Archive | Infrastructure

Collins raises scare about “road tax” diversion, but government fund already $½ billion in red

Former Cabinet Minister Judith Collins, now the National Opposition’s transport spokesperson, raised a scare this week that the new government would divert National Land Transport Fund money from major road projects to rail.

2 things she neglected to mention:

1, while the fund’s income comes largely (but not entirely) from road users, it has always referred to its “land transport” programme rather than to “roads”.

2, it will be a long time before the fund has any money to spend on anything. Its annual reports for the last 2 years disclose that the fund’s liabilities exceeded its assets by $497 million at June 2016, rising to a $528 million deficit at June 2017.

It had budgeted for a $40 million surplus at June 2017.

The fund’s 3 biggest spends in the last financial year were on the accelerated Auckland transport programme ($236 million), public-private partnerships (for highway development, $557 million) & Tauranga’s eastern link toll road ($107 million).

The fund’s income is derived from “all revenue from fuel excise duty, road user charges, motor vehicle registration & licensing fees, revenues from Crown appropriations, management of Crown land interest, and tolling”.

The fund uses this income to manage the funding of the road policing programme, the national land transport programme & activities such as transport planning.

The fund’s last annual report says: “The National Land Transport Fund has a negative general funds balance due to the programmes that were accelerated and current funding was sourced from the Crown. The funding received has been recognised as long-term payables, which are not due until 2-27 years from balance date.

“The fund has the option to slow down expenditure on the national land transport programme, or utilise the short-term borrowing facility of $250 million if required to meet obligations as they fall due in the short term.”

Congestion issues

Auckland – a region where traffic grinds to a halt daily – has a serious, and growing, campaign to get more people to commute by rail, reducing road traffic, but it still has to work out how to handle freight much more efficiently.

The biggest proposal for improving freight movement, the East-West Link through Penrose & Onehunga, won consent from a board of inquiry in November, confirmed by its report & final decision on 21 December. But, by then, the incoming government had canned the project.

Collins on Labour’s “pet” obsession

Ms Collins said in a release on Monday the new government’s transport minister, Phil Twyford, “has confirmed the government is considering diverting taxes paid by motorists who want better roads to rail instead, while insisting to media this won’t happen.

“This is an important principle, adhered to by successive governments, ensuring the specific taxes paid by motorists are invested in newer, safer & better roads – helping keep New Zealanders connected & safe. Road users pay taxes which are directly returned to them.

“But this now appears under threat, because of the Labour Party’s obsession with light rail in Auckland. Mr Twyford has written to stakeholders saying a number of changes to the government policy statement (GPS) on land transport are being considered. Among the proposals is ‘exploring how rail investment is incorporated within the GPS & the National Land Transport Fund’.

“This is in spite of his office telling media last week that funding for road upgrades would not be redirected to rail.

“In his rush to erroneously claim that a number of roading projects aren’t under threat because of the Government’s obsession with Auckland rail, Mr Twyford has been saying different things to different people.

“This desperate grab for more taxes is the result of this free-spending government realising how much it’s going to cost to build its pet rail line from Auckland’s cbd to the airport – so it’s looking to divert funding from regional roads as a result.

“The National Land Transport Fund is paid for by road users to be invested in improving New Zealand’s roading network and it should remain that way. The Government needs to check its priorities and ensure the taxes paid by road users are invested back in the roads they are using.

“Last week, National launched a series of petitions aimed at saving those regional roads that the Government is looking to slash funding for. Given this duplicity from the Government, I want to again encourage everyone to sign the petitions to save our roads,” Ms Collins said.

Twyford signalled his intention

Mr Twyford wrote in a column for Contractor magazine last week: “To achieve our vision for transport, change is necessary. I am interested in how we can best use existing funding tools – like the National Land Transport Fund & the Government Policy Statement (GPS) – to support a more multi-modal approach.

“The traditional way in which we finance & fund infrastructure needs to change if we are going to address the multiple challenges of urban growth, replacing ageing assets, meeting higher environmental standards & improving resilience. We believe we need to be smarter about how we use the Government’s balance sheet.”

Mr Twyford wrote that the challenges of population & freight growth in the “golden triangle” of Auckland-Bay of Plenty-Waikato “will not be solved solely by investment in the roading network. All modes can be complementary to each other.

“For example, the Government is committed to implementing a rapid transit system for Auckland, which will include light rail from the cbd to the airport and to west Auckland. Such an investment will not only make it easier for people to get around town, but it will also free up our roading network to improve freight efficiency.”

