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World's most expensive car park?

World's most expensive car park?

Ports Occupies $2.2 Billion Land

Economist challenges ports company data analysis

Ports of Auckland occupies the most expensive car park in the world*.

If only half of the port’s 61.6 hectares (excluding wharves) was converted to private use, the land would currently be worth around $2.2 billion assuming the value of private CBD land close to the waterfront.

This from a submission to the Auckland Council’s Unitary Plan prepared by independent economist Dr Aaron Schiff on behalf of the Committee for Auckland Limited. The committee is an independent, not-for-profit organisation “established with the aim of making Auckland one of the world's great places to live, work and play”.

In a hard-hitting submission Dr Schiff says that at five per cent growth a year, the opportunity cost of using the Auckland waterfront as a cargo port could be more than $3 billion in 10 years.

The submission says economic information produced by Ports of Auckland to justify its place in the prosperity of Auckland is flawed. It says ports company numbers published in the media focus narrowly on economic impact analysis (EIA) rather than the wider cost-benefit analysis (CBA) of its operations.

“EIA is a flawed and outdated style of analysis that delivers gross rather than net impacts on an economy. In other words, they don’t take in to account wider benefits or costs of their decisions. In the port’s case, this omits a lot of its effects on Auckland and New Zealand,” Dr Schiff says.

The submission says a robust analysis of the port is essential if Aucklanders are to be provided with the true effect of its operations.

“It is to be hoped the inevitable and imminent future port study asks the right questions to ensure a balanced and informed decision is made about the future of the port company and the public land it currently occupies.”

Dr Schiff is a freelance economist who uses economics and data analysis to help organisations understand complex issues. He says his analysis of the ports’ quoted figures reveals there is a range of costs associated with the port that have not been fully considered.

The submission says:
• Private CBD land close to the waterfront is currently worth around $7,000/m2. If only 50 per cent of the cargo port’s 61.6 hectares (excluding wharves) was converted to private use the cargo port land would currently be worth around $2.2 billion. At five per cent growth a year, the opportunity cost would be more than $3 billion in 10 years. The latest rating valuation for port land, not counting the wharves, is $414/m2 which values the land at $76m.
• Substantial and ongoing investment in and maintenance of road and rail infrastructure to serve the port is estimated to cost** anywhere between $100 million to $1 billion.
• In economic terms, Auckland’s incessant growth causes an increase in the opportunity cost of having a cargo port in the CBD.
• Cost benefit analysis (CBA) takes in to account effects on the natural environment, human health, safety and the effects of noise and views and forces their consideration.
• CBA can facilitate a much higher quality of debate, which can only lead to better decisions. In contrast, estimates of the total current or future level of port activity provide little or no useful information for decision making because they do not quantify the changes that would occur as a result of a decision.

Dr Schiff says there is no doubt Auckland’s growth is likely to create greater demand for seaport services as well as higher opportunity costs of having a cargo port in the downtown area.

“However, the current and future costs associated with the port have not been carefully studied. A cost-benefit analysis is the best way to assess alternative options for the port in the long term as well as any consented expansion or new constraints on its activities in the short- to medium-term.

“Decisions about the future of the port need to factor in all the relevant costs and benefits to Auckland over a long period of time, and that work simply hasn’t been done,” he says. “I am not opposing the company; I am advocating for an informed decision-making process that delivers the best outcomes for the people of Auckland, both now and in the future,” he says.

* The cost of the loss of other alternatives when one alternative is chosen.
** Auckland Transport’s Integrated Transport Programme - https://at.govt.nz/about-us/transport-plans-strategies/integrated-transport-programme/

* Stories about some of the world’s most expensive carparks:
http://tinyurl.com/mpknrpw - US$1 million car parks in Soho, Manhattan
http://tinyurl.com/opgyq3f - a £500,000 garage in London


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