This is a longer post than usual, but I want to tackle a question that’s been nagging me for quite a while, as well as look into some issues with the inner workings of our transport planning system. The big question, the one that we should always be coming back to over time is: “why, despite tens of billions of dollars in investment, are so many transport outcomes generally getting worse rather than better?” To do that I’m going to run through some pretty big issues:
- How much do we spend on transport and what do we get for this?
- How should we properly understand “value for money”?
- What do we need to change to get better results from our huge spend on transport?
In coming up with this post I’ve talked with quite a few people in the transport sector and their thoughts have been very helpful.
What do we spend on transport and what are we getting?
Over the past 10 years central and local government between them have spent in the order of $30 billion on transport. This is a lot of public money, with transport frequently being the largest area of expenditure for local councils and the fourth or fifth biggest area of investment for central government. Budget 2017/18 documents report $5.2 billion of central government transport spending, behind only Social Development, Health, Education and Finance costs.
You pay for transport in a variety of ways:
- Over 60 cents per litre on fuel tax, with broadly equivalent charges on diesel (which ramps up with heavier vehicles)
- Around $1000 a year for the average Auckland ratepayer
- Vehicle licensing fees that vary but are generally well over $100 per year per vehicle
- A fairly big chunk from general taxation.
In Auckland, the council and government investment in transport sits at around $2 billion per year. This has increased dramatically over the past 15 years.
In some respects the impact and benefits of all this spend is obvious. Auckland now has a functioning rail system, a completed motorway network, a great Northern Busway, integrated ticketing, a few high-quality cycleways and more. But in other respects we have gone backwards:
There are a few obvious contributors to these issues. In a fast growing city like Auckland “standing still” can be an achievement. But I think this is only part of the story. To provide an analogy, it is as if we increased education spending four-fold, had really complicated systems in place to project where that money would be best spent, but then found out a decade later that kids were actually getting a poorer education.
Ultimately we should expect more from such a massive spend on transport and we need to understand what’s stopping this from happening. Given the huge amount of spend on transport over the past decade, at a high level it’s difficult to say that we have achieved “value for money” in an overall sense.
How should we understand “value for money”?
The need to achieve “value for money” from our transport spend is obvious, and highlighted in many of the plans that guide transport decision making across the country. For example, the (previously government’s) Government Policy Statement identifies “value for money” as one of its three over-arching objectives. Furthermore, there are a huge range of complex processes that exist to assess the merits of transport projects.
Given this priority that is supposedly given to value for money, how can it be that despite spending tens of billions of dollars, we have gone backwards in most key areas? I think this cuts to the heart of our broken transport planning system and requires a strong rethink about how we understand and determine “value for money”.
At the moment value for money is determined largely through a “project by project” basis, with NZTA’s complex “economic evaluation manual” (EEM) detailing the processes for assessing the benefits of a particular transport investment. This process broadly goes as follows:
- What will the future be like without this project?
- What will the future be like with this project?
- How does the difference between these two futures (the impact or benefit of the project) compare to its cost?
We then divide the benefits of the project by its cost and come up with what’s called a “benefit cost ratio” or BCR. If this number is above 1 then the project is considered “worth it”. The higher the BCR, the more “value for money” that is generated.
The last government oversaw quite a substantial reduction in the average BCR for each dollar invested, as this graph from the 2011 briefing to the incoming Minister outlines pretty clearly (for reference, in the graph below low is a BCR of between 1-2, medium 2-4 and high above 4):
At first blush, you would hope that if we demanded higher BCRs for investments, we would see better overall results – better progress on congestion, a road toll that’s reducing rather than getting higher and a reduction in carbon emissions. But there are a number of reasons why I’m sceptical of whether that would actually happen:
- We know from endless examples around the world that you can’t build your way out of congestion through adding road capacity. However, the projects that try to do this, I’m thinking road upgrades like Lincoln Road or motorway widening, often seem to end up with pretty high BCRs.
- High priority safety projects, for example the upgrade of the Tamaki Drive and Ngapipi Road intersection, often struggle to get a BCR that even reaches 1. This is because monetised safety benefits of fewer deaths and serious injuries are outweighed in the EEM by travel time delays, even if those delays are only a few seconds. Yeah, crazily we do trade off lives for a bit of delay.
- The proportion of a project’s benefits or costs that relate to carbon emissions are generally very small. This means that whether a project increases or decreases carbon emissions will only have a very small impact on its overall BCR – in other words it’s not really taken that seriously.
So maybe we should look at value for money a bit differently, perhaps in a more holistic way? Instead of randomly coming up with projects and then “seeing what they might do”, perhaps we need to focus more on identifying and quantifying our biggest transport issues and then delving into the projects that would make the biggest difference?