The National petitions

National MPs began launching their petitions a fortnight ago.

Whangarei & Northland MPs Shane Reti & Matt King’s petition calls for the Auckland-Whangarei 4-lane “road of national significance” to proceed as the previous government planned it.

In Auckland’s eastern suburbs, MPs Jami-Lee Ross (Botany), Simeon Brown (Pakuranga) & Denise Lee (Maungakiekie) launched their petition to support the East-West Link.

They commented: “After a decade of planning & $50 million of investigative spending, you would expect that there was a clear direction on the project. This project has been through a fine-toothed procedural process like no other. It is supported by council, iwi, and has been approved by the Environmental Protection Agency’s board of inquiry.

“The current gridlock is a major barrier to commerce. This is making it difficult for people getting access to their basic daily goods. It is quite literally the bread & butter of transport projects.”

Links:
Contractor, 15 January 2018: Infrastructure & transport
National Party petitions: Save our regional highway projects

Attribution: National Party releases, Contractor.

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Ngati Whatua wants East-West Link consents buried

Auckland iwi Ngati Whatua Orakei raised its concern on Friday that the East-West Link through Penrose & Onehunga could go ahead one day, even though the current government has cancelled it.

The $1.85 billion link was intended to run between State Highway 1 at Mt Wellington & State Highway 20 at Onehunga.

The board of inquiry which heard the NZ Transport Agency’s application for it released its draft report & decision on 14 November – by which time new prime minister Jacinda Ardern & Auckland mayor Phil Goff had confirmed it would be cancelled in its present form. The board confirmed 2 notices of requirement and granted resource consents, subject to conditions.

Ngati Whatua Orakei Trust spokesperson Ngarimu Blair said: “While the iwi welcomes the stated aim of the new government to scrap the project, this does not provide a sufficient degree of certainty and Transport Minister Phil Twyford needs to formally honour the Government’s commitment to cancel the project completely.

“The notices of requirement & resource consents have a 15-year period for implementation, and will therefore outlast the current term of government. We want to ensure the East-West Link as proposed never goes ahead, no matter who is in government at the time.

“We have written to Minister Twyford asking that the Government direct the NZ Transport Agency to formally withdraw the notices of requirement and surrender the consents.

“This would avoid the danger of the current government’s intentions being undermined. We note in this regard that the NZ Transport Agency are currently proceeding with moves to implement the project as if nothing had changed post-general election.”

Mr Blair said Ngati Whatua Orakei, Te Kawerau a Maki & Makaurau Marae, along with other community & conservation groups such as The Onehunga Enhancement Society (TOES) and the Royal Forest & Bird Protection Society, went to great expense & effort to stop the motorway during a gruelling 3-month hearing before the Environmental Protection Authority board of inquiry.

Royal Forest & Bird environmental lawyer Sally Gepp said the society was concerned that the decision to grant the consents & designations meant key policies in the brand-new Auckland unitary plan “have been treated as little more than words on a page.

“Forest & Bird played an integral role in ensuring that the unitary plan provides for nature as well as people. We went to the High Court to change the unitary plan – and won – and as a result Auckland’s remaining biodiversity hotspots are protected in the plan. This decision has rendered those protections meaningless.”

Onehunga Enhancement Society chair Jim Jackson commented: “There is no way to now ‘redesign’ the Onehunga/Neilson St interchange end of the East-West Link within the designations & consents supported by the board of inquiry. Those designations & consents have to be scrapped.”

Mr Blair said Ngati Whatua o Orakei opposed the link designed for freight traffic for its “enduring & significant” adverse environmental & cultural effects.

“We look forward to having real input into the Auckland transport alignment project review and will contribute proactively on future sensible options for the Mangere Inlet & Onehunga area. There must be true collaboration amongst all the parties and not a short-sighted singular focus on road building as we’ve seen in recent years,” he said.

Historic Ngati Whatua links

Mr Blair said Ngati Whatua Orakei had a deep & ongoing connection to Te To Waka, Te Papapa, the Mangere Inlet & Onehunga area: “Its direct association with Onehunga dates back to the mid-17th century, while links through marriage connect the iwi to the entire length of the Maori occupation of the area.

