An announcement today that Singapore Airlines has canned its route to Canberra is a stark admission that there is not enough demand for international flights out of Wellington, say those concerned about the ongoing spending of ratepayer and taxpayer money on the venture.

Guardians of the Bays, representing more than 600 community and ratepayer organisations and concerned individuals, is concerned that public money has been used to subsidise the route despite it being obvious for some time that it was not successful.

Guardians of the Bays Co-Chair Richard Randerson said it was no surprise that Singapore Airlines was pulling the plug on the Wellington – Canberra – Singapore route.

Despite spending at least $3 million dollars of ratepayer money to promote the route, publicly available loading data clearly shows that the route achieved less than a 50 percent passenger loading. That is great if you like lots of seats on your plane, but it isn’t great for ratepayers who have been subsidising this route for more than a year – for no discernible benefit. Canberra has a similar-sized population to Wellington, and if Canberra cannot muster a payload, it is unlikely Wellington can do anything better.

Latest figures from international monitoring sites show the much touted Capital Express – or Wellington to Canberra flights – have not been working. The latest figures from the Australian Government’s Department of Infrastructure and Regional Development show that in August 2017, the Singapore Airlines Wellington to Canberra flight had an average passenger load factor of 128 passengers per flight (based on 16 return services). That is a load factor of 48 percent.

Further figures show that international passenger traffic at Wellington Airport was up only 1.9 percent in the 12 months to September 2017, with Australian visitors actually down 2.2 percent in the same period.

Wellington Airport has tried desperately to stack up its claims that there will be an economic benefit from the proposed airport extension for Wellington without success. It has drawn down significant amounts of ratepayer funding for its Environment Court application and for the Singapore Airlines subsidy and promotion.

“There is already evidence that the proposal is likely to cost much more than the $350m originally suggested, up to $500m according to one expert.

“The proposed airport extension is not about what is good for Wellington. It is about what is good for Wellington Airport and its multi-billion dollar owner Infratil.

Co-chair Dr Sea Rotmann said it was time for the Mayor and Councillors of Wellington City to cut their losses on the proposed airport extension and move on.

In a meeting with Wellington Mayor Justin Lester, shortly after he was elected last year, he was clear that the Council’s support of the Wellington Airport extension was dependent on demand for the route.

This change of route proves that Wellington Airport and Singapore Airlines are scrambling to find a route that works economically.  It is a shame that Singapore Airlines has got caught up in this debacle as it has an excellent brand but appears to have been captured by vested interests.

“It is time for our community leaders to follow the Government’s lead and focus on spending that improves the lives of Wellingtonians and all New Zealanders, not just the few,” she said.

http://www.scoop.co.nz/stories/AK1711/S00488/ratepayers-will-pay-for-wellington-airports-folly.htm

Wellington Ratepayers Will Pay for Wellington International Airport’s Folly

19 November 2017 – Wellington International Airport is continuing its cynical campaign to shoehorn Wellington ratepayers into paying for a runway extension, despite having no airline, no business case and no eye to safety concerns raised by pilots, according to concerned ratepayers, community leaders and recreational groups.

Guardians of the Bays, which represents more than 600 recreational, community and ratepayer members, says Wellington Airport’s announcement that it has signed a Memorandum of Understanding with a Chinese company to construct the new extension shows it has little respect for the community or the ratepayers.

Guardians of the Bays’ Co-Chair Richard Randerson says WIAL is trying to reinvigorate its extension plans on the back of the Government’s $1 billion regional development fund.

“The questions that residents and ratepayers had prior to the General Election have still not been addressed. There is already evidence that the proposal is likely to cost much more than the $350m originally suggested, up to $500m according to one expert.

“The Environment Court process is not completed, there are still questions about the safety of the airport currently being reviewed by the Supreme Court and there is still no detailed business case.”

Co-Chair Dr. Sea Rotmann says the burden to ratepayers and taxpayers of the proposed extension continues to be unacceptable – particularly as the suggested benefits to Wellington City are anything but guaranteed.

“No airline has committed to flying into an extended airport and the one airline currently flying (via Canberra) is getting very low loadings, according to an independent monitor of routes around the world. Singapore Airlines reduced the number of flights in response to low demand.

“The Airport has specified the limit for its own investment in the extension at $100m now. Anything above this must come from Wellington ratepayers and New Zealand taxpayers. There is still no business case that has gone through the Treasury’s Better Business Case process to prove if it is even eligible for public funding,” she says.

In a meeting with Guardians representatives earlier this year, Mayor Justin Lester said the extension was not likely to happen anytime soon and that Wellington City Council would not commit to providing more than $90m.

“Mayor Justin Lester said that Wellington ratepayers will not be contributing any more money to the Airport’s application process. The Mayor has finally declared enough is enough – Wellington City will not hemorrhage money to support a poorly planned and poorly researched project when many, more critical initiatives need prioritising. So why are he, and WCC CEO Kevin Lavery signing an MoU with a Chinese construction company and airline as if this proposal is a done deal?

