Friday, February 26, 2021

In defence of NIMBYs

Why? Not in my backyard!  Or, why not in my backyard? 

NIMBYism is seen as a negative, the selfish not in my back yard reaction of residents to any significant changes proposed for their neighbourhood. But is that always justified? It depends on who you ask. 

Certainly slamming NIMBYs makes for good press, offering developers and planners the high ground in the encounter between haves, with their commitment to the current environment, and the have-nots.  The have nots are supposed to be those (other than investors) that stand to benefit from the proposed change, be they drivers on an expanded highway, commuters on new transit connections, potential dwellers in new apartments, or workers  in new factories, warehouses, and offices.

So, it is interesting when a media commentator like Kerrie McIvor defends the NIMBYs, setting out the neighbourhood issues associated with residential intensification from the ground up.

People who know asking the questions that need to be answered

In fact, there is increasing recognition of the legitimacy of local communities’ reacting against development that threatens their established way of life.  Yet, the people most immediately impacted may be the best-paced to ask the critical questions.  They also have the right to ask them if council commitment to citizen engagement is genuine, and if developers rely on claims of public consultation to legitimise their proposals.

Denigrating all local reaction under the singular label NIMBY also obscures the different motivations of opponents, failing to distinguish those that resist change as a matter of course from those whose insights and experience raise legitimate questions.

Protecting the right to do it badly?

Dismissing local opposition risks lowering the barrier to ill-conceived projects. If a proposal cannot meet the challenges raised, questions must be asked about its merits.  In some cases, no development will be better than poor development.  In others, some modification, even moderation, may lead to enhancements that make a project more acceptable to locals and more attractive to the beneficiaries. Taken seriously, local opposition might result in better outcomes all round, if for example, it leads to better standards, design, and delivery.  

Unfortunately, weak or token consultation, entrenched positions taken by advisors, and blue sky financial or fiscal expectations by promoters lead to the discounting of local concerns and expertise .  This is especially so when local issues emerge only when advanced plans, to which promoters are already committed, are revealed .

There is more to NIMBYism, then, than resistance for resistance’s sake. After all, the challenge of planning is to reconcile development with environmental and community values.

Busting down the doors – clogging up the pipes

Take the response to the failing housing market over the last two decades.  Neighbourhood resistance to intensification garners little sympathy from decision-makers and commentators who simply see it as pitch by those with secure housing in established neighbourhoods against the interests of those in need of the shelter and security that they enjoy. This is a crude over-simplification.

Housing policies have relied too often on the simplistic adoption of residential intensification to boost supply.  When planners and developers choose a location for intensification because of its attractiveness, based on its current character, the risk is that they end up creating is the antithesis of what was there.  Nobody wins.

The result is reliance on expensive land within boundaries often ill-equipped to cope . Affordable housing under these circumstances means low cost, low quality dwellings, with high embodied and operational energy demands and all-too-often construction defects, while the subsequent bill from over-loading ageing and capacity-constrained public infrastructure  - our roads, pipes, parks, and waterways – mounts.  Ratepayers – existing residents and new – foot the bill.

Looking out for the beneficiaries

Simple-minded solutions to difficult problems – a shortage of dwellings in this case – can lead to outcomes that benefit no-one. Dig deeper into the aspirations of the unhoused, and it may be that the opponents of increasing density in urban areas are championing what many people want and what apartment living fails to provide.

Local communities resisting change can be seen as the champions of the values that people today see as rights: clean air, water clean enough to swim and fish in (and drink), access to sunlight and green space, limits on noise and light pollution, a degree of visual and aural privacy, reasonable access to private services and public amenities, and security.

There is no guarantee that the aspirations of future residents will be met by pockets of high-density housing. Evidence from a study of five UK cities indicates that denser neighbourhoods are still more likely to provide poor access to quality green space”, while their residents “are more likely to report to feel unsafe [and] experience less social interaction than in lower density suburbs”.

