Auckland City Centre Rail Link - Business Case Review - Ministry of ...

Auckland City Centre Rail Link Business Case Review | May 2011
first affected firm equals the average effect across all firms, and there will be no
consequent impacts from re-location on market conditions).
Auckland Council officers consider it is unlikely that either would hold. Rather,
officers would expect individual and cumulative location changes to affect the
marketplace. In turn, these changes would be likely to generate other benefits to
firms from re-location to the CBD, which are over and above the net changes in
transport costs 27 . Therefore, a larger share (than just the tax wedge) should be
included as a benefit.
1.8.4 Auckland Council/Auckland Transport views on overall wider economic
benefits
As discussed in Appendix E, Auckland Council and Auckland Transport have
presented a policy case that sets out their view on transport benefits. WEBs are
calculated as a percentage of these benefits and also vary according to job growth
assumptions. The table below provides the WEBs estimates for the low (5,000 jobs)
and high (20,000 jobs) Auckland Council/Auckland Transport policy case scenarios.
Auckland Council and Auckland Transport officers have also estimated that the
project could generate additional regional economic growth. They estimate this could
result in up to $1,300 million in additional benefits but note that only a component of
this number is additive to other benefits. The impact on the total WEBs on the policy
case is shown in the table below.
Table 17: Auckland Council and Auckland Transport estimation of wider economic benefits
Benefit category
Low growth scenario High growth scenario
(5,000 jobs) ($M, NPV) (20,000 jobs) ($M, NPV)
Agglomeration benefits 393 455
Imperfect competition 30 34
Labour supply 57 66
Job relocation 148 591
Total WEBs 628 1,146
Increase in the size of the
regional economy
0-1,300 0-1,300
Total including regional
growth
628-1,928 1,146-2,446
1.9 Summary
The Working Group has reviewed the analysis and estimation of WEBs in the
Business Case for the CCRL. The Review concluded that while some WEBs were
omitted, overall the Business Case WEBs were significantly overstated.
The Review examined the Business Case estimate of 22,000 additional jobs as a
result of the CCRL and concluded there were methodological issues with the
Business Case approach. The Review concludes that up to 5,000 jobs could locate
into the CBD, within the total forecast by the ARLTS, as a result of the project.
Auckland Council and Auckland Transport officers consider:
the job growth will be between 5,000 and 20,000 and that these will be jobs
additional to the ARLTS forecasts
27 Auckland Council has provided further detail explaining their argument in their memo of April 4
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