending on roads?

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    • Hotels in Italy charges around Euro5 per adult. We should therefore levy a equivalent bed tax in New Zealand on Tourists say $10 per adult. Also there is a Euro1 coin operated charge on public toilets in Rome. We should do the same, say $2 coin operated entry to public toilets.

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  5. One thing I would say about cars is that they are now chock full in most towns and affect the ambience. The modern environment is (for most people) an assault to the senses.

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    • Not many will give up the convenience though. My daughter, Gen Y and have left home and started working has not learned to drive and would prefer the bus. The hassle is she now expects me to drive her around whenever she comes to visit me.

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  6. “”the British Empire experience was to invest more heavily in rail””. I must apologise for the British Empire; if Robert Stevenson and Thomas Brassey had visited NZ then assuredly there would have been a double track laid from Helensville to Auckland port and maybe a little later to Hamilton. It would have been built similar to the London Birmingham line which has bridges that trucks run over to this day and wide radius curves. Such a railway line would be easy to electrify and Auckland would now have two conurbations: Auckland and Helensville and the journey between them about 20 minutes non-stop. The benefits of such a track would have encouraged a greater density for dwellings near the critical railway stations. A similar track to the Airport and Papakura and it is Auckland would have the benefits of Brendon’s economics of agglomeration.
    The blame can be assigned to Victorian Britain which was too busy building railways in France and Crimea and Argentina. The lack of vision of the British Empire in matters of NZ transport seem to have been inherited by subsequent NZ politicians and planners.

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  7. I grew up in a country town. Maybe that is why our do not have a fascination with trains that leads me to suspend all disbelief about benefit cost ratios when they are applied to public transport

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    • New Zealand is changing me. From being rather right of Atilla the Hun and thinking ACT was a bit wishy-washy I’m slowly drifting into sympathy with old fashioned socialists – the only identity that matters is working class? However this is why without any data to support me I suspect free travel on buses during the rush hours makes sense for society on the whole. If you live in Auckland and go from Birkdale to Albany you are going against the flow of traffic to the city and until quite recently it was an easy journey by either bus or car. Now the roads are so flooded with vehicles straining to get to the city that they are blocking all the feeder roads and most of the junctions. You sit at the lights and when they go green you just keep sitting and hope one or two cars might get round the corner so you can continue onward. If free bus travel removed say 10% of the parents taking children to school and maybe 10% of those working in or near the city then our roads would get back to what now seems like the golden years of say 2013. This idea may not apply to all of Auckland or any other NZ city and I recommend it rather dis-disinterestedly since I’m retired and usually just wave my wife off to work at 7am. She can chose to start work at any time but 7am to 3.30pm used to be best for traffic. My son leaves at 6:30am.

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      • Jim: You have a fair point. My comments are North Shore experience only so train does not apply. As a goldcard holder I note buses are virtually empty most of the day but are full during peak congestion. Therefore my proposed solution would mean buying more buses and employing more drivers. Doesn’t sound too good on the face of it. However one extra full bus removes maybe 25 to 50 cars and the congestion is so bad that might be worthwhile.
        Quality of life is declining for almost all Aucklanders; most are too busy working to notice it but retirement gives me perspective.

        Had to look up your Down’s law; first item on Google was your website but found this too “”Anthony Downs’s (1962) traffic congestion analysis is given a generalized theoretical foundation. It is demonstrated that only two equilibrium saddle points—one stable, the other unstable—can be attained. Once the stable equilibrium is reached, traffic planning and control measures such as drastically increased metering and/or a metropolitan rail transit alternative must be in place so as to maintain equilibrium. If not, the expressway system eventually reaches gridlock.””
        Assuming expressway means SH1 then we are rapidly reaching the gridlock and have neither metering (congestion charging) nor a PT transit alternative available. It is crazy.

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  8. Having taken the public bus system in Rome for 9 days to see all its wonders and driven around Rome for a couple of days before driving the 250km journey to Florence and another 250km to Venice and then back onto the Roman port, Civitavechia another 500km back.

    Surprisingly, the peak traffic even though jammed packed with cars and the bus systems were jammed packed with people, traffic still flowed well. Part of the reason was the lack of rules.

    Little Fiat Puntos and Lancias, small and manual were being driven at 160km/hr. Heavy container trucks were overtaking each other at 180km/hr. I was being honked at being too slow with tailgating and flashing lights at 130km/hr throughout my joirney. But they had extensive tunnelling though mountains to straighten roads. You can drive through 5 to 10km of tunnels entering one end and it’s dark, raining and emerge the other side and it’s bright, sunny.