Too often, the rush to compensate long-standing failures of the housing market has led to alternatives that fail to deliver the real benefits of decent housing to the so-called beneficiaries – the occupants of the new dwellings.

Equity should not rely on lowering standards

So, when communities call for protection of their living space and the quality of the local built environment, they are not denying it for others. They are calling on those that can make a difference to do so in ways that add to the appeal of urban living, rather than destroy it. Urban plans that prioritise the destruction of organic suburban spaces to deliver sub-standard outcomes are about pursuing a form of urbanism that lowers the quality of city living and frustrates the pursuit of equity by lowering the well-being and expectations of an entire generation, not simply those that happen to make the most noise about it.

Saturday, January 23, 2021

Covid 19 - Unpacking the City

 The compact city – a crumbling consensus

The policy consensus promoting compact, centralised cities cannot be sustained in a world ravaged by Covid-19. The current pandemic is accelerating the move to dispersed urbanism. Beyond the direct impact of disrupted trade, travel, and consumption on the economic foundations of cities lies the cascading impact of changing work behaviours. This post considers what remote working might mean for urban development.

Calculating the number of jobs that can be decanted

My previous post summarised the McKinsey Global Institute (MGI) analysis of sector-specific potential for remote working, applying the resulting metrics to New Zealand.  Here, in line with other developed nations, around 30% of current jobs offer remote working potential.  

This post considers the possible impacts on urban function and form by applying the MGI approach to New Zealand’s cities and districts.

Urbanisation and Remote Working

The share of tasks that can be undertaken remotely has been calculated across 19 sectors for 67 territorial local authorities (TLA).  The results have been aggregated into: (1) the three largest cities (Auckland, Christchurch, Wellington); (2) ten provincial cities with populations between 50,000 and 175,000; (3) partly urbanised districts characterised by smaller towns and townships; and (4) mainly rural districts encompassing rural areas and small settlements (Figure 1). 

Figure 1: Urban Dimensions of Remote Working Potential, New Zealand

 

The potential for remote working appears to be a matter of scale: the large urban areas offer the greatest opportunities. 36% of Wellington’s jobs could be done remotely, 32% in Auckland and 29% in Christchurch. The potential is lower among small provincial cities (28%), partly-urbanised districts (25%), and rural areas (22%).

It appears that more urbanised areas have greater potential to substitute remote work for fixed-workplace employment.  This is confirmed when we plot potential for remote working against urbanisation across all TLAs (R2=0.47, Figure 2). 

Figure 2: Urbanisation and Remote Working Potential, New Zealand Council Areas

.. 


Examination of the variation around this relationship between urbanisation and remote working potential indicates the role of differences in local employment structure.  More production-based jobs offer lower potential for remote working, while more business and service jobs lift the potential.

Where within the city?

This section considers variation in the potential for remote working within Auckland (New Zealand’s dominant city with 1.7+m residents). Figures for 20 Local Board areas based on the MGI sector coefficients have been aggregated and organised in Figure 3 from north to south (left to right on the axis).  Reflecting the city’s linear geography, areas at each end are most distant from the CBD.  The CBD and its fringe comprise the “Central” area, sitting within the Isthmus, which contains the city’s older, inner suburbs.

Based on this example, remote working potential varies more within the city than among cities, ranging between 41% in the centre (47% in the CBD fringe) to 10% in the upper north and west and 2% in the rural south. The former reflects the high value, administrative, business, and professional jobs in the inner city and suburbs, and the latter the greater share of manufacturing and personal service (face-to-face) jobs in the suburbs and primary production on the fringe.

Figure 3 The Prospects for Remote Working within Auckland

 


Push and Pull Drivers

Much of this theoretical capacity is likely to be taken up.  On the push side, the risk of exposure to infectious diseases is reduced by limiting exposure to places where people congregate for work, education, and entertainment. One benefit is limiting the spread of other infectious illnesses, a personal and productivity bonus. Remote meetings offer another productivity gain, lowering travel costs and focusing information exchange, supervision, and negotiation.

