InfratsructureNZ Policy Director, Hamish Glenn, says make the property owners who get windfall gains pay for Light Rail.

The Auckland Light Rail Project, confirmed by the Government yesterday, is not only about transport.

Though it is hyped by its advocates as a green alternative to fossil-fuelled transport, the reality is that its main benefit will be as a catalyst for property development.

And that raises questions about how it should be funded.

Transport Minister Michael Wood yesterday conceded that the Government did not even know what the final cost might be.

“There’s no doubt that it will be a very significant investment,” he told a media conference called to announce the creation of an establishment unit to develop a business case “so evidence-based decisions can be made on mode and route, providing cost estimates, and funding and financing options which include looking at value capture.”

But he clearly expects it to be expensive.

“The way that I think about it, as if we were starting from scratch in 2021 with our roading network and we planned to build a motorway network between the Central City and Mangere, everyone would expect that that would be a multi-billion dollar project,” he said.

“We will be looking at a project of a similar scale in this case.

“The reality is this is about planning for Auckland’s transport needs, for our urban growth over the next 100 years.”

However, the addition of “value capture” acknowledges a long lobbying campaign by Infrastructure New Zealand, who argue that the main financial benefit from urban transport projects accrues to property owners who live within 400 metres of a station.


Simply, “value capture” imposes a special rate or levy on those property owners who will have seen substantial windfall gains because of their proximity to a transport station.

In 2013 economists Arthur Grimes and Chris Young estimated the total increase in land values resulting from rail updates to Auckland’s western line  at $667 million; a sum that broadly matched the $620 million cost of the rail developments.

Seeking to capture some of this windfall capital gain to finance projects is now becoming common overseas.

The Greater London Authority raised  £5.2 billion out of the estimated £14.8 billion project cost for London’s Crossrail project from value-capture sources.

Hamish Glenn, Policy Director of InfrastructureNZ, argues that we have already missed out on having the beneficiaries of increased property values from Auckland’s Central Rail Link pay some of the cost.

“What we’ve seen with the Central Rail Link is that it has delivered significant property value improvements to a lot of sometimes wealthy property owners around the stations, right across the rail link,” he told POLITIK.

“That just cannot be efficient, and it cannot be equitable under our current approach.

“It should be that those property owners are paying largely for this project, not taxpayers through their income taxes; not road users through road user charges, only to the extent that they benefit.

“But the predominant beneficiaries in major rapid transit projects are the property owners. We have to find a way of getting those beneficiaries to pay their fair share.”

Wood singled out value capture as a funding option.

“We’ve asked them (the establishment body) to give us advice on different funding options and specifically ask them to consider options such as value capture so that we’re looking at the different ways in which we can fund what will be a very significant project,” he said.

Though Glenn and Wood both refer to the LightRail project as “rapid transport”,; just how rapid is another question.

The Greater Auckland Blog, a long time advocate of Light Rail, believes that if the trains operate in dedicated lanes and have a preference at traffic lights, then from about the Civic through to the Mt Roskill shops, “we should expect services to be able to reliably make this trip in about 18 minutes, even with Queen St having a 30 km per hour speed limit.

“At peak times, that’s about 5 minutes faster than even the express buses today and about 15 minutes faster than regular buses.”

It was that narrow margin overexpress buses that persuaded the former National Transport Minister, Simon Bridges, to favour buses for the immediate future.

The Greens, however, enthused about the ability of light rail to deliver its passengers to the airport in 40 minutes.

“With street-level light rail, we estimate there could be a train every four minutes at peak times, taking 40 minutes from Queen Street to the Airport,” said transport spokesperson Julie-Anne Genter.

“Three-quarters of the journey would be separated from roads, allowing speeds of up to 100 km/h, but obviously slower through suburban centres.”

But Google Maps shows a car journey from the bottom of Queen Street to the airport in 25 minutes.

However, the importance of light rail may not be so much the speed with which it gets its passengers to the airport, but its ability to move freely in an increasingly congested Auckland and at the same time by scooping up a large number of passengers contribute to decongestion.

The head of Advocacy and Strategy at the Auckland Employers and Manufacturers Association, Alan McDonald, made this point at the media conference.

“It’s really good to hear that a minister has listened and is establishing the group to look at quite wide-ranging steps, including the mode and the financing and the funding and the route because I think there’s still some contention around that,” he said.

“As a group, we are all we share a common goal to decongest Auckland’s roads.

“We may not agree on the pathway to that, but we agree on decongestion because it’s critical for business and for the lifestyle of Aucklanders.

“We don’t want to be stuck in traffic.

“We’re losing production.

“We funded a study a couple of years ago that showed us we lost one point two billion dollars every year because of congestion.”

Lightrail was an election pledge from Labour in 2017.

“We need a game-changer to fix Auckland’s congestion woes,” said soon-to-be Transport Minister Phil Twyford.

“Auckland needs to be a world-class city with a world-class transport network to support its growing population and economy,”

Prime Minister Jacinda Ardern then promised that the light rail would be built within four years.

Given that the Government has failed to meet that target, Wood offered a more cautious timeline yesterday.

“We’re setting up the process to make sure that we make the right decisions, will have a delivery entity moving into the next phase of this project by the end of the year, and they will be able to start shaping up that timeline,” he said.

“But we will be moving forward with this project as quickly as we can, ensuring that we make good decisions, given the scale of it and the impact on Auckland’s transport system.”