One example of this approach is how we developed the Congestion Free Network. Knowing that congestion is a pretty big issue for Auckland – costing the city around $1.3 billion a year – we focused on creating an enduring solution with two main parts:
- Creating a network that enables people to avoid congestion and to make it irrelevant to them. We know that the Northern Busway has made congestion on the Northern Motorway irrelevant to many more North Shore residents over the past decade (at least on the sections where the busway exists!)
- Providing quality transport options to all main parts of Auckland, which will be critical for the successful roll-out of road pricing in Auckland, which time and again has been shown as the most effective way of tackling congestion.
While the Congestion Free Network is now effectively government policy, in areas like safety and reducing carbon emissions there’s no clear overall plan to achieve success – in fact it isn’t clear what the goals even are.
Overall, I think there’s a pretty clear case that we need to think about value for money differently when it comes to transport planning – in particular we need to take a much more holistic view across the whole transport sector.
What do we need to change to get better results?
Hopefully by now you agree that our current transport planning approach isn’t delivering the outcomes that we want from the huge spend we make on transport each year. Hopefully you also see how our existing ways of understanding “value for money” are fragmented, too “bottom up” and are trapping us into repeating the mistakes of the past – hoping for success when doing the very things that have not previously been successful.
So how might we change this? I’m going to run through four big changes that I think need to happen for us to achieve better results. Making all four of these changes happen is no small thing, it will need to turn the current planning system inside out to work.
- Shift away from fragmented “bottom up” processes for identifying projects to a far more systematic top down approach.
- Fundamentally change the way we predict what will happen in the future to reflect that it will not just be a continuation of the past.
- Close the yawning chasm between strategies and decisions that happen “on the ground”.
- Increase diversity among key decision-makers.
I talked a bit about shifting to a more systematic approach for identifying projects above, and how the Congestion Free Network is a fairly unusual example of this. Yet even with Auckland’s rapid transit network, which has been planned more holistically than most other transport projects, the next level of detailed planning is still fragmented. For example:
- There’s little information available on how isthmus light-rail would integrate with the North Shore rapid transit upgrade.
- The most recent analysis of whether Northwest Rapid Transit should be a busway or light-rail doesn’t really look at city centre bus access constraints, even though they will be the very thing that determines whether it’s worth progressing a busway before shifting to light-rail in the longer run.
Reading through the business cases of various rapid transit projects in Auckland highlights massive repetition, which adds little value while simply padding out the work done by various consultants who prepare these documents. It also means that important stuff slips through the cracks – the best example being the third main which has been critically required for years but missed out due to stupid funding policies and because it was never a clear part of any particular project.
Fragmented planning and funding means that only parts of the much needed third main have been completed.
What would a systematic, top down approach look like? It would mean more business cases like what Auckland Transport did for cycling in Auckland, where an entire mode’s role and areas of focus are worked through. It would mean a single business case for the whole rapid transit network, rather than bits and pieces of it. It would mean a similar strategy for safety, a holistic approach across all involved organisations and all possible solutions that identifies what needs to change and where to start. It would mean doing cost-benefit analyses differently – much more of a focus on assessing the costs and benefits of these programmes rather than our current bit by bit approach.
Planning for Uncertainty
Alone though, this shift won’t be enough to really fix our transport planning system. To really get more out of our transport spending we will need to get better at predicting the future – or more to the point shift away from trying to predict an exact single future when there’s so much change happening in transport around the world. To highlight how important this is, consider the following:
- Despite ATAP’s commitment to road pricing, I’m not aware that any of the transport modelling for project business cases actually includes consideration of road pricing as being in place in the future. However, given the huge impact road pricing had on congestion, the “need” for more roading projects will almost certainly be over-estimated by not considering pricing.
- Despite rapidly changing transport technology, I’m not aware that any current transport modelling takes the potential impacts of driverless cars, driverless buses or any other technological development when predicting the future. Most studies into new technology confirm the ongoing need for a rapid transit system, but other impacts could be huge – especially if they allow existing roads to be used much more efficiently. Once again by ignoring this we are almost certainty over-estimating the need for more roading projects.
I understand that pricing and technology changes aren’t included in project analysis because it’s just too complicated. What pricing scheme would you use and is it applied consistently across all projects? How can we model the impacts of new transport technologies when we don’t even know theoretically what these impacts might be and when they might happen?
Because the current approach to predicting the future is reliant upon predicting a single future, it becomes essentially impossible to take these massively important changes into consideration. This means the most important future changes to our transport future are ignored. There are better ways of planning for the future than this, mainly through developing a variety of different possible futures and seeing what decisions made today will still add value across a number of these. Linking back to the examples of pricing and technology, this approach could lead us down the following process:
- Road pricing is likely to increase demand for public transport services and reduce the number of cars on the road (after all, that’s the entire point of pricing). Therefore, decision-makers should be constantly asking questions like “what might need to be done differently if public transport demand on that corridor was higher than we project?” or “would we still need that new or widened road if pricing reduced car travel along this road?”