On the pull side, remote working has been positive for many people and businesses, with reports that the practice is being adopted on an ongoing basis in New Zealand despite limited community transmission of Covid and internationally.

What about the downsides? 

A suitable work (or school) space within a dwelling is needed to maintain both productivity and satisfaction from remote working at the individual level. With housing affordability constraints impacting on younger people and families, in particular, their capacity to work effectively from home will be constrained.

Lack of face-to-face contact with colleagues limits the benefits of work based social interaction. In a Covid-free environment, however, one option is to mix remote working with workplace attendance one, two, or three days a week.

Impact at the centre

However it evolves, the urban impacts of remote working will be far-reaching. As employment in the central city stutters, policy makers and investors will have to rethink the principles of workplace location, investment, and development.

Hospitality, personal services, and discretionary retailing in the city centre will suffer from reduced commuter and work-related spending. They will also suffer from any changes in the attraction of the city centre for housing. Modest apartments in multi-storied buildings marketed for a city lifestyle will lose appeal, becoming a welfare, last resort, or first housing step rather than lifestyle choice.

Add the deskilling of high order services, displacement of predictable or repetitive transactional tasks by AI, and the prospect that the international travel industry shifts away from mass tourism, and the outlook for city centres as we know them dims.

Against this, the resurgence of suburban centres, provincial cities, satellite towns, and country life may build on the intrinsic appeal of living locally as more people decamp from intensively urbanised areas, provided, perhaps, that the policy-makers do not seek to impose the densities of inner cities on under-resourced suburbs and cling on to the notion of commuting-based city centres.

And Infrastructure?

As it stands, the compact city comes at considerable cost. The demands on ageing infrastructure from intensification were never anticipated by the city builders.  Maintaining or rebuilding energy and water supplies, the capacity and reliability of wastewater systems, boosting transport networks and retrofitting ageing transit systems all demand substantial expenditures, mortgaged in large part against expectations of growth that must now be in doubt. 

If nothing else, the impetus Covid has given to dispersal must shift attention to infrastructure challenges in existing suburbs.  While highlighting the hard questions in a policy environment beset by an unnatural aversion to greenfield development (in which the potential for sustainable settlement has suddenly become compelling); it also raises challenges for small, erstwhile sleepy settlements unprepared for the demands of a growing flow of ex-urbanites

Saturday, January 2, 2021

The long-term consequences of Covid-19 on the workforce: who – and how many – will work from home?

 Crises are transformational.

The second world war was a crisis that transformed the world.  Out of the ruins of a militaristic, fascist state, Germany emerged as the exemplar of liberal democracy. It led to the unification of Europe after centuries of conflict. And it transformed technology, precipitating a revolution in the communications and computing which drives today’s economies. 

More recently, the oil crises of the 1970s drove the search for alternative sources of hydrocarbons, boosted ongoing investment in alternative energy , and fueled the geo-political fire in the Middle East. Another: the terrorist challenges of the 21st century, highlighted by the 2001 bombing of the Twin Towers, escalated Middle Eastern conflict, promoted advances global in surveillance technology and information exchange, and initiated the undermining of US hegemony in world affairs.

 And now, Covid-19

The 2020/21 pandemic has boosted research into the virus and its mutations, has seen massive investment in vaccine development (and now global distribution ), and stretched emergency medical facilities.  It will lead to lasting gains in public health practice. It has invigorated debt-led state spending, altered the trajectory of the world’s economies, and tested the foundations of liberal democracy.

What are the impacts on employment?

The obvious impacts are on economic structure – which sectors have increased and which have lost jobs and income.  Health and IT, distribution and communication services have made big gains.  In some areas limits on trade have sustained or even increased manufacturing jobs, in others they have reduced them. Travel and hospitality are suffering, and may have changed forever. We may even see the toning down of mass consumption necessary to avert the worst of climate change.

There will be other more immediate changes.  The design of workspaces will change, with attention likely to shift from fitting as many workers as possible into a space to addressing workforce wellbeing. And the rigid timetabling of the production day is likely to fall away as more people work remotely. 

