Wednesday, March 30, 2011

Another question for Bill English

And while we're asking questions about the government's priorities, here's another: if the government is so short on money, why is it spending billions on highways that don't meet its own cost-benefit test?

The SAHA Report shows that three of the expressways had negative returns when assessed conventionally - the value of the benefits generated, in terms of travel time, fuel savings and reduced accident costs, is less than the sum of the costs to build and maintain them.

Among these is the Wellington to Levin expressway. It has a benefit-cost ratio, or BCR, of only 0.6, meaning that the project would generate benefits amounting to only 60 per cent of the costs.

And even when you add in wider economic benefits - something the government does not believe in when it comes to Auckland rail, but does believe in when it comes to their pet roads - it only comes out as positive in the most optimistic scenario.

NZTA's normal BCR threshold is 4 - that is, a road must generate benefits equal to four times the costs before they will build it. Unless, apparently, its in a marginal electorate National wants to shore up support in.