“Ngati Whatua resided at Mangere & Onehunga in autumn & winter and, soon after Matariki, would plant & till the extensive gardens in the area. The Rev Samuel Marsden & John Logan Campbell both visited Ngati Whatua at Onehunga and, after the signing of the Treaty of Waitangi, Ngati Whatua Orakei with Waikato iwi were major players in the economy based around the trading port at Onehunga. The iwi moved its main base to Orakei in the mid-19th century.

“Onehunga land was ‘acquired’ from Ngati Whatua Orakei during the period of the Fitzroy waivers (1844-45), when settlers could purchase land directly from Maori vendors, itself a breach of the Treaty of Waitangi. When these transactions were later examined by land commissioners appointed by Governor Grey, the sale of only 8 acres was upheld. Of the remainder, 723a became Crown land and a further 575a were kept by the Crown as defence land – none was made available to the original owners, despite a requirement 10% of land sold was to be kept aside for the benefit of its ‘former’ Maori owners. This historic grievance was settled with Ngati Whatua Orakei in 2012.”

Links:
EPA, East-West link
About the east-west link
Draft report & decision

Attribution: Ngati Whatua release.

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Northern transport corridor works approved

The board of inquiry into the Northern Corridor improvements proposal has confirmed & granted the NZ Transport Agency’s notices of requirements & resource consents applications.

The board of inquiry produced its final report & decision on 16 November and released it publicly last Wednesday.

Parties, including submitters, can appeal the board’s decision to the High Court, but only on questions of law.

The proposal provides the final motorway connection for the Western Ring Route project. It includes direct motorway interchange connections between State Highways 1 & 18 and capacity & safety improvements on State Highway 1 between Constellation Drive & Oteha Valley Rd, and on State Highway 18 between State Highway 1 & Albany Highway.

It also includes an extension of the Northern Busway from Constellation Drive to the Albany bus station, reconfiguration of the Constellation bus station and the addition of shared-use paths along the length of the proposal area.

The Transport Agency lodged its application for 6 notices of requirement & 25 resource consents with the Environmental Protection Authority on 14 December 2016.

Links: Final report & decision
Northern Corridor improvements project

Attribution: EPA release.

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Matching infrastructure to population explosion a key Goff plank

Auckland mayor Phil Goff laid out his vision yesterday to build infrastructure at a rate that would match the region’s unprecedented population growth.

Some funding mechanisms are in place, and the council & Government have agreed bigger funding streams for some areas such as transport, but their budgets still show a $5.9 billion shortfall over the next decade.

The mayor said he would seek staff advice on options for broadening the council’s revenue base, which currently relies on rates to generate almost 50% of its funding. Other options include:

  1. the further development of special purpose vehicles funded by growth infrastructure targeted rates
  2. the application of the targeted rate on accommodation to the informal sector (eg, Airbnb)
  3. the sale of non-strategic assets, and
  4. likely proceeds from various road pricing options & practicality of implementation.

The mayor wrote his 8-page report to set the process going for the council’s 10-year budget (otherwise known as its long-term plan) for 2018-28.

The process now is for the council to run political workshops through September-November, finishing with a more concrete mayoral proposal which will go to more workshops in December, then out to public consultation in March and adoption of the plan on 27 June next year.

Mr Goff wrote in his release presenting the report:

“Our vision for Auckland is a world-class city where talent wants to live. It must be the city which can keep the best & brightest of our young people in New Zealand while competing globally with other cities around the world for skills, entrepreneurship & investment.

“My key focus is to build infrastructure at a rate that matches unprecedented population growth to maintain our quality of life and make it easier to do business in our city.

“Auckland grows by 45,000 people/year and is clearly a desirable place to live. This growth creates opportunities, but it also presents challenges in housing shortages & affordability, growing traffic congestion & pressure on our environment.

“The key to tackling these issues is our ability to lift investment in our infrastructure.

“Investment in public transport, including light rail, in active transport modes like cycling & walking, and optimising our road network is critical.

“That’s why, under our latest Auckland transport alignment project, we have set aside $27 billion for capital investment in the next decade. Currently, $5.9 billion of that is unfunded and has to be found.

“I welcome the Government’s commitment to meet the larger share of that, but Auckland will also need to contribute more.

“The 10-year budget needs to consider where we source our share of the funds.

“The interim transport levy is not user-related and does not raise sufficient funds. We can’t simply impose huge general rate increases to pay for infrastructure, so some form of road pricing will be essential.

“We need to build more houses more quickly. The mayoral housing taskforce makes recommendations which we need to move to implement.