 Working Remotely

The capacity to work from home – or on the road  – has been increasing slowly for three decades building on advances in IT and Cloud-based computing. With Covid’s aggressive contagion, the case for remote working has become compelling.  

The result has been a rapid lift in the capacity, flexibility, and reliability of the necessary technology. With this infrastructure in place, there will be no going back, even in a vaccinated world. Quite apart from diminished risk of illness, people will be reluctant to relinquish the up-side of lock down: flexible work practices, more control over their working (and leisure) lives, and, perhaps, more appealing work environments.

 Who will be affected?

The answer depends on what tasks can be performed effectively outside the disciplines of a set workplace. Back-of-office jobs processing and transferring information are obvious candidates in the historic view that higher order jobs (involving negotiation, personnel management, or specialist expertise) require face-to-face contact. The success of virtual boardrooms, classrooms, offices, courtrooms, and council chambers under lock-down has put the lie to that.

Lock-down has demonstrated that traditional face-to-face tasks do not demand a continuous joint presence. Remote working will mean fewer days at the office, better organised meetings, and fewer social precursors to getting business done.

 The numbers

McKinsey Global Institute analysed jobs and tasks in different sectors across nine nations to identify “work that doesn’t require interpersonal interaction or a physical presence at a specific worksite[i]. Figure 1, reproduces the results for the United States, showing the shares of jobs in each sector that can be undertaken effectively at a distance. [ii]

It demonstrates substantial potential for remote working in high value-added sectors. For example, 76% of financial services jobs could be undertaken remotely, 68% in business management, 62% in technology, scientific and professional services, and 58% in information technology and communications 58%.

Figure 1: The potential for effective remote working in the United States


Source: McKinsey Global Institute (November 2020) 

Potential is lower in sectors where tasks demand direct contact with materials or customers . Just 8% of tasks in hospitality can be performed remotely without eroding productivity, 7% in agriculture.

The analysis was repeated for eight other countries. The results largely reflect their different economic structures.  UK has the greatest potential for remote working (33% of the total workforce). Germany, Japan, and France had levels similar to the US (29%).  Less developed countries have less potential: Mexico (18%), China (16%) and India (12%).

And in New Zealand?

Applying McKinsey's sector estimates to New Zealand[iii] suggests that here as well 29% of jobs could be undertaken remotely without reducing productivity. The two most “footloose” sectors (professional, scientific, and support services and business management and administration) account jointly for 30% of the potential (Figure 2).  Education and health sectors are also potentially major contributors given numbers they employ.

 Figure 2: The potential for remote working in New Zealand sectors

 

What Next?

The Covid-19 crisis, an event that almost nobody predicted[iv], is driving significant change to economies, migration, geopolitics, and public health.  It is also promoting rapid changes in the way we work.  There can be no expectation of reverting to the old ways. It makes sense to prepare for a  future in which a third of the workforce, more in high-value growth sectors, only occasionally attends a formal workplace.  The consequences for lifestyles and land use, especially in advanced economies, will be far reaching. The next post will consider some of those consequences for New Zealand .



[i]              McKinsey Global Institute (November 2020) What’s next for remote work: An analysis of 2,000 tasks, 80 jobs, and nine countries[ii]            The McKinsey study also estimated a greater potential for more remote working in each sector, but the marginal increase to a theoretical           maximum came at a cost to productivity. This analysis draws only on the lower, effective figure.

[iii]        Based on Statistics New Zealand Business Demography Tables

[iv]        Bill Gates’ 2015 prediction in a Ted Talk is a noteable exception: - Bill Gates: The next outbreak? We're not ready | TED Talk

Tuesday, July 7, 2020

Preparing for a Post-Covid19 Economy: capacity building or building capacity?


We seem to have the pandemic under control - what next?
Now that community transmission has been eliminated in New Zealand and some rigour brought to border control, it is timely to think about economic recovery. That’s not straightforward. As the pandemic rages globally restricted travel, limited trading opportunities, and disrupted supply chains mean that we have to make the most of an inevitably shrunken economy.