    Busses worked on an honesty system. Pay if you like to pay and buy a boarding pass from the nearest tobacco shop. The on board electronic systems just activated the weekly or monthly bus passes but does not check if you have an activated pass. In other words I did most of my sight seeing for free. Busses were jammed with people packed like sardines.

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    • Throughout my journey, there were warnings that electronic surveillance was active. Keep to 90km/hr but no one paid any attention as traffic flowed at an average 160km/hr on the motorways. I was expecting a whole bunch of speeding tickets from Hertz but there were none charged.

      There were automated ticketing machines at bus stops but many were not working so I suspect either most people were honest and bought daily, weekly or monthly passes or most people did not bother.

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    • Yes, there was extensive use of toll charges on motorways though. The older scenic routes did not have toll charges though so you had options to pay or not pay.

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  9. Four Laning …. Auckland-Wellington … not sure that would or could begin to achieve what you suggest unless you had a side-by-side high-speed rail-line to relieve the disruption and traffic chaos that would occur and would run for a good number of years … NZ is the land-of-portable traffic lights now without adding to it … the only solution would be duplication with a dual-carriageway … as they do in AU, UK, DE, US … but, the unanswered question is, with increasing population and increasing demand with more and more bigger trucks on the road, how long before you are back to grid-lock … enlarging the main arterial route simply creates and exposes the incapacity of the feeder roads which then become problems in themselves … the coke-bottle-neck effect

    It took NZTA 5 years to build the Lincoln Road interchange … that’s right 5 years … and for the duration exacerbated what were impossible conditions to become a nightmare conditions … guess what … they say Lincoln Road is still a nightmare … it’s a very clever well designed and engineered nightmare

    I lived in Hillcrest during the 1970’s when Onewa Road was the main artery for getting out of Northcote, Highbury, Birkenhead, Chatswood, Birkdale and western end of Glenfield. It was 2-lane then, it was always backed up from the Harbour Bridge to nearly Highbury. In 40 odd-years has anything been done to solve that problem, because the population has gone up considerably and the migrants keep moving there and keep buying cars … how do you solve that one

    In fairness they do say the Waterview Tunnel has been a great success

    https://en.wikipedia.org/wiki/Dual_carriageway

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  10. The mistakes that arise when elites, lobbyists, patronage, influencers, urgers, pushers get involved
    NZ has a propensity to plan for yesterday – or, to say it another way – plan for today with a 10 year build time – by which time it is inadequate

    An example
    The Auckland Harbour Bridge
    Initial planning began in 1860, but would not come to fruition until 1957 nearly 100 years later. The 4-lane structure that was built was inadequate within 4 years (repeat 4 years) The planners then embarked on extending out to 8-lanes (4-each-way) it by adding clip-ons which expanded its carrying capacity by 100% which is inadequate today. The surrounding infrastructure on either side of the bridge has never been up to the task and in sync with the bridge itself. Read some of the history here
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10574333

    Compare that to the Sydney Harbour Bridge which was opened in 1932 after taking 6 years to build and has yet to reach absolute capacity which is not expected until 2030. It was developed with two levels, including trams and trains and vehicle transport.

    Would you believe, one of the main reasons for planning difficulties and delays on the type of harbour bridge was because it had to be high enough (coathanger style) to allow cargo ships to get under the bridge and up to the Chelsea Sugar Works at Birkenhead. That’s the only reason, otherwise it could and would have been lower. Just had a dekko and sure enough the Chelsea Sugar Works, first established in 1884, are still going, and they still to this day have handysize ships importing raw sugar from Queensland once every four to five weeks – yep – one boat every 4 to 5 weeks – http://en.wikipedia.org/wiki/Chelsea_Sugar_Refinery

    Noted in Interest.co.nz July 2013 on an article by Brendon Harre
    https://www.interest.co.nz/opinion/65197/brendon-harre-thinks-we-have-problem-poor-quality-and-inadequate-quantity-local#comment-744130

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  11. The mistakes that arise when elites, lobbyists, patronage, influencers, urgers, pushers get involved

    NZ has a propensity to plan for yesterday – or, to say it another way – plan for today with a 10 year build time – by which time it is inadequate

    An example
    The Auckland Harbour Bridge
    Initial planning began in 1860, but would not come to fruition until 1957 nearly 100 years later. The 4-lane structure that was built was inadequate within 4 years (repeat 4 years) The planners then embarked on extending 8-lanes (4-each-way) it by adding clip-ons which expanded its carrying capacity by 100% which is inadequate today. The surrounding infrastructure on either side of the bridge has never been up to the task and in sync with the bridge itself. Read some of the history here
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10574333

    Compare that to the Sydney Harbour Bridge which was opened in 1932 after taking 6 years to build and has yet to reach absolute capacity which is not expected until 2030. It was developed with two levels, including trams and trains and vehicle transport.

