When broken forecasting means billions wasted

This line records use of a certain item by New Zealand population since 2000. Where do you think it will be in say 20 years time?

The statistic went up, and then down, and so the best estimate to me would be a flat or downward trend. But rather strangely the authors of this chart determined that all of their estimates would be up, and that the lowest change would be a substantial increase. Here it is, with my added red line eyeball trend:

The chart, of course, is estimated vehicle use in New Zealand, expressed in millions of kilometres travelled. It’s sourced from the ” National Long-Term Land Transport Demand Model, NZIER and NZTA (2013)”, and that’s a critical model as it feeds into all sorts of cost-benefit analysis and policy for transport in New Zealand.

International and local evidence is that vehicle use is declining, driven by a new generation that cares about global warming, and prioritises iGadgets, internet use and public transport over cars and other structural shifts. So seeing a forecast like the below is completely unreasonable (the red is my straight line projection again):

It’s a basic mistake that is and will cost the country billions – in over-spent costs to build more roads, and, worse, in the opportunity cost of not applying that investment to more productive areas of the economy.

The bias towards cars is also reflected in this chart of forecast public transport statistics – which doesn’t pass the giggle test either. Witness the trend and the projections below (the red is my version of the trend-line):

So for some unfathomable reason the growth in the use of public transport is forecast to immediately and dramatically fall, while the growth in the use of cars will immediately and dramatically rise. It’s ludicrous.

I plucked those charts from the Treasury Paper “Infrastructure Evidence Base: Transport Sector“, published today. It’s wonderful to see papers like that published, but not when the underlying assumptions are flawed.

The executive summary acknowledges this flaw, stating:

“Historic assumptions about future revenue growth from fuel taxes are being re-evaluated in light of international trends such as driving less, increasing fuel prices, e-commerce, increasing fuel efficiency and alternate fuels.”

That’s repeated elsewhere – and I wonder what the authors really think.

While the report covers road, rail, marine and air modes of transport, it ignores the most popular transport method – walking, and ignores cycling as an alternative which takes thousands of cars off the road each day.

But it does state that congestion in Auckland has been decreasing:

There has been notable progress in Auckland since 2009, which shows evidence of improvement in travel times during the morning peak period, despite population increases.

And that’s backed up by a chart – I’ve added the census data for Auckland population from 2006 and 2013. The trend from 2009 is unmistakeable, and not coincidentally the liveability of Auckland has skyrocketed during that time:

There is no mention of why congestion has lowered in Auckland, and I suspect that the considerable rise in medium and high density housing, the major improvements in the bus and train systems in Auckland along with the rise in cycling and walking are deemed out of scope. That’s a shame, as it contributed towards Auckland being a far more liveable city, and that in turn is driving the economy here.

The narrow scope, along with laughable forecasting of lower growth in public and higher growth in private transport collectively mean that the report is fundamentally broken.  

A broken report means that we cannot yet even fairly communicate in New Zealand about the quality of our transport infrastructure and the future investment required. That’s really not acceptable in an election year.

Published by Lance Wiggs


4 replies on “When broken forecasting means billions wasted”

  1. Lance,
    I agree that the forecasts do not seem to pass the simplest of sense checks. A couple of additional observations:
    1. Based on a brief review of the National long-term land transport demand model the VKT projections seem to the a function of ~40% increase in vehicles per capita over the next 30 years despite a 30% reduction in km per vehicle over the same period i.e. we will buy cars that we wont use.
    2. I am always concerned when the forecast period is significantly longer than the period of historic data, in this case the 30 year forecast appears to be based on 10-12 years of data; and
    3. The y-axis scale selected on the VKT and PT Demand charts are misleading, both series are forecast to grow at approximately 1% p.a. over the next 30 years.


  2. I am encouraged that there is a report with the title “INFRASTRUCTURE EVIDENCE BASE” but not surprised that weaselise replaces robust examination of the evidence. In a footnote [24], the report comments
    “We note that, although the NZIER / NZTA model predicts a gradual decline in the future, the public transport share of passenger kilometres has shown a steady growth trend over the past decade. This may merit further monitoring and consideration as time progresses.”
    This could be paraphrased as … the evidence for those grand plans for roading is really suspect .
    As Sam Stewart also points out, the graphs VKT and PT demand are designed to prtray a point of view that is not supported by the data.


  3. Good timing Lance.
    I sat in yesterday at the Board of Inquiry which is assessing the proposed Basin Reserve flyover in Wellington. Lawyer for Save the Basin, Tom Bennion, was quizzing traffic expert Tim Kelly from Opus about exactly this point.
    Kelly looked at ANZ’s truckometer graph (page 2 of http://www.anz.co.nz/resources/4/4/447b34eb-da65-4348-acc3-78be5c9d82c2/ANZ-Truckometer-20140211.pdf?MOD=AJPERES&CACHEID=447b34eb-da65-4348-acc3-78be5c9d82c2) and declared his faith in traffic growth.
    Bennion pointed to a graph like yours and suggested vehicle growth has peaked and is declining. Crucially, the peak is pre-GFC, suggesting a structural inflection.
    I found this useful: http://en.wikipedia.org/wiki/Peak_car
    So, why are we splurging on RoNS instead of PT, cycling and walking?
    Why are we locking people into car-dependence?
    Why are we not transitioning to low-carbon transport?


  4. Hi Lance

    Pick up a copy of NZTA latest research newsletter. An international review says that NZTA significantly overplayed traffic estimates in 5 of the last 6 major projects they completed amongst a whole host of other significant criticisms of NZTA to do the maths.

    We’re just discovered that NZTA quietly rolled the Petone to Grenada Road into the Roads of National significance (Oct 2009 and still haven’t told the Wellington Mayor!) and have been quietly adding whole new proposed motorways on (option D – Takapu Motoway for no good reason that capacity. Saying that the 3km piece of SH1 motorway won’t handle the traffic? It does now easily and will do once transmission gully is connected. They’re saying that to build the whole new Takapu Motorway (up a rugged fault formed valley, over the Wgtn gas main and water main, weaving amongst South Island Power cables heading north) is cheaper than widening the existing motorway. Apparently wasted time by commuters looking at diggers tips the balance and justifies destroying a whole community, rural valley and 2 entrances to Belmont Regional Park.

    Since the Govt has decided Transmission Gully will be a PPP, it’s freed up $800 million of ring fenced money looking for action. More roads will be the answer looking for a problem and massaged traffic figures are the lubricant that will further underpin the increasing imposition of the roading network on Kiwis. It has to stop.


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