“The Council already gave the Airport $3m of ratepayers’ precious money to fund the creation of its reports, which are consistently being shown to be little more than ‘spin’ to support the Airport’s slant on the proposal.

“Infratil, majority owners of Wellington Airport, are offering to put in less than 20 percent. The rest will have to come from ratepayers and taxpayers. That means further increases in rates.

“How can Wellington sell its self as a world-class tourist destination with a strong environmental record when we need to invest so heavily in things that make it just that, such as our infrastructure, earthquake resilience and our performing arts’ venues?”, Dr Rotmann says.

“Other priorities for Council expenditure include affordable housing, reducing traffic congestion – like on the access road to the airport – and improved social services,” says Richard Randerson.

“Ratepayers have consistently rated such items as of greater priority than a runway extension. It is very disappointing that the Mayor and Chief Council Executive should be signing an MOU with a Chinese construction corporation before essential criteria have been met. It makes a mockery of democracy and slants the playing field in favour of an extension before the matter has even been considered by the Environment Court,” he says.

ENDS

www.guardiansofthebays.org.nz

 

By Dave Armstrong: https://www.stuff.co.nz/national/politics/98996698/Airport-extension-shouldn-t-be-allowed-off-the-ground?utm_source=dlvr.it&utm_medium=Twitter
There's no  money to build the runway extension at Wellington.

KEVIN STENT/STUFF

There’s no money to build the runway extension at Wellington.

OPINION: Last Sunday in Beijing, Wellington Airport signed a Memorandum of Understanding (MOU) with a Chinese construction company and the China Express airline.

Hallelujah! Wellington has the world’s biggest construction company to help extend its runway so millions of tourists can flood into Wellington.

The parties will apparently work together on the extension, develop the airport area and market Wellington as a destination. Yet as Scoop website reminded us last week, our council signed a similar MOU with a different Chinese construction company in 2015.

And remember the MOU that Celia Wade-Brown signed in China to build that lovely Chinese Garden that currently sits in Frank Kitts Park? Oops – what a civic embarrassment that has been. I’m sure there must be an old Chinese proverb about Wellington mayors who rashly sign MOUs ending up with gravel rash at election time.

READ MORE
Wellington Airport lines up Chinese construction giant for runway extension

Airports group joins Supreme Court hearing to warn of risks from pilots’ safety challenge
Wellington Airport claims not all planes need to be able to land on longer runway

But there’s just one minor problem with the plethora of  memorandums that have been flowing out of China like the Yangtze. There’s no bloody money to build the runway extension.

Most of the city’s Councillors, as well as many citizens, see no need for it. MOUs are not worth the paper they are written on if there’s no money involved. They are Purex memorandums.

In the past, central government has been uninterested in funding the runway extension. Steven Joyce rightly asked why taxpayers and ratepayers should throw more than $300 million at an asset mainly owned by a private company that makes over $600m profit a year.

Will Jacinda Ardern’s belief that climate change is her generation’s nuclear free moment cause her Government to fund a runway extension, currently held up by legal action from pilots, which will greatly increase emissions? I don’t think so.

And despite the mayor, council chief executive and Wreda (Wellington’s Really Expensive Dining Agency) being enthusiastic about the latest MOU, there is little enthusiasm from city councillors.

Even one of the most pro-runway-extension candidates in the Southern Ward by-election, Labour’s Fleur Fitzsimons, said she would support a runway only if the council limited its expenditure to its share in the airport company (33 per cent), and then only if there was a robust business case, which so far there has not been.

But our mayor is right behind what many see as unnecessary corporate welfare in a city saddled with more than $500m debt. In China, Justin Lester said that despite Wellington being named as one of the most liveable cities in the world, “our front door to the world is closed because we don’t have a truly international airport”.

Really? So tourists don’t come here simply because we don’t have a long runway? I look forward to Mr Lester reducing unemployment by making the doors of WINZ offices narrower, reducing crime by building smaller prisons and increasing Wellington’s exports by building bigger cranes on our earthquake-munted port.

Last week I ran into a former colleague who works for a North Island tourism operation. He never mentioned runways, but reckoned the big challenge with Asian tourists is that many perceive New Zealand as essentially being the South Island with its stunning scenery – a “Switzerland of the South”.

Many of them give the North Island a miss. An extended runway won’t change that perception.

Queenstown Airport can be hazardous, is often closed during winter, has few night flights and, like Wellington, has most of its international flights coming from Australia. Yet it is going gangbusters.

Perhaps instead of extending the runway, Wellington City Council could commission a giant papier mache model of the Remarkables to stand in the background of Wellington Airport?

It’s interesting that so many of the city’s current issues – train strikes, buses not turning up, bus drivers with uncertain futures, blocked drains and dud street lighting, polluting diesel buses, and the runway extension – can all be traced back to once-efficient council and state assets being privatised.