“The unitary plan enables land development, but we need to invest in infrastructure to allow houses to be built. This will involve intensification of houses, as well as new developments under the future urban land supply strategy.

“Use of targeted rates as well as special purpose vehicles through Crown Infrastructure Partners will be essential. That also applies to protecting & enhancing our environment.

“Water quality is a top priority. We need to reduce wastewater overflowing into our streams & harbours. Building new water infrastructure will be our focus, including new wastewater interceptors & green infrastructure.

“While the council is looking for new sources of infrastructure funding, we must also get better value for the ratepayers’ dollar.

“It is time to realise the benefits of amalgamation to deliver further efficiencies & economies of scale made possible by the super-city.

“Findings from our group-wide section 17A value-for-money reviews will be critical, and I want the council to develop group-wide shared services.

“APEC [Auckland will host the Asia-Pacific Economic Co-operation forum leaders’ week from 8–14 November 2021] and the America’s Cup defence add impetus to our planning and provide the opportunity to create a lasting legacy for Aucklanders.

“We have the opportunity to make Auckland more prosperous, smart, innovative, inclusive & culturally rich, with a beautiful environment and choice & opportunity for all.

“With this as our vision and the investment we need in infrastructure, we will make Auckland a world-class city.”

Image above: Auckland mayor Phil Goff, on site shortly after his election as mayor last October.

Links:
Mayoral intent for the 10-year budget (long-term plan) 2018–28
10-year budget 2018-28 road map

Attribution: Mayoral release & plan document.

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Christchurch convention centre tender introduces Cimic to major NZ projects

When the Government awarded the $240 million contract to complete the design & construction of the Christchurch Convention & Exhibition Centre to CPB Contractors Pty Ltd last Thursday, few people outside the industry would have been much the wiser. CPB?

Except that, whoever this contractor was, it needed close watching, as the Minister supporting Christchurch Regeneration, Nicky Wagner, confirmed in her release: “CPB has committed to completing construction in the first quarter of 2020 and the Government will be closely monitoring its progress,” she said.

That’s not the kind of public warning you issue to someone you’ve supposedly had sufficient confidence in to award them a very large contract – unless the recent performance of New Zealand’s biggest contractor, The Fletcher Construction Co Ltd, is making you extra-jittery about every contractor. [Fletcher Building Ltd, Fletcher Construction’s parent, reports its annual result Wednesday morning.]

Ms Wagner said work would start soon on what would be “a world-class boutique facility, capable of hosting international conferences as well as community meetings, balls, galas & weddings.”

It will offer options of:

  • an auditorium for 1400 delegates (divisible into 2 700-person auditoriums)
  • a 1250-person banquet hall
  • 14 interconnected meeting rooms for up to 1400 people
  • 4400m² of pre-function spaces for up to 1400 people, and
  • a 3600m² multi-use exhibition hall for 200 exhibition stalls.

“The convention centre will be a cornerstone of the revitalised central city and help bring domestic & international visitors back to the central business district.

“The direct economic benefit of the convention centre is estimated to be more than $320 million in the first 8 years, and $57 million every year after that.

“It’s also expected to increase private sector investment, open up business networks & opportunities and create new jobs.”

The contract was let by Otakaro Ltd, a Government-owned company whose job is to deliver Crown-led anchor projects in central Christchurch and divest the balance of Crown land. The company bears the Ngai Tuahuriri name for the Avon River that runs through Christchurch.

Who is CPB?

As for the main works contractor, CPB changed its name from Leighton last year. The New Zealand company is a subsidiary of Cimic Group Ltd, which is 73% owned by Hochtief AG of Germany, which in turn is now 71.8% owned by ACS Group SA of Spain. Those stakes make the Spanish group 52.2% owner of Cimic.

All are big names in construction internationally, with current heavy focus on major infrastructure projects, especially through public-private partnerships.

Other international contractors have looked at New Zealand but uncertainty over the future order book has been a deterrent.

Attitude talks inclusion

Cimic Group chief executive Adolfo Valderas.

For the Christchurch job, Cimic Group chief executive Adolfo Valderas said: “Cimic & CPB Contractors’ market-leading & cost-effective capabilities in delivering major commercial & social infrastructure position us strongly for projects such as the Christchurch Convention & Exhibition Centre.

“Cimic is committed to delivering this project as part of the rebuilding of Christchurch. The project will deliver a vibrant & world-class piece of infrastructure supporting sustained economic & cultural benefits for the Christchurch community.”