Making decisions about where to put economic resources – including spending on recovery – is made harder because we have no idea what the future holds. We can no longer predict economic conditions and the outcome of policies with any confidence if we rely on past experience.  We can, however, make decisions about how to deal with today’s crisis in a way that prepares us for tomorrow’s unknowns. 

This post suggests focusing early recovery on employment-intensive sectors that better equip the community to rise to the unknown challenges of the new normal, rather than building the infrastructures associated with the old.

The Infrastructure Capacity Consensus
To date, New Zealand’s rebuilding strategy has been defined mainly in terms of building physical infrastructure to cater for economic activity as we knew it.  Among other things, the Government has just committed $3bn to start on its list of shovel-ready projects. While it's early days, the National opposition already says we need more infrastructure. While there may be debate about how much, what projects, and in what order, there is no obvious disagreement with the notion of building our way out of the darkness.

This risks justifying spending on uneconomic infrastructure that undermines productivity and prejudices long-term growth. Promoting infrastructure to create jobs simply promotes investment that cannot otherwise be justified in sectors already facing supply chain and skill bottlenecks. When these are publicly funded they not only increase fiscal risk; they potentially starve activities that promise greater employment and a more assured long term return.

Building Capacity as an Alternative
What about another approach? What about building the capacity of people, rather than structures, to deal with a future that will not be a rerun of the past? This will emphasise more jobs more immediately, maintain better short-term domestic demand , and build the adaptability and resilience needed in the long-term.

It does not mean dismissing infrastructure, but calls for spending on it to be moderated, focusing on what we know is needed and not the nice-to-have or me-too projects, favouring instead activities that deepen the skill base, develop talent, promote creativity, and encourage entrepreneurship.

Investing in people
Today we are confronted by a deficit of demand, not a deficit of infrastructure. Investing in people will lift demand directly, hold together a fractured domestic economy, and lay the groundwork for long-term recovery and resilience. Our nation’s capacity to respond will be best served if the population is in good health, well housed, well educated, and well employed.

So, what are the best sectors for promoting employment?
Employment multipliers are used here to address this question.  The multipliers relate job numbers to output in each of the 106 sectors used to define the economy.  The jobs may be direct (within the sector in question), indirect (associated with supplying materials, components, goods, and services to that sector),and induced (from the spending of employees in the first two categories). [1]

Table 1 lists the sectors with the highest employment multipliers. Among other things, this indicates that one million dollars of additional output (or funding) in pre-school education would give the most jobs for $1,000,000 spent: around 29 in total, comprising  around 21 in the sector itself, 3 in activities supplying it, and 5 from the resulting household spending. Specialised food retailing also scores well, with a strong indirect effect reflecting how it draws on domestic suppliers.[2]   

Table 1: Sectors with Highest Output:Employment Multipliers (2017)

Table 2 compares multipliers from the most employment-intensive industry groups drawn from Table1 with those for the industry targeted by infrastructure spending, construction.

From this we see that:
·   The employment boost from spending in construction sits close to the median for all sectors, but well below education, health, and social care services.
·  Residential building is a slightly better job-booster than civil engineering (roads, bridges, and the like) and non-residential building.
·  Residential and non residential building both generate significant indirect employment, reflecting reliance on local suppliers and subcontractors.
·   Non-tertiary education sectors have a substantial direct employment impact, with a relatively high induced impact suggesting that the sector’s typically “middle incomes” sustain above-average household spending.

Table 2: Employment Contribution, Selected Industries (2017)

·   Spending on tertiary education may generate less immediate employment because of higher overheads and salaries.
·   Medical and residential care and social assistance also have significantly greater employment impacts than construction.  Some of this will come from low paid “care” jobs, an issue highlighted by the critical nature of this sector to the Covd19 response.

Promoting job-intensive sectors may seem two-edged: they tend to pay the lowest wages (Figure 10).[3] However, low income households are likely to direct most of their additional spending to food and consumables, ensuring a large share of increased earnings flow through the retail and service sectors.