Can I suggest that the majority of city councillors who believe that the runway extension is a folly ignore the MOUs and quietly take the $90m allocated for the runway extension in the Long-Term Plan and reallocate it to something better?

It can’t be that hard to find something more useful than $90m of corporate welfare.

March 21, 2017
Residents and ratepayers group the Guardians of the Bays has welcomed the news that
Wellington Airport will postpone the progression of its runway extension resource
consent in the Environment Court.

In advance of a pre-hearing conference on Thursday, the Airport has announced that it will
withdraw its resource consent application while it appeals to the Supreme Court on
the Court of Appeal ruling that the Civil Aviation Authority must reconsider its
decision on the length of the proposed runway safety area.

Guardians of the Bays’ Co-Chair Richard Randerson said the decision showed that
Wellington Airport’s application was deficient in not considering possible
contingencies such as the Court of Appeal decision.

Wellington Airport has said in its own memo to the court that it will potentially need
to rescope the application or withdraw it completely, if its appeal to the Supreme
Court is unsuccessful.
The Pilots Association case on the safety of the extension was before the courts
well before Wellington Airport lodged its application to the Environment Court. Yet it
still went ahead and used nearly $3 million of ratepayer funding to scope a proposal
which now looks like it will be redundant.
First and foremost, any runway extension must be safe, but to make that happen
Wellington Airport’s budget will need serious review.”

Co-Chair Dr. Sea Rotmann said that the Airport’s decision to withdraw its application
is an opportunity for Mayor Justin Lester and Wellington City Council to seriously
review the City’s commitment to funding this project.

As time marches on, the figures that Wellington Airport put up about the costs
become more out of date. There is already evidence that the proposal is likely to cost
more than the $350m originally suggested. An extension to the runway safety area
would push costs well over the half a billion dollars it is currently expected to reach
and would put the project well outside the parameters of the current Environment
Court application.”

In a meeting with the Guardians last month, Mayor Justin Lester said that the
extension was not likely to happen any time soon and that Wellington City Council
would not commit to providing more than $90m.

We continue to urge the Mayor to take a leadership role for all ratepayers, including
making a public commitment that the Council will not promise more ratepayer money
for an application that has not been well considered.

The Airport has previously specified the limit for its own investment in the extension
at $100m. Anything above this must come from Wellington ratepayers and New
Zealand taxpayers. We won’t know for a while if the Airport plans to proceed if a
longer safety margin is required, but Wellingtonians need to know now that the
Council will not burden ratepayers with additional costs- particularly as the
suggested benefits are nebulous and far from being guaranteed.”

By Michael Reddell, October 17, 2016. Link here.

Fairfax’s Hamish Rutherford had a substantial piece in Saturday’s Dominion-Post on the proposed Wellington airport runway extension, under the heading If we build it, will they come? (a rather similar title to my own first post on the airport last year).  It seemed like a fairly balanced article, covering many (but not all) of the key uncertainties about the project.   Most of them wouldn’t be a matter for public concern if this was to be a privately-funded project, but it isn’t –  and everyone agrees on that.

There was an interesting quote to that effect at the start of the article from airport company chair Tim Brown.

As Tim Brown tells it, the first time he discussed a “back of the envelope”-type analysis of the cost to extend Wellington runway with the airport’s chief executive, Steve Sanderson, the conversation was “completely negative”.

…..Brown had just been presented an outline of a $300 million project, aiming to enable non-stop long-haul flights to the capital.

However, the  potential gains to the airport (two-thirds owned by Infratil, the rest by Wellington City Council) were likely to see a boost in profits that would only justify it investing around $100m.

Whatever the final costs of the project might be (and the estimates are unmoved in the years since), Brown was clear about the chances.

“Literally within 10 seconds I said: ‘So what? What do I care? We’re not going to do that, are we?’,” Brown recalled this week.

This isn’t a project that might need the last 10 or 20 per cent of the cost picked up by the taxpayer/ratepayer to make it viable.  Instead it only works –  even on their own numbers –  if the Crown/WCC picks up two-thirds of the capital cost (and ratepayers have already paid millions of dollars to get the proposal this far).  This is a politically-driven project at least as much (and probably more) than it is a WIAL/Infratil one.

The whole process is getting underway again now, both because the airport company (WIAL) has restarted its resource consent application, and because now that the election is past the ability of citizens and ratepayers to hold in check the big spending “boosterish” tendencies of the mayor and councillors is diminished considerably.  It is difficult to tell quite what the balance of the council now is, but the new mayor has been at the forefront of the various “booster” projects the Council is spending money on, and one councillor who was vocally opposed to the extension in the previous term is no longer on the council.  WCC’s track record –  of wanting to “do something”, spend money on big ticket initiatives, often with little or no public scrutiny (sometimes not even with scrutiny from councilors) – is pretty disquieting.

