Brian Rudman: Wheels fall off mayors' grand plan despite costly PR spin

Despite a gaggle of highly paid spin doctors, the eastern highway project is fast becoming a public relations farce.

Heralded by Mayor John Banks as the make-or-break project of his first term, one of the back wheels fell off the project within days of its launch a month ago. That's when it was admitted that at least 300 houses would have to be demolished, not the 200 initially announced.

Two days later came the other back wheel, when Mr Banks revealed the highway would cost upwards of $1 billion, not the original $460 million.

Now it's the turn of the front wheels to start wobbling. Late last week came a report which, in effect, rubbished the fantasy of supporters of the scheme, that it could be self-funding through tolls.

The report, by Auckland City's own consultants, Eastdor, says revenue forecasts from tolls are "not encouraging". Eastdor modelling had indicated that tolls would raise less than $100 million of the projected cost of the project.

The maximum revenue that could be achieved from tolls is "in the order of $12 million per year by 2021". After reviewing various options, Eastdor concluded, "in all cases the revenue would make only a minor contribution to the cost of the scheme".

It said that this sort of revenue "might attract $50 million-$80 million in private finance towards the capital cost of the project".

This, say the consultants, should come as no surprise. "Using tolls to fund a facility with free alternative routes is rarely financially or economically efficient. Internationally, such facilities only succeed where the facility has a monopoly (eg, the Sydney harbour crossing) or the alternatives take substantially longer."

They said the eastern highway functioned more like a ring road, with traffic using short sections and only a small amount of end-to-end traffic."This makes the design of an efficient and effective toll system very difficult."

If it comes as no surprise to the experts, it will come as a big surprise to the public at large, who have been led to believe that it was all a matter of bringing in a private motorway builder/operator, then lying back and thinking of England.

Unsurprisingly, the Eastdor computer modelling shows that as the toll goes up, the number of punters willing to use the new road will go down.

Because of the high volume of on-off traffic, the model is designed with two toll points, one to catch motorists between Orakei Rd and St Johns, the other, between St Johns and Merton Rd. With a nil toll, it calculates 120,000 movements a day through one or other of the tolling places.

That through-put rapidly drops as the toll goes up. At 50 cents a toll stop, the traffic drops to 60,000 movements and by $2 the daily flow is down to fewer than 20,000 vehicles.

Revenue levels peak at around $40,000 a day when the toll is between $1 and $1.50 and traffic flow through either toll booth is between 20,000 and 40,000.

But the perfect match of price and traffic volumes for revenue purposes, hardly produces the optimum outcome as far as congestion is concerned - which was the stated point of the exercise in the first place.

Indeed, at the traffic volumes required to produce the optimum revenue, we no longer need the six-lane (four car lanes and two bus lanes) highway being planned. At the 20,000-40,000 movements "the traffic volume on the facility is way below its capacity. This suggests that if a road were to be built as a toll road, it might be possible to construct a smaller facility".

Later on, the Eastdor consultants say that if the toll was to be seen as a traffic-management tool instead of an income-generating one, a possible strategy would be "build a two-lane facility in the short term and to build further lanes at a later date".

This would make the highway a more viable proposition for a private build-and-operate contractor. But it would not produce the results Mr Banks and his Manukau City ally, Barry Curtis, crave.

Even if we were to put to one side all the other controversial aspects of this project - its environmental impact on the city's front doorstep and the question of what is going to happen to all the cars once they reach the central city - the simple matter of where the money is coming from for the mayors' grand plan needs some straight answers.

If toll revenue is going to supply less than 10 per cent of this motorway's cost, who is going to pay the rest? Transfund, the Government's roading funder, will presumably pick up 48 per cent of the roading components of the project. On a $1 billion project, that still leaves $400 million or so to find. That's an awful lot of money for Auckland and Manukau City ratepayers.

No doubt the two councils will be banging on the door of Infrastructure Auckland. But there they'll have to get in the queue behind major rail and drainage projects.

Meanwhile at Transfund there's a huge queue of other roading projects much higher on the region's priority list.

Both Auckland and Manukau City Councils are now starting to pour large amounts of cash into this project. Much is going on public relations spin. Before any more money is wasted, it would be nice to see a believable, straightforward business plan, proving this project is in any way viable.

Further reading
Feature: Getting Auckland moving

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