By Bernard Hickey
Prime Minister John Key has announced to an Auckland business audience that the Government will bring forward construction of Auckland's two biggest road and rail projects by two years to 2018.
The two projects are expected to cost up to NZ$4.35 billion with a central Government contribution of over NZ$3 billion.
The announcement, which is the Government's first major one of the year, followed the Government's decision in December to loosen restrictions on capital spending and after the Reserve Bank called on the Government to increase its infrastructure spending to help it boost the economy and reduce pressure for lower interest rates.
Key said the Government would work with the Auckland Council on bringing forward the start date for the NZ$2.5 billion City Rail Link (CRL) from 2020, which was the Government's previous preference, to the 2018 date preferred by the Council. The Government and the Council are expected to share the costs of the 3.4 km of tunnels linking the Britomart station at the bottom of Queen Street to the western rail line at Mt Eden. The Council expects the costs to be shared 50-50 and Key later told reporters he expected the share to be "about NZ$1.25 billion." He agreed it was likely to be funded by borrowing, "subject to the timing of the payments."
He also announced the Government would bring forward work on the East-West project linking the Southern Motorway at Penrose with State Highway 20 at Onehunga. This project, which is projected to cost NZ$1.25 billion to NZ$1.85 billion, is fully funded from the central Government's petrol taxes. Economic Development Minister Steven Joyce said the project had previously not expected to be in place until well into the 2020s.
The Government had previously said it would only agree to an earlier start to the CRL project if rail patronage levels rose to 20 million trips per year well before 2020, and if Auckland CBD employment grew 25% from 2012 levels to 122,528.
Key said employment was still some way away from the target, but rail patronage levels were on target.
"It's become clear that we need to provide certainty for other planned CBD developments affected by the Rail Link," Key told an Auckland Chamber of Commerce luncheon at the Langham hotel.
"This means we see merit in starting the project sooner," he said.
"So I can today confirm the Government will work with the Council to bring forward the business plan and formalise our funding commitment from 2020."
Key's speech and separate announcements from Transport Minister Simon Bridges did not make clear when the Government would provide funding. Key also said decisions had yet to be taken on how the project costs would be shared, or who would own the tunnels and rail.
Key said the green light for the CRL from 2018 would allow the Council to get on with negotiating contracts and provide certain for investors in other Auckland CBD projects, including the NZ$350 million NDG Auckland Centre next to the new Aotea Station and the NZ$680 million Commercial Bay tower opposite Britomart. Commercial Bay is being developed by listed firm Precinct Property.
"Timely confirmation of these and other projects, alongside the Rail Link, will encourage more people, businesses and jobs into the heart of Auckland," Key said.
"It should also reduce the period of disruption in the central city by concentrating construction over a shorter timeframe," he said.
'Business plan for CRL later this year'
Key said the Government still had to work through a number of complex issues with Council.
"Providing these issues are resolved -- and I'm confident they can be -- we'll aim finalise the business plan later this year," he said.
Key also announced the East-West project would go through an accelerated consenting process lasting nine months because it could either be called in under the 'Roads of National Significance' clauses or progress under the Environmental Protection Act.
"We need to get the thing built. People need certainty. We can't spend 10 years getting RMA consent," he said, pointing to the successful acceleration of the Waterview project nearby, which is near completion.
He said the Government intended to fund the East-West connection through the Land Transport Fund "so construction can start as early as 2018."
Key said the NZ Transport Agency would also start early project work on a widening of State Highway 20 between Neilson St and Queenstown Road.
'Some money for the regions too'
Elsewhere, he also said the Government had confirmed it would spend NZ$115 million to complete four regional roading projects, including two in Taranaki, one in Gisborne and one near Blenheim.
The two projects in Taranaki to improve State Highway 3 to the North of New Plymouth were a NZ$9-15 million Awakino Tunnel bypass and a NZ$80-90 million Mt Messenger bypass.
The Gisborne project was a bridge replacement over the Motu river for NZ$3-5 million and the replacement of the Opawa Bridge in Marlborough for NZ$14-NZ$17.5 million.
(Updated with more detail)