Presumably under some pressure during the election campaign, the new mayor Justin Lester modified his stance somewhat in responding to pre-election candidate surveys.

I have committed to seeking the resource consent for the airport extension project. It’s too early to say whether the project will proceed because the following three caveats will need to be satisfied before it proceeds:

1. Resource consent approval

2. Financial support from Central Government

3. Commitment from airlines to fly direct routes to Asia.

This is a 50 year project and needs careful consideration before any decision is made.

On the face of it, that looks like a fairly insurmountable set of hurdles.  It is very unlikely that any airline is going to give a commitment to fly direct long-haul routes between Asia and Wellington in advance of (multi-year) construction even starting –  they couldn’t know what would happen to fuel prices, the world/regional economy or the like in the intervening period.    That is especially so given the expressed lack of interest in flying long-haul from Wellington from the one airline that always will be flying New Zealand routes, Air New Zealand.

And, to date, central government seems to have been commendably non-encouraging about any suggestion of central government financial support.

So what –  beyond the track record of poor quality secretive spending – makes me uneasy about the Lester-led Council?  First, Lester knows very well that he won’t get commitments from airlines before the Council has to make decisions on whether to fund the runway extension –  but he might get non-binding expression of interests, which could be politically spun to sound a bit like commitments.  Second, the government has a  track record of ending up funding uneconomic infrastructure projects, including ones it initially poured cold water over.  One could think of Transmission Gully, or KiwiRail, or Northland (by-election) bridges or –  perhaps most concerningly – the City Rail Link in Auckland.   With a modest budget surplus to be subject to an electoral auction next year, is it so inconceivable that the government could change tack (government built houses and immigration last week) and throw $100 million in the direction of the runway extension?  Compared to the spending on Transmission Gully, it would be chicken feed.

And while Lester is quoted extensively in the Fairfax article, neither of the conditions in the pre-election quote above (airline commitments, central government funding) is repeated.  [UPDATE: I gather they are still part of his set of pre-conditions]

So ratepayers beware.  Citizens beware.

In the Fairfax article, Lester tries to blunt possible ratepayer concerns by suggesting the bulk of any Council funding should be raised from business rates rather than from residential ratepayers, because “the majority of the benefit would go to the business sector”.  That might sound superficially plausible (if there were material benefits at all) but the mayor seems unaware of the notion of tax incidence: that the party who writes the cheque to pay a tax or rates bill isn’t typically the party that bears the economic cost.   Much of any company tax is actually borne, over time, by workers –  because less investment occurs than otherwise, and wages are lower as a result.  Just as renters bear some/much of the incidence of rates bills paid by landlords, we should expect that the wider pool of Wellington citizens would bear much of the economic cost of higher business rates to fund an airport extension, even if no non-business ratepayer ever has to increase their direct rates bill.  This is an issue that should bother all citizens, not just business ratepayers.

A lot of the decision-making should turn on a robust cost-benefit analysis of the proposal.  WIAL and the Council have commissioned their own analysis, which suggests large positive national benefits.  Not many people who have looked carefully at the numbers have found their numbers persuasive.  Justin Lester seems to suggest this is all about self-interest

“I’m not going to have people telling me and telling Wellington and telling our council what we should be doing because of their own interests.”

If one wanted to descend to a similar level, one could ask about the incentives on and interests of councillors –  spending other people’s money on big ticket projects.  But, perhaps more importantly, advocates like Lester would do better to front up and explain why they disagree with specific points raised by critics –  whether those critics are representatives of the airline industry, or other commentators and economists.

In the last few weeks, questions have begun to surface about the estimated cost of the runway extension itself.  In a private sector project, citizens wouldn’t need to worry too much.  After all, if the company proposing the development gets it wrong, its own shareholders will be the ones who lose money.  But this is a project where large amounts of ratepayers/taxpayers money will be at stake, and where it isn’t clear how well aligned incentives really are.  The construction estimates are being done for WIAL, which has already concluded that it would only be worth them putting in around $100 million.  If the project is to proceed central or local government will be on the hook for the rest.  Mightn’t the incentives at present be to keep the construction estimates to the low end of a possible range?  Doing so might (a) increase the chances of getting a resource consent (since, sadly, the Environment Court needs to do an economic appraisal) and (b) increase the chances of getting central and local government approval to proceed, with political commitment to the project, with any later cost-overruns perhaps largely falling on those parties.

My own unease has been around three main points; developed in earlier posts:

(a) the large assumed increase in long-haul visitors to New Zealand, simply because of an option to fly long-haul into Wellington (rather than Auckland or Christchurch.

(b) the very large assumed “wider economic benefits” assumed to flow from such increases in visitor numbers, even if the passenger projections were accurate, and

(c) the discount rate being used to evaluate such gains (many of them decades into the future).