- Technology is likely to increase the throughput capacity of some roads (especially motorways) and could be a more cost-effective alternative to public transport in lower density, dispersed urban areas. It’s less likely to take away demand from core public transport routes. Therefore, decision-makers should be asking questions around “would we still need this new or widened road if our existing ones could carry more people?”
Close the gap between strategy and delivery
Auckland has had a broad transport strategy that prioritises alternatives to cars since at least the 2010 Regional Land Transport Strategy. The need to get better place outcomes from the transport network was strongly emphasised in the 2012 Auckland Plan. Yet so much of what happens “on the ground” shows little sign of changing at all. For example:
- Road renewals still put streets back exactly the way they were, missing opportunities to add better walking or cycling infrastructure or to get rid of dangerous fast corners at intersections.
- Every small pedestrian improvement remains a huge battle, even in the city centre where Auckland Transport were happy to completely destroy the Victoria Street Linear Park despite it sitting at the heart of the Council’s City Centre Master Plan.
Big strategic changes take time, but they require a really strong link between all the fancy documents that we spend much of our time looking at, with what happens out there in the real world on a day by day basis. This requires really strong and effective organisations and a genuine “buy in” to change. Over recent years this is one area that Auckland Transport have really struggled, perhaps because of poor leadership or perhaps because the high level plans have not yet filtered down into the detailed guidance which really drives day to day decision-making. With these detailed standards now being updated, through documents like the Transport Design Manual, perhaps we will finally see change. But I’m doubtful we will see real change unless there is passionate leadership put in place within these dark depths of Auckland Transport.
Increase diversity among decision makers
Almost all of Auckland Transport’s executive lead team are middle-aged white guys, which seems pretty common across key transport decision-makers. We have a Mayor and Deputy Mayor who are not only both middle-aged white guys, but also live in very similar part of Auckland.
The people on executive teams and Boards not only make decisions themselves, but they are also part of groups that make collective decisions. If the people making these decisions only represent a very small slice of Auckland then they will very often be, even sub-consciously, biased towards people who are similar to them – both in their direct decisions and in the people they hire and subsequently make further decisions on their behalf. Given that transport decision-making has long been the domain of middle-aged white guys, they are probably the group who least need the extra focus – making this problem compound on itself again and again.
Emma’s great post on the need to design cities for women picked up on this issue very eloquently:
Of course it’s not just women that we need to design for – we need our cities to be awesome and function for everyone. But the best way to do this is by getting our priorities in the right order, and flipping the “pyramid” to focus on women, women of colour, new New Zealanders, wāhine, people with disabilities, the elderly and children first. The already perfectly comfortable men can take a back seat.
The need to increase diversity among decision-makers in transport isn’t just about gender and ethnicity – as important as these are. It’s also about ensuring a good spread of decision makers across different parts of Auckland, a good spread of ages, cultures, incomes, skillsets and experience.
In a piece about the woes at Fletcher Building, Brian Gaynor wrote this of the company’s board that seems to equally apply to ATs situation.
Hassall, and many other individuals seeking board seats, emphasise their wide range of experience when shareholders would prefer more directors with specific industry expertise. This emphasis on wide experience, rather than specific industry expertise, means that our boards are dominated by accountants, lawyers, financiers, management consultants and technology specialists rather than experts in cement, steel, construction, building products and large-scale distribution.
Consultants who have presented to the Fletcher Board relate that the company’s directors don’t seem to have deep industry knowledge, their expertise is more one metre deep and a kilometre wide, rather than the other way around.
With the exception of the Deputy Chair, Wayne Donnelly who is a former CEO of Land Transport NZ (a predecessor to the NZTA), none of the board have worked in the industry before. I wonder how many truly understand the impacts of the decisions they make or when was the last time they caught a bus or train, or rode a bike in the city.
I’m confident that we would see far better decision-making with more diversity and experience among our decision-makers. I think there would be less of a focus on park and ride and more of a focus on interpeak public transport service frequencies; less of a focus on silly Devonport shuttle vans and more of a focus on safe cycleways.
Given the tens of billions of dollars the country has spent on transport over the past decade, we should have achieved more. Seeing congestion worsen, the road toll spike upwards and carbon emissions only grow is a major failure that demands fundamental change to our transport planning system. We have surely not achieved value for money, I think largely because the way we assess value for money is broken.
Fixing this mess will require big change and I have suggested four key areas to start:
- More holistic planning
- Planning better for future uncertainty
- Closing the gap between strategy and delivery
- Increasing the diversity of our decision makers
These changes won’t fix everything, but they will go a long way towards ensuring we don’t repeat the failings of the past decade.
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