CPB Contractors managing director Román Garrido said: “By utilising our international expertise & local project experience in Christchurch, our team consistently delivers value-for-money design & construction methodologies that ensure quality outcomes.

“We are focused on providing opportunities for local businesses, a socially inclusive procurement strategy to broaden community benefits, and enhancing local workforce capabilities to the benefit of future building & infrastructure projects in the region.”

Business model transformed

Cimic reported a strong first-half result last month and said it would lead to improved outcomes. The company lifted first-half revenue by 28% to $A6.3 billion, net profit after tax by 22% to $A323 million and operating cashflows up $A523 million. It has $A35.2 billion of work in hand.

ACS Group executive chair Marcelino Fernández Verdes.

Group executive chair Marcelino Fernández Verdes said: “The compelling numbers we reported today are a testament, not only to the transformation of our business model which we commenced in 2014, but also to the ongoing drive of our people to improve, innovate & grow.

“Through continually evolving how we deliver projects, we are achieving favourable outcomes for clients, which improves the position of our group to win further work. We have also substantially increased our net cash position, which allows us to better reward shareholders and more efficiently allocate capital.”

And group chief executive Adolfo Valderas added: “By securing new work of $8.9 billion during the period, we have brought work in hand to $35.2 billion – a level equivalent to more than 2 years’ revenue.

“We are in an ideal position to build on our strategy of providing clients with end-to-end solutions – from financing to engineering, construction, mining, operations & maintenance. Doing so will further diversify our income streams and add more recurring revenue through the expansion of our services business with the successful integration of UGL.”

New projects

Among its early scores in New Zealand is the design, construction & financing of a New Zealand schools public-private partnership – a $103 million project for CPB Contractors & Pacific Partnerships Pty Ltd. Cimic is also tendering for major Sydney rail & road projects and the deep tunnel sewerage system in Singapore.

In its half-year report, Cimic said it had won one of Australia’s biggest public infrastructure projects: “CPB Contractors is in charge of stage 2 of the Metro expansion in Sydney. Cimic’s share of the overall contract value of $NZ3 billion is 45%. The trust our customers place in us with major infrastructure projects was yet again confirmed by CPB Contractors’ recent selection as the preferred proponent to deliver a part of the Melbourne Metro tunnel, Victoria’s largest-ever public infrastructure project.”

Links:
Cimic Group
ACS Group
Hochtief
Otakaro

Attribution: Company & ministerial release, group websites.

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Billions astray, but political thinking on Auckland transport infrastructure is positive

The numbers don’t add up, but at least Auckland Council & the Government are trying to make progress on bridging the shortfall of several billion dollars in infrastructure funding to meet projections of higher population growth.

From 2 statements issued on Friday by Auckland mayor Phil Goff and Transport Minister Simon Bridges, you have these 2 sets of figures:

Mr Goff: “Council & Government have identified the need to lift transport spending from $24 billion to nearly $27 billion and bring forward a range of major projects to address growing transport congestion.”

Mr Bridges: “ATAP (the Auckland transport alignment project) agencies were asked to provide an update of how much additional funding may be required in the first decade to meet the challenges of growth. The update identifies an additional $1.9 billion of transport investment will be needed over the 10-year period.

“This is $1.1 billion less than the amount previously identified by Auckland Council. The total funding required for the decade is estimated to be $25.9 billion, of which $20 billion has already been committed to by central government ($13 billion) & Auckland Council ($7 billion).

“That leaves about $5.9 billion to be sourced from the Government, council & the private sector over the next 10-year period.”

Simon Bridges.

Mr Bridges said the ATAP update report “identifies faster growth is now expected to occur in North & South Auckland, requiring some transport investment to be brought forward to support the housing development in these areas. We will also need to bring forward transport investment to accommodate additional public transport demand.”

He said key initiatives from the first-decade package that would be brought forward into the next 3 years with this extra funding included:

  • Advancing development of the “next generation” of state highway projects, including the State Highway16- State Highway 18 interchange, Southern Motorway widening between Papakura & Drury, improved eastern airport access (State Highway 20B) and the North-western Busway
  • Accelerating Auckland Transport’s programme, targeting high priority & well developed investments including the Mill Rd, Ameti (Aukland-Manukau eastern transport initiative) Eastern Busway & associated Reeves Rd flyover, the earlier purchase of new electric trains, along with earlier completion of key city centre bus lanes & interchanges
  • Completing approximately $250 million of rail network infrastructure upgrades to cater for ongoing rapid growth in rail use and increasing freight volumes, including an additional track from Westfield to Wiri and a variety of key network resilience and performance upgrades.