I dealt with the visitor number points in this post late last year.   The WIAL cost-benefit analysis uses passenger projections which assume an increase of 200000 visitors to New Zealand (building up over time) simply because it becomes physically possible to fly long haul into Wellington.   That seems implausible.  In his own look at the passenger projections, Ian Harrison of Tailrisk Economics, noted that the numbers assumed that within 20 years 30000 more Americans a year will come to New Zealand simply because they can fly directly into Wellington.   One can imagine a few more might want to arrive via Wellington, but is it really credible that so many more will come to New Zealand as a whole?  Perhaps more startling were the assumptions for “other Asia” (ie other than China and Japan).  At present, only around 30000 people come from those countries to Wellington in a year.  The projections assume that putting in a runway allowing long-haul flights will provide a boost of an additional 105000 visitors annually within 20 years.  Were Wellington Florence, perhaps it would be a credible story.  As it is –  and even with some more marketing spending and a heavily subsidized new film museum – it just doesn’t ring true.  Long-haul passengers don’t come to New Zealand for its cities –  the cities are mostly gateways, and in the case of the lower North Island, Wellington isn’t the gateway to much.  (And yes, I can see the South Island as I type, so perhaps there is a small “gateway to the South, by slow ferry” market).

I touched on the “wider economic benefits” and the discount rates in this post. Here are some extracts from that post:

But much the biggest issues relate to the possibility of benefits to New Zealand from additional foreign tourists buying real goods and services in New Zealand.  Sapere appear to have estimated a total for the likely increase in tourist spending in New Zealand and then subtracted an estimate for the cost of providing those services.  For that they have assumed that 45.5 per cent of the expenditure is domestic value-added (ie returns to labour and capital).  That approach doesn’t seem right and generates highly implausible estimates.

The producer surplus is the gain to the provider of a good or service over and above what he or she would have been willing to provide that service at.   The cost of providing the service includes the cost of intermediate inputs (materials etc) but also the cost of the labour and the cost of capital (a normal rate of return).  If the producer sells product at that cost, there is no producer surplus. In this context, there is no net economic benefits –  economic costs have just been covered.

Over the long haul, in reasonably competitive markets, producer surpluses should be very small (in the limit zero).  For a hotel that budgeted on 80 per cent occupancy, a surprise influx of visitors for the weekend will generate a producer surplus –  the windfall arrivals add much more to revenue than they do to costs of supplying the service.  But over the long haul –  and the airport project is evaluated over the period out to 2060 –  it is fairly implausible that there will be any material producer surplus resulting from well-foreshadowed increases in visitor numbers.  Most of what tourists spend money on in New Zealand are items such as accommodation, domestic travel, and food and beverage.  In all those sectors, capacity is scalable.  One would expect new entrants just to the point where only normal costs of capital were covered.  In the long run, supply curves for most of these sorts of services/products should almost flat.

My proposition is that there are few or no producer surpluses likely to arise from a trend increase in foreign tourism as a result of extending Wellington airport.  But even if there were, any such gains would have to be offset against the loss of producer surplus for New Zealand producer (to foreign producers instead) from New Zealanders taking more holidays abroad.  It makes little difference to the hoteliers if I take my holiday in London instead of Queenstown, while at the some time someone in Manchester takes his in Queenstown instead of taking it in London.

Even if the consultants are right that there would be more additional inward visitors than outward, any producer surpluses from either set of numbers should be small.  And the net of two small offsetting numbers is even smaller.

The safest assumption, in evaluating the WIAL proposal, is to assume that the economic benefits of the proposal all accrue to users, and that there are no material net economic benefits (or costs) to the rest of the community.  Perhaps there is a small amount in the net GST flow, but it is hardly worth focusing on given the scale of the other uncertainties.

Perhaps this point will seem counterintuitive to lay readers and city councillors.  Surely “Wellington” or “New Zealand” is better off from having more foreign visitors (assuming the numbers outweigh the increased outflow of New Zealanders)?  And if so, shouldn’t we –  Councils, government –  be willing to spend money to get those benefits?   The short answer is no.    Good and services cost real resources to provide, and in a competitive market simply providing more goods and services won’t make the city or country better off –  you need to be able to sell stuff that generates more of a return than it costs to provide (including the cost of capital).  Vanilla products and services typically don’t do that.  After all, labour that is used to provide services to tourists is labour that can’t be used for something other activity.  And over a horizon of 45 years we can’t just assume there are spare resources sitting round unused.  Spending public money to generate this economic activity will come at a cost of some other economic activity being displaced (as well as the deadweight costs of taxation, which are allowed for in the cost-benefit analysis).

If, to a first approximation, there are no “net incremental economic benefits” for the “rest of the community” then even if the WIAL/Sapere passenger number estimates are totally robust, the net benefits of the project drop from $2090 million to $954 million.

It is not as if the new visitors – even if they eventuate –  are likely to be top-end exclusive customers.  Business and government travel –  a significant part of the Wellington market –  is unlikely to be much affected, and any boost to overall visitor numbers seems likely to be mostly tourists, consuming fairly vanilla, easily replicable, goods and services.

