Double hit for taxpayers as NRA needs €100m bailout on toll roads

NRA get toll figures wrong by 20 to 30% – but it’s taxpayers that will pay

  • On the M3 traffic is 22% below the penalty payments level
  • Traffic is 26% below the penalty payments level on the Limerick Tunnel
  • Taxpayers face a €100m bill over the life of PPP contracts based on a scenario favourable to the NRA i.e. traffic growth assumed from 2011
  • Arrogance and naivety of the NRA shown in toll road contracts
  • NRA continues to use discredited projections in attempting to justify further motorway

The NRA’s expectation that traffic would grow rapidly has proved hopelessly inaccurate. Figures obtained by PlanBetter, a joint initiative of four environmental organisations – An Taisce, Friends of the Earth, Friends of the Irish Environment and Feasta, show that traffic levels on the newly opened M3 and Limerick Tunnel are 20 – 30 per cent below the level at which the NRA must pay penalties to the private companies operating these roads.

Actual traffic on the M3 is 22 per cent – almost 5,000 vehicles a day – below the level at which penalty payments must be made. Traffic would have to reach 26,250 vehicles a day to avoid penalty payments; the current daily traffic is in or around 21,500.

Traffic using the Limerick tunnel is 26 per cent (3,500 vehicles) below the penalty fee level. To avoid penalty payments 17,000 need to pass through the tunnel a day; the actual traffic level is around 13,500 vehicles a day.

According to the environmental organisations, the bill to taxpayers will be at least €100m over the lifetime of the contracts but will be far higher in the event traffic levels remain static or continue to fall in coming years.

While taxpayers will have to bail out the NRA for its use of widely over-optimistic traffic growth projections, the NRA continues to use these same projections in attempting to justify motorway between Oilgate and Rosslare (N11/N25),* for example. Other sections of motorway/dual carriageway the NRA is attempting to justify based on inaccurate data include: Blarney to Patrickswell (N20), Clontribret to Moybridge (N2), the Ballyvourney motorway (N22), Abbeyfeale to Clonshire (N21), Kilmeaden to Midleton (N25), Ashbourne to Ardee (N2), and Tuam to Letterkenny (N17).

The NRA’s reputation has been holed below the waterline with these revelations. There has been a 7 per cent fall in traffic over the last two years that the NRA continues to try and ignore. Instead it uses an August 2003 growth multiplier that assumes traffic grows by more than 2 per cent every year. In failing to come clean on traffic levels, the NRA is causing itself further damage. To continue to use such forecasts, which are known to be wrong, could constitute professional misconduct. Contrast the NRA’s projections of never-ending growth with the UK, where transport planners allow for traffic decline in conducting sensitivity analyses.

Arrogance and naivety led to dreadful contracts

The NRA’s contracts display an arrogance mixed with naivety. The contracts are naive in that there is no amendment or reset clause. Because the assumed levels have been missed in the opening year, taxpayers are almost certain to be caught for penalty payments in every year. With no way to redress breaches in the year of opening, it doesn’t matter even if traffic growth resumes at the assumed level because the leap required to close the initial gap is just too large.

Failure of Government to regulate

The PPP (public private partnership) contracts highlight another failure by Government to regulate. This time a public organisation got wrapped up in the myth of high, endless levels of growth, with the same result as the banks: the public will pay.

The M3 and Limerick Tunnel contracts are proof, if proof was needed, that penalty clauses based on never-ending growth hang taxpayers out to dry. The public organisations that sign such badly-configured clauses never seem to incur any penalty; all the pain is shouldered by those already hard-pressed.

It has become increasingly clear that further large-scale road-building at a time of falling traffic is foolhardy. As oil prices rise government needs to prioritise bus investment and help people to make the transition to public transport. A sustainable vision is set out further in the policy note below.

Attribution (for above and below): Spokesperson for PlanBetter, the joint initiative of An Taisce, Friends of the Earth, Friend of the Irish Environment and Feasta.

Contact details: Miles Deas – 086 2007998.

Miles is campaigning for the enhancement of the existing N11 between Oilgate and Rosslare rather than adding an entirely separate new motorway. James Nix – 086 8394129

Policy note: Prioritising cost-effective public transport

Today, with humans causing climate change, economic growth with its ever-greater use of materials and higher traffic levels, involves plundering tomorrow’s resources in an attempt to preserve a way of life that won’t in any event be available to the generations of tomorrow. In short, our economic growth and greater use of resources steals from tomorrow in an attempt to preserve yesterday’s way of life. This is particularly evident in attempts to build more and more motorway.

Government needs to produce revised proposals for cost-effective public transport without delay. The focus must be on Advanced Bus Corridors, enhancing bus routes in Irish cities to the standard enjoyed in France, where Nantes and Rouen have shown the service improvements that can be delivered with thrifty investment.

Billions can no longer be borrowed for mega-projects, the cost-benefit studies for which were completed based on borrowing at 3 to 4 per cent whereas Ireland now faces interest rates in or around 7 per cent. Moreover, rail tunnelling projects create far fewer jobs compared to bus investment because money is sent abroad to buy tunnel-building equipment and expertise instead of being circulated and re-circulated in local economies.

The recent move to merge the RPA and NRA is welcome. It must be made explicit that Advanced Bus Corridors are within the remit of the new authority, and that the new entity will proritise their delivery across our cities. In Dublin, as a matter of urgency, a bus corridor needs to be constructed along the north wall to the mouth of the Dublin Port Tunnel in the docklands, with a corresponding corridor at from the northern side of the tunnel to Dublin Airport.

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