“Current & committed investments include $3.4 billion for the City Rail Link, $1.85 billion for the East-West Link, and up to $1 billion in upgrades to the Northern & Southern motorway corridors.

“This is a very useful update of the agreed ATAP programme. I look forward to continuing to work with the mayor of Auckland on addressing the remaining funding required for the first decade.”

One major factor in the review is that Auckland’s population is projected to rise by 100,000 more over the next decade than the ATAP projections were based on last year.

Phil Goff.

Mr Goff said: “I particularly welcome the commitment of $1.2 billion in the first decade to mass transit on the isthmus, which I believe will be light rail.

“Busways in West & East Auckland and on the Northern Motorway will relieve traffic congestion by providing effective public transport alternatives.

“Penlink is also being considered as a tolled PPP (public-private partnership) road and new arterial routes are funded to service greenfields development.

“The increased budget & projects now go to the council & Government, and are expected to be formally agreed. Bridging the funding gap of $5.9 billion is now being negotiated between council & government.

“I welcome the Minister’s statement that Government has enough headroom in its budget to make a larger contribution to funding Auckland’s transport infrastructure.

“The hundreds of extra cars being added to Auckland’s roads each week, paying more petrol taxes & road user charges, will help fund the new projects.

“Auckland has to meet its fair share of the cost and we are considering the best options for how we do that.

“Road pricing, such as congestion charging, tolls or a fuel tax, in my view better reflect costs falling where there are benefits to the users of transport infrastructure than general rates. We are also exploring other options including targeted rates & value uplift.”

Link:
ATAP update, 11 August 2017: Auckland transport alignment project – update to reflect faster growth August 2017.pdf (pdf 804.72 KB)

Earlier stories:
16 September 2016: Brown leaves mayoralty with 2 huge transport wins
22 August 2016: Commission sees government change as essential for urban planning
22 June 2016: Government & council start lining up on tolls but transport report still has big failings
11 May 2016: Infrastructure council seeks rethink to improve transport & intensification
23 February 2016: Transport alignment starts off-track

Attribution: Mayoral & ministerial release.

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Access matters most

On this website, access is the most important consideration. The real estate catchcry, “Location, location, location,” relies on your ability to get there.

In Auckland, a 30-minute car journey can take 90 minutes, but estimating timeframes is also hazardous at pretty much any time of day.

The Government resolutely opposed rail innovation until the super-city’s first mayor, Len Brown, won the support to proceed with the city rail link and forged ahead, notwithstanding the funding gap as the Government sat on the sidelines. Eventually, this year, the Government signed up.

Cars have quickly filled the extra lanes on a short patch of the Northern Motorway and will quickly fill the Waterview tunnel & North-western Motorway expansions.

As I wrote 6 years ago about travelling on the western, industrial side of the isthmus: “Occasionally I stray into Neilson St, Onehunga, and quickly realise it was a mistake. There’s no need to be quick about the realisation, of course, because it’s going to be a while before you can escape.”

Construction of the East-West Link, the State Highway 1-20 road route through that western area, is before a board of inquiry, Mill Rd between Papakura & the southern edge of Flat Bush at Redoubt Rd & into Murphys Rd is becoming a more significant arterial and is now the subject of upscale talk, but the arrival of still more congestion isn’t being beaten.

Now, it seems, the third track on rail’s main trunk line will be built, and perhaps the fourth track as well.

Labour’s new candidate for prime minister, Jacinda Ardern, upped the ante yesterday when she said Labour would build light rail between the city centre & airport within a decade, extending to West Auckland in the same timeframe and later to the North Shore.

She would introduce a regional fuel tax, infrastructure bonds & targeted rates.

National’s finance minister, Steven Joyce, again ruled out a regional tax, which he’s previously argued is inefficient. So, too, is doing nothing while Auckland’s population grows by about 50,000/year, with 10-year projections from Statistics NZ of 29,000/year (medium) to 35,000/year (high).

A party in power for 9 years has no room for innovative policy without the audience asking why these policies weren’t already in place and, while both National & Labour issued transport policies yesterday, Miss Ardern had to have the front running.