And what of the discount rate?

It is very unlikely that any private company (or shareholder) would evaluate such a risky project using anything as low as a 7 per cent real cost of capital.  On the WIAL/Sapere numbers, even raising the discount rate to 10 per cent –  a fairly typical cost of capital for Australian companies according to a relatively recent survey by the RBA –  roughly halves the value of any net benefits from the project (even if all the other assumptions about passengers numbers, and “wider economic benefits” are in fact well-founded).  But this runway extension seems much riskier than the typical investment project –  it is location-specific, not usable for anything else, and relies on assumptions that involve transforming the nature of the business (ie there is no long haul capacity at present, and no one can know with any confidence how much demand there might be for the service).  It would be enlightening if Infratil/WIAL told us what cost of capital/discount rate assumptions they would use in evaluating such a project if all the risk were on them?  I’m sure, for such a hard-nosed bunch of operators, if would prudently be more than 10 per cent real.

The Fairfax article picks up a number of other points, including some comments from me. In some of those comments, I probably wasn’t as clear as I might have been.

A few weeks ago, Singapore Airlines –  assisted by a non-transparent Wellington City Council subsidy –  began flying several times a week between Singapore and Wellington, with a stopover in (of all places) Canberra.  No one know whether those flights will succeed (SIA reportedly wants to move to daily), and become viable without ongoing Council subsidies.  That uncertainty is reflected in the article.  Tim Brown from WIAL seems to believe that if the route succeeds, and attracts a larger proportion of foreign passengers, it would tend to support the case for the runway extension.  Justin Lester seems a bit nervous

Like the airport company, Lester also appears to concede that if the Singapore Airlines flights do not show the demand its supporters hope, it would be bad news for the runway extension.

“People are getting on and off these planes four times a week and if the demand doesn’t go up to seven times a week, you know, we won’t need to do it,” he said, quickly adding that this would be a “strong indicator” rather than proof the runway extension was not worthwhile.

I was quoted along similar lines

Would strong success of Singapore Airlines’ new route, with a high proportion of visitors, help prove the case of the missing passengers?

For a man who freely admits he is naturally sceptical about most public infrastructure projects, Reddell is surprisingly open to the idea.

“If they can make that route viable without larger public subsidies than they’ve got then I think that would be interesting”, especially given that passengers face being “stuck in Canberra for a couple of hours”.

But with several caveats.  First, even if the Wellington-Canberra-Singapore route proves viable, it only offers any insight on the long-haul issue if a material proportion of the passengers in and out of Wellington are not just Wellington-Canberra passengers (although it seems unlikely that a daily 777 flight just Wellington/Canberra would be economic).

Second, if such flights prove viable with the current runway, that is great. All involved are likely to gain.  But that is different proposition than spending  (an irreversible) $300 million on a new runway.  As I noted

However, Reddell adds, this may only prove Brown is right about the problem being a lack of marketing, without proving the airport extension itself was needed.

“I would open up the argument, [of] let’s subsidise some more flights, and if they don’t work we can shut them down, whereas with the $300m runway extension, it’s a sunk cost,” Reddell said.

“The great thing about marketing is you can shut it off. You can’t do much with a runway extension” that doesn’t work out.

In the cost-benefit analysis, one of the options they looked at was a big increase in marketing expenditure.  It produced net benefits not that much smaller than those purportedly on offer from the runway extension, and could be re-evaluated constantly, rather than being irreversible.

If central and local government do go ahead and fund the extension, it wouldn’t surprise me if 10 years hence there were a few long haul flights in and out of Wellington.  But, of itself, that would prove nothing about the economics of the project.  The financial contribution of central or local government would, no doubt, be treated as a bygone –  with no direct financial returns, and arguable and uncertain indirect ones –  and with a runway in place, and only its own capital contribution to cover, perhaps WIAL could attract a few flights.  That might leave today’s councilors feeling better, as they show the extension to their grandchildren, but is no reason to think that Wellington citizens and ratepayers will have been made better off as a result.

I’ve not touched at all on issues like the possibility that future carbon charges make long haul travel less attractive than it is today, or that rising sea levels might raise questions about Wellington airport more generally.  But they all should bring us back to Justin Lester’s point

This is a 50 year project

and

His “gut instinct” was that the case would eventually be proven, but it could be soon, or it could be decades away.

The costs of waiting simply aren’t that large.  If the proponents are right, the case will look that much more compelling  –  and less risky –  10 years from now.  If they are wrong, (lots of) real resources will have been irreversibly wasted –  and that burden will be felt not just by Wellington businesses, but by all citizens and ratepayers of Wellington.   I’d urge the incoming Council to reflect on that choice, and to take seriously what decisionmaking under uncertainty should mean.

“Wellington City Council has no Plan B to protect Wellington’s ratepayers if the Wellington Airport Extension doesn’t deliver,” according to business, recreational, community and environmental groups who are calling for more rigour around the proposal.

