Auckland Mayor Phil Goff says he’s frustrated with the time it has taken the Government to progress the Auckland light rail project and says talk of using a public-private partnership (PPP) to fund it won’t be a magic fix.
In a Double Shot interview with interest.co.nz, Goff says he remains committed to the project, but makes the point that many of the city’s major infrastructure projects take time to come to fruition.
Last week Transport Minister Phil Twyford said he had shortlisted two potential partners for the Auckland light rail project. In a press statement he said he was planning to make a decision on the successful tenderer early next year and the two potential partners are NZ Infra and the NZ Transport Agency (NZTA).
NZ Infra is a joint venture between the NZ Super Fund and Canada’s CDPQ Infra which has been established to bid for the project. But no construction work will start on the project until 2021 at the earliest.
Goff is running for re-election with polls closing on October 12.
Goff's growth dilemma
“On one hand I understand what the Government is trying to do,” Goff says. “They say we are going to put some billions of dollars into this, we want to do it right and we want to make sure we do it in the most efficient and cost effective way. But I’m also feeling somewhat frustrated about it.”
He says in Mount Roskill there are already plans to build another 12,000 houses, in Mangere another 10,000 and a further 3-4000 homes in Onehunga. Goff says they are all areas that will be able to use the light rail services when they are up and running and without access to good public transport the increased population could create major problems.
“You cannot get more cars on the road and worse than that you can’t get more buses on the road than are currently using those routes. So we have to have a more effective and efficient, a quicker and a higher capacity way of getting around.”
Goff says in looking at other major cities around the world, light rail is the obvious answer.
“If you can’t run it underground like London and New York and Washington then you put it over ground and you put it down existing roads.”
The costs and benefits of PPPs
Goff agrees that Canada’s CDPQ Infra, which is partnering the NZ Super Fund in its bid, has a strong track record working on major infrastructure projects. It is currently working on the massive Réseau express métropolitain (REM) rapid transit project in Montreal. The 67 km light rail network is expected to cost NZ$7.44 billion.
But he says Auckland ratepayers can rest assured that they won’t be picking up the tab for the light rail project.
“The Government has agreed to fund light rail and I’m very pleased about that. It is a project that will have some financial risk.”
The Auckland Transport Alignment Project (ATAP), which was announced last year by the Government and Auckland Council, includes $1.8 billion in initial funding for the project. Goff says that will be used in the early stages of the project for planning, design and acquisition.
“But the principal funding of it will be done by the Government, either through the NZ Transport Agency, or the PPP with the NZ Super Fund and the Canadians.”
He says public-private partnerships, or public-public partnerships, aren’t the only solution and while they do have some benefits they also have their own associated costs.
“PPPs keep the initial capital costs off the council’s books, or off the central Government’s books. But it’s like hire purchase, you can afford it now but you pay for it for much longer. So it’s not a magic fix.”
He says if the project isn’t funded by the NZTA and the Government it will cost more in the long run.
“The taxpayer, the ratepayer and the commuter will all be contributing to the higher costs that will be involved with a PPP. I’m just stating problems that are inherent with that model," Goff says. “I don’t think it’s a big risk for them unless they get something terribly wrong in the planning, but you know we’ve got mixed feelings about that. We want the NZ Super Fund to do well because that’ll be paying our super for us in years to come, but we don’t want them to put the price up, other than a reasonable level, for the money they invest in delivering this infrastructure.”
However, a spokesperson for Transport Minister Phil Twyford says the Government hasn’t yet decided on what funding model it will use and says large infrastructure projects do take time.
“The Government wants to ensure Auckland’s light rail will be fit for purpose for generations to come, that’s why they are taking the time to examine the different proposals in detail and get it right."
The NZ Super Fund first approached the government with an offer to build to fund, design, build and operate the light rail network in partnership with Canada’s Caisse de depot et placement du Quebec (CDPQ) in May last year. Under the project proposal first outlined by Twyford in 2017 two light rail lines would be established in Auckland. One leading from downtown Auckland out to the airport at Mangere, while a second line would run from the central city along State Highway 16 to Kumeu/Huapai.
Twyford has estimated the project would cost about $6 billion, making it the biggest transport project in New Zealand history. The NZ Transport Agency (NZTA) announced last month that it had produced an indicative business case for the first stage of the Auckland light rail project, but it said it couldn’t move on to the next stage until Twyford accepted or rejected the NZ Super Fund proposal. The agency said the business case was for the city centre to airport line only.