We are set up, then, for a serious battle of wits over primary infrastructure & housing in Auckland – and the skilful politicians will at least appease the rest of the country, if not produce some sound economic offerings, so the election doesn’t just become about Auckland.

For the voter who thinks more about policy than party allegiance – and these voters, I think, are likely to decide who comes to govern – there are questions not just about policies but about strategies, and particularly funding methods.

Among those questions today:

  • Why has it taken so long to introduce new central government funding for extra housing infrastructure support?
  • Why has the Government steadfastly opposed new forms of tax, or a greater sharing of tax to support regional initiatives & infrastructure?
  • Why have key Auckland transport decisions been delayed so long in the face of record immigration?
  • Why is a board of inquiry examining one proposed section of transport infrastructure – the East-West Link – in isolation from other components such as the third & fourth sections of main trunk rail track and the future port location & consequent transport links?

Those are questions which are obviously aimed at the incumbent government. Other parties have released policies on some of these issues.

Labour has a policy to build, or finance the building of, an extra 10,000 houses/year and Miss Ardern talked yesterday of using a regional fuel tax.

The key transport – access – decisions need further input from all claimants for the government benches. The central issue is integrated decision-making, and the absence of such integration has long been a feature of central government (including bureaucrats) versus Auckland.

Attribution: Party speeches & release.

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Councillors scrap over buying more trains as car imports skyrocket

As statistics were released on Wednesday disclosing that New Zealanders imported 2566 more cars this June than last June, an Auckland Council committee debated long & hard whether to pay a deposit of up to $25 million to import 17 new-style rail vehicles to meet anticipated higher rail patronage 2 years away.

Auckland Transport’s request for the deposit, and an overall shared payment of up to $207 million (cut to $198 million days before the meeting), came weeks after all the council’s long-term plans & budgets were cemented in place. After trenchant criticism from Cllr Desley Simpson for the surprise, Auckland Transport chair Lester Levy & chief executive David Warburton were apologetic, but also firm in their insistence that if the rail units weren’t bought, commuters would be left stranded on the platform.

Others at the council finance & performance committee meeting said it wasn’t really a surprise because increasing stock had been proposed long ago, while the tabling of a 79-page detailed business case was fair indication that the council’s transport arm had been working on the acquisition well before the end of the financial year.

Lee alone with questions about stock

Cllr Mike Lee at Wednesday’s meeting.

Just one councillor questioned the stock being purchased. Cllr Mike Lee, who was one of the council’s 2 nominees on the Auckland Transport board until new mayor Phil Goff decided councillors should no longer be nominated but could put their names forward for board positions like anybody else, believed Auckland would be buying experimental stock that wasn’t used in any of its comparator cities.

The units Auckland Transport wants to buy are independently powered electric multiple units (IPEMUs), which can run on electricity or battery.

Cllr Lee believed hybrid diesel-electric options should have been put before the committee for a comparison, but Mr Warburton said the diesel units weren’t compatible, and the IPEMUs were more sustainable and had been running in light rail overseas for some time.

Cllr Lee: “In my view they are experimental… We have to make a decision with no alternatives…. In terms of financial decision-making this is very poor decision-making. In terms of the strategic approach, this is ad hoc, done in a rush & deliberately so. This is not about new technology… The cardinal element is politics… Making this decision lets the Minister of Transport off the hook in completing electrification of the Auckland network.”

Council debt limit at risk

Auckland Transport chief executive David Warburton, responding to Cllr Lee.

The acquisition, if completed on the shared terms proposed, would lift Auckland Council’s debt ratio over its 265% ceiling to about 266.5% in 2019 unless other savings are found.

Mr Warburton said he’d mentioned battery electric multiple units numerous times on visits to the council chamber, but conceded that this proposal wasn’t mentioned in Auckland Transport’s budget documents in May.

He said the option for the council was to delay purchase and insert the proposal in a subsequent long-term plan – “and you won’t have trains until 2021”.

Auckland rail patronage has been on a steep upward curve, rising at 17%/year at the moment. Meanwhile, the road congestion it’s intended to defeat can only worsen, judging by the car import figures. Statistics NZ said national vehicle imports were up $118 million (31%) on a year ago to a record $505 million in June, led by an $86 million rise in new car imports.

Mr Goff said the rail decision would tie in well with infrastructure decisions between the council & government supporting housing growth in South Auckland, particularly beside Stevenson Ltd’s industrial subdivision at Drury.

Mr Goff said the infrastructure measures would bring forward construction of nearly 18,000 houses, and the provision of public transport was essential to move commuters out of their cars.