The Guardians of the Bays, a citizen-led umbrella organisation representing a growing number of groups of businesses and individuals who are concerned the runway extension will not deliver the benefits being promised by Wellington International Airport Limited and some City Councillors.

Co-chairs Dr Sea Rotmann and Richard Randerson said the airport is being presented to the public as Wellington’s main economic growth option.

“We are all keen on a progressive and successful Wellington. But the numbers being put up for this proposal simply don’t stack up.

“The Council has promised $90 million of ratepayer money, on top of $3 million already handed over to the airport, for a runway extension that has no business case. The Airport has refused to put its numbers under the scrutiny of the Government’s own Better Business Case process, which is required for getting Central Government funding.”

“Economically, the runway extension has the potential to lump Wellington ratepayers with a wasteful and unnecessary White Elephant requiring significant ratepayer subsidies and hindering economic growth for decades. Ratepayers throughout the region will be faced with higher rates and debt and there is no guarantee that any benefits will flow through to Wellingtonians.

“The only one who really wins from this extreme version of corporate welfare is Infratil” said Mr Randerson.

Dr Rotmann said the Airport has been over-exaggerating the tourism and visitor benefits.

“There is no evidence that if ‘you build it they will come’. The Singapore Airlines ‘win’ to fly to Singapore via Canberra comes at the cost of millions of ratepayer subsidies to the airline and is of no more benefit to Wellingtonians than already-available international flights through Auckland, Sydney or Melbourne,” she said. Singapore Airlines itself said it would not be able to fly this route without the additional passenger numbers from Canberra.

“If the airport extension is such a good idea then why is Infratil not paying for it, rather than relying on corporate welfare from ratepayers and taxpayers?

“We call on all mayoral and council candidates to demonstrate a deeper vision of what growing our city could look like, rather than just pinning it all on an airport extension.

“So far only a handful have said the airport extension needs closer scrutiny and questioned whether ratepayers should provide corporate welfare to Infratil to build it. It should be noted that some of those same mayoral candidates now asking more searching questions, voted for ratepayers to pay half of the airport’s resource consent application costs, even though the City only owns a third of the shares. We need a mayor and councillors that act in the best interests of all Wellingtonians, not just big business.”

Dr Rotmann said there will be many environmental and recreational impacts. The proposal would affect surfers, recreational fishers and other users of Lyall Bay. It will also harm sensitive ecological and environmental treasures, including little blue penguins, reef herons, giant kelp forests and other marine life that would suffer enormously from millions of tonnes of rubble being dumped into the South Coast. 11ha of ocean would need to be reclaimed without having a single airline lining up to fly here long-haul.

The proposal would also cause major traffic disruptions to Wellingtonians during the four-year construction period, as up to one truck every two minutes transfers material to and from the site, via SH1, the two tunnels, the Basin reserve and through the airport gates.

“This is a Wellington-wide issue. The Greater Wellington Regional Council and Wellington City Council officers who are currently checking the airport’s resource consent application have found many significant errors and gaps in the airport’s supporting evidence,” Dr Rotmann said.

“Wellingtonians have the right to know how their money is being spent. By refusing to properly answer the questions the Regional Council has asked on behalf of everyone, the Airport is failing to respect this right. The airport is either being highly disrespectful of the process or simply doesn’t have the answers,” she said.

The Guardians are encouraging Wellingtonians to have their say about the extension by making submissions to the Greater Wellington Regional Council and Wellington International Airport. The submission period runs until Friday 12 August.

A simple guideline for how to submit and where to send submissions can be found below.

“This is such an important decision for Wellington that we need to capture as broad a range of perspectives and views as possible,” said Dr Rotmann.

Submission guide:

[gview file=”https://guardiansofthebays341400583.files.wordpress.com/2021/06/628df-final-gotb-submissions-guide-5-july.pdf”%5D

 

We now have 5 candidates contesting the Mayoral election this year, and four of them are gung-ho supporters of the corporate hand-out to fossil fuel giant, Infratil.

Why oh why does Infratil, which owns airports, energy companies, transport groups, property and hundreds of petrol stations with more than $2.5 billion in assets, still need handouts from the Wellington City Council? Why oh why are Justin Lester and Co promoting discredited numbers around this extension ad nauseum, yet refuse to insist on a proper business case by the airport? Why oh why did the Council hide the subsidies to attract Singapore Airlines to fly to Wellington (via Canberra), with Justin Lester trying to blame his leak on Helene Ritchie? Why oh why are they pushing for Wellington ratepayers to pay half of the cost of the runway extension, even though they will – at utmost, and only with unreal fantasy projections – only get a third of the economic gains? Why or why are they paying for half when they only own a third of the shares yet get just over 10% of the dividends? Why oh why are they calling critics of the airport extension to be “Anti-Wellington” and “Anti-Competition”? Why oh why is a former Green Party member who become Mayor suddenly turning her credibility into a pretzel by claiming that more long-haul flights will reduce emissions? Why oh why is the Council promoting a ‘low carbon plan’ yet fiddling with the actual aviation emission statistics which will make up more than 25% of Wellington’s emissions?