Figure 1: Average Wages by Sector, Q4 2019

In addition, these are the sectors that promote well-being across the community and should increase people’s skills and their abilities to deal with change.

Creating value
The benefits of recovery driven by employment-intensive industries also depend on how much value they add to the economy. According to the 2013 National Inter-Industry Tables, the share of output that is value added in the construction sector is modest, although low margins are offset in part by the substantial purchase of intermediate goods and services by the sector. 

While gross output is substantially lower in health and education than in construction, more value is created, largely in salaries and wages.  And because health and education each generate more household income than construction, funds channeled into these industries will lead to greater downstream demand in retail, services, and hospitality.

Table 3: Value Added, Imports, and Compensation of Employees, Selected Sectors (2013)


Towards a Multi-Layered Recovery – Scaling back the Infrastructure Sell
Infrastructure still has a role to play, especially in accommodating extra capacity in the priority sectors indicated by these figures. And, to be fair, the first $2.4bn of spending outlined by the Government included a strong commitment to social and affordable housing, well distributed sanitation and community enhancement projects, and environmental initiatives (Figure 2). Just under 30% was directed towards transport. However, this omits the big promises made to Auckland transit projects and major highway developments.

Figure 2: Distribution of the First Round of Shovel-Ready Spending


Investing in Human Resources
It is time to back off spending on mega-transport projects for which demand is uncertain and, instead, to focus on building the capacity of our people to deal with a changing economy.

Already there has been a commitment to step-up health funding in the May 2020 budget. The Simpson report on reorganising health and disability delivery (by consolidating and centralising administration and “professionalising” governance) may also help with a reset, although on the face of it looks a little like an expensive rearrangement of deckchairs.

Beyond that, a step up in new and innovative educational and vocational projects and initiatives across society may be the best means of ensuring that the recovery from Covid19 can be sustained, and that the country will be even better placed to deal with such crises in the future. 

Directing funding towards a more diverse, inclusive, and flexible education sector may mean increasing funding to both the educators and the educated. A simple start could include: increasing the funding of pre-school education; lowering staff student ratios in schools; developing applied tertiary courses in technology, production and distribution, agriculture and horticulture, and resource management; and encouraging and funding applied research.

Infrastructure should serve recovery, not shape it
Without doubt, initiatives in these areas will drive demand for further infrastructure.  But this investment will be focused on the needs of the sectors that underpin social well-being and economic productivity, and that foster the capacity of people to adapt to whatever demands the new normal might make. 




[1]    The multiplier estimates are based on the national input-output tables (Statistics NZ, 2014) calculated and updated to 2017 by Insight Economics in Auckland. I gratefully acknowledge access to them, and am solely responsible for their interpretation here.
[2]    Employment in retailing largely reflects the induced effect of growth in other sectors. Spending by overseas visitors in retailing (and hospitality), though, represents additional external demand.  
[3]   Although wages in sectors like medical care span a wide range.

Wednesday, June 24, 2020

End of the line for Auckland light rail?


Rethinking the future
While New Zealand has restored modest levels of domestic activity following the Covid19 outbreak, prospects for full recovery are undermined not just by continuing border threats, by the twin blows of falling global trade and rising global indebtedness. Even if the country remains largely virus-free, it faces ruptures to the economy and employment, migration and housing, commuting and travel. Under these circumstances many of the shovel-ready projects placed before Government for funding may be of minimal long-term value, leading instead to additional fiscal strain and lower productivity.

It is time for a real rethink.

Rethinking Auckland’s Public Transport
This post suggests that Auckland can no longer afford to indulge in think big public transport projects. First, it again flags the need to shelve Auckland’s Central Rail Link. 
It then lists the documents supporting various light rail rapid transit options, which led to the questionable government commitment to light rail, reflected now in the postponement of the Minister’s decision on who might build light rail to the airport.  But if that decision is made in due course, this would lead to a greater fiscal disaster than the CRL. LRT should now be jettisoned.
Instead, it may be time to revisit the prospect for a modern, bus-based transit system to better respond to major shifts in demand and reduce the exposure of ratepayers and taxpayers to a fiscal black hole.



