Experts disagree but monorail over

Bob Robertson
Bob Robertson
In one corner, Wellington management consultant Ian Dickson; in the other corner, Auckland economist Fraser Colegrave.

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 Holdings Ltd.

In his 47-page report released at the end of last week, he damned Riverstone's business plan, calling it ''poor and not adequate''.

Mr Colegrave was employed by Riverstone to respond to Mr Dickson's review.

In his 17-page report, he said parts of Mr Dickson's report were ''unduly pessimistic'', ''misleading'' and ''unrealistic''.

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 travelled there.

''In other words, the peer review's analysis contains significant arithmetic errors because it failed to scale up.''

It also, he said, assumed there would be no growth in tourist numbers.

''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 it.

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.

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