    Would you believe, one of the main reasons for planning difficulties and delays on the type of harbour bridge was because it had to be high enough (coathanger style) to allow cargo ships to get under the bridge and up to the Chelsea Sugar Works at Birkenhead. That’s the only reason, otherwise it could and would have

    been lower. Just had a dekko and sure enough the Chelsea Sugar Works, first established in 1884, are still going, and they still to this day have handysize ships importing raw sugar from Queensland once every four to five weeks – yep – one boat every 4 to 5 weeks
    –http://en.wikipedia.org/wiki/Chelsea_Sugar_Refinery

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    • An engineering friend told me that the original plan for the harbour bridge was for 8 lanes and high enough to allow any ship under it (using the Queen Elizabeth as the standard). When they decided to save money and make it 4 lanes the chief engineer kept the towers unchanged without telling the council. Without that deliberate ‘mistake’ they would not have been strong enough to support the clip-ons. He also told me the design engineers were having a real problem keeping the gradients reasonable until whoever was in charge asked ‘why is it so high?’ and when told it was for the Queen Elizabeth cruise liner so he replied ‘it isn’t coming’ and the bridge was built to the height that matched suitable gradients. These stories may be as apocryphal as stories such as Arthur burning the cakes and Robert the Bruce and the spider but then contain an inner truth.
      Until your comment and after 15 years living near the bridge I had never considered that it could have been much lower by just moving the sugar factory. Cheaper and think of how much fuel is used daily getting vehicles up and over it. Of course it wouldn’t have looked quite so good in the scale models that the council reviewed. Sometimes the obvious is so hard to see.

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  12. So your argument is that airlines, railways, and coastal freight operators should have to make profit, but we should subsidise roads by billions (yes billions) of dollars a year?

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    • Kiwis love their cars. Most of us have cars. I have 3 cars in the garage. Roads equal to votes. Traffic jams may be an inconvenience but when you have great music and news radio stations like RNZ those jams are a sort of meditative relaxation.

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    • No. My specific point was two-fold:

      1. Even allowing for arguments about the extent to which road use isn’t fully priced (on average – it clearly isn’t at the margins) other competing transport operators successfully meet the market test (air, coastal shipping). It isn’t immediately obvious why rail freight (the issue here) shouldn’t be held to the same standard

      2. Successive govts have been happy for Kiwirail to operate in very low (negative) returns to shareholders – perhaps partly to reflect presumptions around road pricing etc – but even by that undemanding standard, Napier-Wairoa doesn’t appear to be have been viable.

      There are various interesting comments to my post. But I haven’t seen any that suggest Napier-Wairoa is an economic proposition. It is still possible, of course, that in fact it is, but then one might have hoped for a cost-benefit analysis to have been (a) done, and (b) published.

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  13. 1) The Government should have made the regional development fund contestable. One presumes some of the regional allocations came out of coalition talks. There should be a NZ law to avoid this.
    2) Regions (main cities excluded) should have then had to make business case submissions to access the funding.
    3) However trucking should also pay their full costs

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  14. I have been a advocating converting the rail corridor for self driving trucks. There are lots of advantages in this;

    1) No time restrictions on driving
    2) Will fit thru the tunnels with Hi Cube containers (50% of worlds shipping is HQ) where the trains don’t
    3) Dont mind waiting long periods for trucks coming the other way on narrow stretches and tunnels.bridges
    4) They drive a 70kph so are more economic – also need less power in the truck as no steep hills or overtaking
    5) They can be electric – can stop for charging when needed
    6) They go point to point – not railyard to railyard. Can be driven “the last mile”
    7) Take way more trucks off the road than rail can
    8) If there are accidents nobody dies
    9) Network can take self driving buses and cars too – so a passenger service may be viable

    Why doesnt Shane Jones lead the world in doing an enquiry into changing the network to something truly modern and suited to NZ. Surely the $5M spent opening the Wairoa line would be better spent on research for this.

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    • Shane Jones has a rural development budget of $1 billion. It costs around $3 to plant each non native tree which equates to 333 million trees and not a billion trees. If he wants to plant a billion native trees he will need $10 billion as the cost to plant one native tree is around $10 or he will only get to plant 100 million trees. Looks like Jacinda Ardern’s Labour Government is big on aspirational targets which is clearly practically cannot be achieved.

      Like

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