Back track on this one first
For starters, it makes sense for Auckland to follow economist Tim Hazeldine’s advice and pull the plug on Auckland’s Central Rail Link. The cost of shelving it should be far less than the cost of completing it.


As for LRT, do not even get started
It also makes sense to abandon plans for light rail transit. A solution in search of a problem, there was never a robust case for it.  And even if investment funds are willing to front up with the dollars, ratepayers (and taxpayers) will struggle to meet the returns they will require to justify such a high-cost, high-risk project. 


It appears that LRT has been shunted aside by the government for the moment, athough evidently officials continue to work on it. 
Now, though, is the time to finally lock it away.

Tracking light rail proposals
I intended to review the economic rationale for the LRT but could not pin down exactly what we are going to get, for how much, and why. So, all I can offer are conclusions based on reviewing as much of the associated documents as I could find.


Here is what I covered (with links).

·         The Auckland Transport Plan (Auckland Regional Transport Authority, 2009) suggested rapid transit would be needed in the long-term to relieve commuting congestion on four cross-city routes.

·         The Auckland Regional Land Transport Strategy 2010-2040 (Auckland Transport) firmed up on these prospects with proposed construction between 2031-2040.

·         The Auckland Regional Land Transport Plan 2015-2025 (Auckland Transport) switched tracks, promoting LRT to fill the gap in services between the inner suburbs and the CBD. 

·         The Auckland Central Access Plan (CAP) Programme Business Case (Auckland Transport, March 2016) proposed “higher capacity rapid transit” services on the isthmus.

·         A Peer Review (April 2016) supported the CAP but noted that it was based on a heavy focus on public transport; reliance on land use assumptions from the 2011 Auckland Plan (Auckland Council), and most significantly, ignored affordability, which “should be addressed as soon as possible” (p2).

·         The South-western Multi-Modal Airport Rapid Transit: Draft Indicative Business Case (SMART, Jacobs NZ Ltd, June 2016, for Auckland Transport) compared the economic and financial performance of heavy rail, light rail, and bus-based rapid transit for the CBD to Auckland Airport route.  While LRT was favoured, further investigation of Bus Rapid Transit was also recommended.

·         The Advanced Bus Solution (LEK, January 2017, for NZTA) specified a more advanced system offering a higher level of service over a larger catchment. It indicated an incremental B:C ratio of 1.28 from the improvements proposed. While different discount rates prevent detailed reconciliation with the SMART report, the analysis suggests that a bus option could match LRT in economic terms.

·         The Advanced Bus Solution Report (Auckland Transport, February 2017) suggested the LEK solution may only be sufficient until the 2040s, and involved technical uncertainties and transition risks. It instead proposed staged transition from bus to light rail.

·         The Auckland Transport Alignment Project (ATAP), a collaboration between Auckland Council and central government, advanced rapid rail to Auckland Airport and Westgate as part of the rapid transit package in its 2018 report.

·         The Auckland Regional Land Transport Plan 2018-2028 confirmed these routes.

·         The final ATAP report (2019) called for a $8.4bn investment in rapid transit over ten years (excluding the western line).  This included heavy rail, busways, and light-rail. The cost of light rail, scheduled post-2024, was not identified.

Government gets on board
In 2015 the government and Auckland Council agreed to align transport spending for projected growth of 700,000 people over 30 years. The government committed to $18.5bn of $28bn total funding called for by 2028. The Minister of Transport then proposed prioritising the CBD-Airport link from this “indicative package” (Cabinet Economic Development Committee, July 2018).  He requested NZTA to prepare a business case, and called for measures to accelerate the project.


Treasury and the Ministry of Transport reported on an early draft of the business case in November 2018. They noted expectations for “balanced and robust” economic analysis, a “rigorous process” for considering risks to government, “clearly articulated financial implications”, and “appropriate” governance arrangements. While their advice was redacted, the report said that the NZTA Board was unlikely to be “in a position to resolve all issues that a business case requires as a minimum” at its November meeting.

