In one corner, Wellington management consultant Ian
Dickson; in the other corner, Auckland economist Fraser
One believed a Fiordland monorail was financially viable.
The other did not.
Mr Dickson was employed by the Department of Conservation to
review the monorail proposal put forward by Riverstone
In his 47-page report released at the end of last week, he
damned Riverstone's business plan, calling it ''poor and not
Mr Colegrave was employed by Riverstone to respond to Mr
In his 17-page report, he said parts of Mr Dickson's report
were ''unduly pessimistic'', ''misleading'' and
As history has recorded, on Thursday Conservation Minister Dr
Nick Smith sided with Mr Dickson, rejecting the monorail
proposal and Mr Colegrave's arguments.
And Riverstone principal, Bob Robertson, of Wanaka, brought
the curtain down on the venture, telling the Otago Daily
Times: ''This is an end for us ... It's over.''
The bones of contention between the two business experts
boiled down to a few key points, the size of the potential
market for monorail tickets being the main one.
Mr Dickson noted monorails as visitor attractions ''have not
maintained their appeal to visitors''.
Also, he regarded the Milford Sound visitor market as
''mature'' and ''significantly smaller than assumed in
[Riverstone's] business plan''.
''In contrast to the business plan, which envisages
considerable growth in the market ... the actual experience
in recent years suggests the market for Milford-bound
visitors is mature.''
The business plan, he said, relied too much on assumptions
about the potential market that were ''unsupported by market
research'' and based on old tourism data.
There was also, he said, an increasing preference by visitors
to travel independently and there was ''no hard evidence''
the monorail would expand the Milford market.
Mr Colegrave's report said Mr Dickson's tourist data was
based on the number of visitors who took boat rides at
Milford Sound and did not account for all the others who
''In other words, the peer review's analysis contains
significant arithmetic errors because it failed to scale
It also, he said, assumed there would be no growth in tourist
''Given the long-term trend, this is difficult to understand.
''It appears that the author may have blindly extrapolated
the mediocre performance over the last few years without
first determining the longer-term picture.
''This is a significant error and, in our view, has caused
their projections to miss the mark considerably.''
Mr Colegrave said other ''key stakeholders'' expected growth
in the market ''which means that the peer review's assumption
of zero growth is highly unrealistic''.
The ''next biggest challenge'' to the monorail, Mr Dickson
said, was the potential for overruns in the cost of building
While the business plan estimated the cost in 2009 at $210
million, Mr Dickson said it was his experience rail
infrastructure projects could overrun by 34% to 45%.
However, even after updating and adjusting Riverstone's
figures, he considered they were still low per kilometre of
track compared with monorails built overseas.
Monorail operating and capital costs, he said, ''are
prohibitive compared with low-cost alternatives such as
coaches and independent travel''.
''Fundamentally, the monorail is a very high-cost solution to
moving relatively few people over a short distance.
''Compared to typical coaches with seat numbers ranging from
20-50 seats, the monorail with 160 seats seems a very
expensive alternative ...
''Mr Dickson cited studies that concluded rail projects were
''particularly prone to cost escalation''.
Mr Colegrave argued that Mr Dickson had not considered the
capital costs in the context of the proposed Fiordland route
where land, for one thing, would be used under a concession
rather than bought.
He also noted costs per kilometre would be lower than those
in cities overseas because the Fiordland route would have
fewer stations and a longer track.
After responding to a list of other criticisms, Mr Colegrove
called on Dr Smith to reject Mr Dickson's review.
However, Dr Smith accepted Mr Dickson's recommendation that
''there seems little prospect that the business idea could
translate into a viable business''.
Dr Smith's rejection of the monorail might have killed off an
idea that has been a talking point for 16 years but it has,
nevertheless, left room for speculation over which expert was
right and which was wrong.