Ben Ross : Auckland

City Rail Link already hitting its Rail Fallacy?

Part of The City Rail Link Series

Debate on the City Rail Link continues with figures and all sorts coming out from both sides coin.

VOAKL will cut right down the middle and look at a post from: From Cities Matter; Evidence-based commentary on urban development by Phil McDermott. Seems The Rail Fallacy is already haunting us?

It is time for a discussion and VOAKL will provide one – for everyone with a VIEW

In May this year I posted on The City Rail Link and The Rail Fallacy. In a brief recap of that post here is a quick look at the introduction:

IN THIS POST WE LOOK AT:

How did I come to the figure of $3.6 BILLION for the City Rail Link Project and what is The Rail Fallacy that I keep mentioning.

So how did I come to the $3.6 billion sum for the City Rail Link compared to the $2.84 billion figure being touted by Auckland Council. Well this is where The Rail Fallacy comes into the equation and why The Rail Fallacy will usually defeat large scale rail projects such as the CRL. So the first question you should ask is: “What is The Rail Fallacy?”

THE RAIL FALLACY

The Rail Fallacy was a formula given to  me by a mentor on how to roughly calculate the “actual” cost and time to completion of a heavy rail or light rail project. The Fallacy was based on previous experience from projects in the USA and Scandinavia where rail projects were given a cost and time to completion by the Public Authorities. However  by the end of the said project (if it was not scrapped) the final cost was higher and time to completion “delayed” compared to the original numbers given, with public confidence often not that high. Thus the Fallacy formula was derived on an average of 1.5x (one point five times) and can be applied to (usually) to any passenger rail project due to be constructed in the Western World.

When I had published this post, it had stirred quite a bit of heated feedback from Pro-CRL people; even though I am Pro-CRL myself.

Well here we are in August and someone with expertise has picked up on the first Rail Fallacy to hit the City Rail Link, yet we have not even turned the first sod in this mega project. I am reposting Phil McDermott’s piece that gives the first bit of actual evidence that the City Rail Link is suffering from its first Rail Fallacy already. All rights, references and credits belong to Phil McDermott.

From Cities Matter; Evidence-based commentary on urban development by Phil McDermott

THURSDAY, AUGUST 2, 2012

Irresponsible inner city behaviour

The latest in urban design – new public spaces for the dispossessed

In my last blog I raised the question of whether purchasing land for a possible rail link through the city would reduce the attractiveness of the inner city living by laying waste to a corridor cutting through it – shades of the motorway madness of the 1950s and 60s.  I suggested that this will increase the anti-social behaviour after dark that so worries CBD residents and visitors.

So it was interesting to see in the New Zealand Herald today the concern over the use of vacant city sites as places of refuge for people deemed anti-social and particularly as sites for binge drinking.  These are, of course, informal public spaces, simply being used as such.  And with the purchase of 280 properties in the central city for construction works or sites for rail-related development in support of our “sometime-maybe-never?” underground rail link, we are creating more of the same.  This will no doubt make inner Auckland more liveable for the homeless, dispossessed, impoverished, and underemployed.  Paradoxically, we could claim from this that laying waste to inner city sites contributes to the vision of increasing inner city living.

Getting rail up and overrunning

By the way, the $240 million set aside for acquisition of 280 properties sounds just a little light.  I haven’t searched the records, but I suspect few of those properties would be valued at under $1million.  And what about the compensation for relocation and loss of revenue and goodwill among the  many businesses that currently occupy them, and of course the relocation costs of displaced households?

To me it looks suspiciously like we have taken the first step down the budget blow-out track.  But then, that tends to be the way of big civic projects utilising public funds, which are almost inevitably subject to optimism bias and waste, partly resulting from confused accountability.

(On accountability, it is not quite clear whether the train driver is the Council, the Mayor, or Auckland Transport.  And any expectation that the Government should shoulder much of the cost or should legislate to tax motorists points to further potential confusion in accountability, in this case between central and local government.  This is particularly significant for a project destined to make  a big a hole in public finances).

Of course, many of the properties to be acquired will be sold once the link is completed.  But assuming that the holding costs are based on $240m expenditure, any over-run will boost them.

So will delays to the project as a result of unresolved funding problems, continuing economic uncertainty, and likely fiscal constraints.  These are likely outcomes: a Benefit Cost Ratio of 0.4doesn’t justify going ahead, and the strategic benefits remain decidedly unclear. But that’s another story.

Suffice to observe that like alcohol bingeing among people with too much time on their hands, it seems that playing the train game is a difficult habit for politicians and other enthusiasts to break.

 

Passing the bucks

Even if  we do get to spend all this hard earned (or borrowed) money down the track, over-optimistic passenger and revenue projections and pie in the sky proposals for station-based office and residential developments will mean under-recovery of capital and operating costs.  A BCR of 0.4 looks a bit optimistic.

Of course, we can continue  to behave badly by excessive, wasteful spending  and leave someone else to clean up the mess.  In this case another generation will be left to foot the bill while today’s decision-makers slip – or slope — off into retirement (most likely in suburbia or their coastal retreats).  How responsible is that?

Looking at that you would be mistaken not to see my lack of confidence with Auckland Transport and Auckland Council in currently leading the City Rail Link Project. We are highly looking at an overrun in costs for the CRL already and that is only at Stage Two – Route Designation and Property Acquisition. Heck we do not even have full funding available yet (regardless of source or method) for the mega-project. So like the defunct Eastern Highway; the route designation is there but no funding or “will” to build the required highway and there is the slim chance we could have the same for CRL.The CRL has got the route designation, but the mega-project might not be built when our Resident Prude – Our Absentee Mayor wants it.  So on that regard Phil’s first and second statement ring rather true.

As for passing the buck, wait for that game next year when the Local Elections 2013 happen and mayoral candidates “thrash about” on the CRL – yawn.

I have also seen the Ministry of Transport’s review of the first Auckland Council CRL business case where the 0.4 BCR was given. I am wondering – and have raised before in the UK and Dutch Rail Fallacies if the original business case has: overcooked the benefits and under-sold the costs. Who knows, maybe a full Auditor-General’s enquiry is needed there. However regardless of that situation, and as I have said before: We need to fully restart the CRL project from scratch and do it properly (this time). Otherwise (from a comment I left on Facebook): Enter the Rail Fallacy that I warned about Councillor. No matter the validity now of this mega project, due to Council and AT (as the late Owen McShane would say) Under-cooking the costs and over-cooking the benefits we will now get blow back on this project…
And only officials have themselves to blame for it (although I am not pointing the finger at you Dick Quax)

Just out of interest, I noticed this vacancy at Auckland Transport today: Social Media Advisor and Events Facilitator. Hehe looking at it, I wonder if AT are reworking their social media front?

So conclusion out of all of this:

It seems the one’s who want the CRL so “desperately” could be the very one’s who defeat the project through citizen push or blow back. While “conservatives” could be the very one’s saving the CRL and actually getting it built – just like former Auckland City Mayor Christine Fletcher did with Britomart in 2001.

This saga has a long way to go in playing out as the CRL trundles along towards eventual operation. History shall judge us in time on this rather dramatic if not Shakespearian Play.