And off again?
It appears that the rigorous analysis recommended by Treasury[1] was sidestepped. Instead, in June 2019 two potential suppliers were announced for the City-Airport LRT, with proposals received in August from NZTA itself and from NZ Infra, a joint venture between Canadian investors CDPQ Infra and
the NZ Superannuation Fund. The NZ Infra pitch raised the prospect of funding it off the books.

A decision on the preferred partner was not made, although $1.8bn was committed to seed funding.  However, the total cost of just this link was estimated at $6bn, suggesting earlier estimates were wildly out and that LRT would never be economically rational, and throwing doubt on delivery of ATAP’s $8.4bn full rapid transit package.

In October 2019, it was revealed that the NZ Infra proposal was likely to provide for grade separation (including undergrounding) at a significantly higher cost than the at-grade NZTA proposal (costing perhaps $10bn). While this has the advantage of retaining capacity on existing corridors for other modes and might lead to lower long-term operating costs, it is impossible to see it stacking up in economic terms.  Add in likely cost over-runs and it is surely a fiscal step too far.

Hence, reported splits in the governing coalition over the issue in May 2020 are hardly surprising. Labour is reportedly leaned towards the NZ Infra PPP proposal while junior partner New Zealand First appeared unwilling to commit to any LRT.

LRT at any cost?
Despite changing technical and financial parameters, and the uncertainties of a post-Covid19 world, the NZ Super Fund remains “enthusiastic about” Auckland LRT. That is not surprising: securing long-term, government-guaranteed returns is commercially clever in an uncertain, recessionary economic environment in which equities so much riskier and bonds so much less rewarding. But it wouldnot work for Auckland and Aucklanders.


So, what can we take from this history?
There is considerable variation in the policy trail regarding what LRT services might be required, and in what order: long-term cross-regional commuting? linking the inner Isthmus suburbs and the CBD? lifting capacity between the outer Isthmus suburbs and the CBD? or linking other employment centres (Westgate, the airport) with the CBD? This makes it difficult to trace the costs – and economics – of even the version currently being advanced, the CBD-airport LRT.

After more than a decade of official deliberation, we have no idea what the configuration of regional LRT will be, or of the costs, but we can be confident that they will be a lot more than the figures bandied around at present. (With four years to go before completion, the CRL is already 70% over the original budget). One way or another ratepayers and taxpayers will be footing a substantial bill if LRT development proceeds. [2] If nothing else, uncertainty over the future of international travel and the recovery of aviation mean that the time has come to dump the proposal for a CBD -airport line.

The public has been sold the sizzle but there is no sausage.

Time to take the bus?

Just as disturbing as undue preoccupation with LRT is the failure to fully evaluate advanced bus transit. This would offer the ability to invest incrementally to cater for short and medium-term shifts in public transport demand.  It provides opportunities to:

·         Adopt new technologies as they evolve, continuously advancing service levels;

·         Respond to major changes in land use and patronage;

·         Fashion a network that provides wide-ranging connections across Auckland’s distinctive geography; and

·         Align investment and funding more clearly with benefits. 

At the same time, a bus-based transit system would substantially lower economic and fiscal risk compared with large scale, fixed-track solutions.

If nothing else, the shock of Covid19 provides the opportunity – and excuse –to avoid repeating the Central Rail Link experiment. The future is more likely to be about demand-responsive rolling stock using largely existing corridors to serve communities and commercial activities across Auckland, rather  than carving out new routes or reducing the flexibility and accessibility of existing arterials to favour limited corridors of residents and prop up values in selected commercial destinations.



[1]    “Given the size of the project, the fiscal risks and the build and operational challenges, we consider a strong examination of the implementation choices is essential” Treasury report T2018/1002
[2]    The CRL experience, Treasury advice, and global experience all point to the likelihood of costs blowing out, this in a period when it is almost inevitable that patronage will be less than projected.