We think we know why: Because Infratil, the 66% owner of the Wellington Airport (WIAL), seems to have a very strong hold over many of these candidates. Here is Tim Brown, Chair of the WIAL board, waxing lyrically about Justin Lester in his campaign video. We all know that Celia is sitting on the WIAL Board of Directors and thus hugely conflicted when she insists on keeping up her promotion of the runway extension in public. And Jo Coughlan is cozying up to the Chinese to attract foreign investment for Infratil’s – and her Council’s – pet projects.

That leaves only Keith Johnson, one of the Guardians, who actually opposes ratepayers giving such corporate handouts to a multi-billion company and rejects pork barrel politics. He cheekily shows Justin Lester proudly wearing some of his corporate badges. It may not be a bad idea asking all of our Mayoral candidates to wear, literally, on their sleeves who their corporate supporters are and why they always seem to end up with ratepayer handouts to the tunes of millions of dollars.

Local economist, policy adviser and writer Keith Johnson says he will push for greater accountability, lower rate and debt rises, and higher levels of scrutiny for project planning and implementation.

The contest for Wellington’s mayoralty is heating up, with profesional public policy analyst and citizen journalist Keith Johnson declaring that he will enter the race as an independent. Johnson joins incumbent mayor Celia Wade-Brown, deputy mayor Justin Lester and councillors Nicola Young and Jo Coughlan in declaring their candidacies in the October election.

Reining in the Council’s sometimes massive, and apparently somewhat casual and arbitrary spending plans will be his top priority.

Like Jo Coughlan, Johnson is highly critical of the Council’s approach to transport planning, arguing that it is driven by emotion rather than objectivity. He agrees with Jo that failure to solve the Basin Reserve’s peak hour congestion has resulted in “lost years” of progress, resulting from the canning of a proposed highway flyover and a failure to promote a practical alternative.

Unlike all the other candidates who are standing, Keith is also highly critical of plans for the Council to contribute $90 million to the proposed Wellington Airport Runway Extension Project. He sees this as yet another example of Pollyanna planning that rides roughshod over good practice, involving the commissioning and application of business case analysis from tame and possibly biased consultants – in support of private profit.

Keith is also concerned that the Council’s Big Ideas spending takes insufficient account of the costs imposed on residents through rate rises and accumulating debt – and tends to favour a narrow group of interests in the tourism, hospitality, recreation and property development sectors, at the expense of local innovation and individual entrepreneurs in areas such as Information Technology, Education, Manufacturing and the Creative Arts.

Keith has been widely critical of the Council and its current mayor, and of WCC’s Chief Executive Officer Kevin Lavery, as demonstrated by numerous articles on his website ‘Keith Johnson Wellington NZ’ [ http://www.kjohnsonnz.blogspot.co.nz ]. Asked if he could work effectively with the Chief Executive and other councillors in the light of his criticisms, he was at pain to stress that he would be absolutely committed to working effectively with everyone who shared his love of Wellington:

“I have worked widely across the globe in planning and advisory roles and am dedicated to the highest standards of professional conduct. Making sure that projects are selected on the basis of sound analysis and the best principles of economy, effectiveness, efficiency, accountability and probity should create no problems. If the current crop of Big Ideas proposals passes muster, I will restrict myself to ensuring that the investments are implemented to best advantage. However, I am highly likely to oppose any further big spending, subsidy lobbying, and wish-list proposals by councillors”.

Keith was an early declaration for the 2013 Mayoralty Race but withdrew partly subsequent to a perceived lack of interest by voters [and partly due to commitments to a family of then small children].  However, he has since become conscious that many citizens were prepared to support him and that there is a widespread desire to have someone on the stage, along with the other candidates, who is prepared to argue for economy and ask tough questions about current spending plans.

“To have almost unlimited faith in Wellington’s citizens and little confidence in our existing politicians, is a view that is widely shared” he comments.

WHO IS KEITH JOHNSON?

  • Married with two boys aged 12 and 13, with two adult boys from a previous relationship
  • Holds BA and MA degrees from the University of Cambridge, UK and a PhD in Economic Geography from the Australian National University in Canberra
  • Has worked in a total of 27 countries as an academic, development economist and public policy analyst / adviser, including working as a Senior Development Policy Officer with the Asian Development Bank in Manila, Philippines
  • Is now an independent writer who is a widely read online journalist, commentator, creative writer and poet, with 800,000 – 1.5 million page views currently recorded on his website [depending on the metric], with readers from over 100 countries worldwide

ALSO IN THE MAYORAL RACE

Incumbent mayor Celia Wade-Brown

Councillor Justin Lester

Councillor Nicola Young

Councillor Jo Coughlan