Deputy mayor Bill Cashmore said the addition of the new rail units was the culmination of 7 years’ work, and a “far more finessed outcome” than when planning for development from Papakura south to Pukekohe started.

The debate closed with 20-1 (Cllr Lee against) support for the purchase. It was dependent on the NZ Transport Agency committing to funding at least 50% of the capital & operational expenditure.

Attribution: Council committee meeting & agenda, images from council live stream.

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Ministers explain infrastructure funding deal

The Government said yesterday it would repurpose its ultra-fast broadband company to co-invest up to $600 million alongside local councils & private investors in network infrastructure for big new housing developments.

Finance Minister Steven Joyce & Local Government Minister Anne Tolley said yesterday: “Crown Fibre Holdings Ltd will be renamed Crown Infrastructure Partners Ltd [though that name has been reserved for a new entity], and bring the investment skills & experience gained through the Government’s world-leading ultra-fast broadband rollout to the job of attracting private investment in roading & water infrastructure that open up big new tracts of land for more housing development.”

Crown Infrastructure Partners will set up special purpose companies to build & own new trunk infrastructure for housing developments in return for dedicated long-term revenue streams from councils through targeted rates & volumetric charging for use of the infrastructure by new residents.

Mrs Tolley said: “This innovative new funding method will be made available to cash-strapped councils who are struggling to fund new long-term infrastructure from their own balance sheets.

“Councils will have the option of buying back the infrastructure at some point in the future, but won’t have to commit to doing so. This is all about introducing outside capital to build this infrastructure, so current ratepayers don’t get burdened with all the costs of growth.”

2 of the earliest projects to be assessed by Crown Infrastructure Partners for investment will be projects in the north & south of the Auckland region previously which Auckland Council said would require investment outside the council’s own balance sheet.

“These 2 large projects can provide an additional 5500 homes in Wainui to the north of Auckland, and 17,800 homes across Pukekohe, Paerata & Drury to the south of the city.”

Mr Joyce said the Government was prepared to be an investor alongside the private sector and take up some of the early uptake risk: “We learnt from the ultra-fast broadband programme that if we derisk some of the early stages of the investment, we can bring in private sector investors to take on much of the heavy lifting as the investments mature. We would expect the Crown’s investment in each project to be matched with at least one-to-one with private sector investment over time.

“This new model is another way in which we are helping councils in our fastest growing cities to open up more land supply so more Kiwis can achieve the goal of home ownership.

“Crown Infrastructure Partners is the logical next step in infrastructure funding following the Government’s Housing Infrastructure Fund, which will deliver 60,000 houses across our fastest growing population centres over the next 10 years.”

Link:
Infrastructure funding detail

Attribution: Ministerial release.

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New Crown entity will advance housing infrastructure

The Government has lodged the documents to establish a new company, Crown Infrastructure Partners Ltd, to support development without breaching local council debt constraints.

Auckland Council has been tiptoeing just below its debt:revenue ratio limit of 265%, and put the concept to the Government of a special purpose vehicle to fund infrastructure in a way that recognises those debt constraints.

Instead of the council funding infrastructure for new development, it will come from the Crown company. Auckland mayor Phil Goff said yesterday this would enable construction of 23,300 homes in the north & south of the region to be brought forward.

Mr Goff said the announcement was made at Drury, in South Auckland, because that was likely to be the first place the new funding would be used, for 700 homes.

Mr Goff said: “The initial investment of $387 million in transport & water infrastructure in Drury South & West, Paerata & Pukekohe will enable the construction of 17,800 dwellings much earlier than would otherwise be the case.

“A further major development will be around Wainui in north Auckland, with $201 million in infrastructure funding required for an additional 5500 dwellings.

“The new investment vehicle will provide capital from the Government & the private sector which will not be debt on the council’s books. It will be funded through development contributions & targeted rates within the new housing developments.

“Auckland is growing by 45,000 new residents/year and requires unprecedented levels of infrastructure growth to keep up with demand. Increasing the supply of housing is a critical part of overcoming our housing shortage and slowing price rises caused by demand exceeding supply of housing.

“The new unitary plan ensures there is adequate land – greenfield & brownfield – to meet demand, but infrastructure servicing that land is necessary for homes actually to be built.

“Special purpose vehicles are another tool in our toolbox to enable us to lift the scale & pace of new housing development.”

Attribution: Mayoral release.

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