For "game-changer" solutions we need look no further than what deficit-stretched governments and cities around the world are increasingly doing to unlock new investment from the private sector to fund major infrastructure projects that wouldn't otherwise get built.
There are many models and examples we could use. Here are three from transport:
• In Hong Kong, the mass transit system is financed by revenue from property development along corridors. Every train station has a private invested multi-tower complex on top from which substantial revenue is generated through rents and other tools.
• In London, a Special Purpose Vehicle (SPV) Crossrail company is investing $28b to build 10 new stations, and around 118km of rail line, including 42km of tunnels through central London.
Crossrail has a 50:50 shared governance sponsored by the mayor of London and the UK's Secretary of State, will increase London's rail capacity by 10 per cent and be operating in 2019.
The consortium delivering Crossrail comprises three world class industry leaders, including Aecom, a firm operating in Auckland. Crossrail includes a station (at Woolwich) proposed and financed by a private developer, and which has commercial activity at the station site complementing the project's public transport and amenity objectives.
• In Denver, Colorado, an SPV has been formed to build a large station using borrowing from central government loan programmes and the private sector.
Common to these examples is the setting up of a special purpose company or SPV embracing all the partners and setting out risks, benefits, funding and most important, detailing where the revenue to ultimately pay for the project will come from. This can take many forms, but increasingly around the world a tool known as "value capture" is used.
For each project or package of projects, an SPV is established to support the leveraging of value capture revenues, especially from property value uplift. This is the main revenue source for all three examples.
In Crossrail "value capture" revenue mechanisms include a business rate, development revenue on "new" ventures attracted by the project's benefits, sale of surplus land and property and a bundle of "voluntary" contributions from Heathrow Airport, Canary Wharf Group and other developers.
Innovative thinking and receptiveness to consider new ideas are at the heart of "value capture" models. The SPV governance gives all parties critical certainty and accountability of who gets the benefits and how to secure this.
Could an SPV model work for Auckland?
Drawing especially on the Crossrail model, options to form an SPV and use value capture and other tools to generate revenue to pay for the critically-needed accelerated momentum in Auckland's delivery of major infrastructure are being explored.
The idea was signalled some time ago by Government ministers keen for Auckland to suggest a more innovative approach to funding key infrastructure.
But an Auckland SPV approach will only succeed if Wellington-Auckland differences can be put aside. Aucklanders must get beyond thinking that someone else will pay for solving the city's worsening infrastructure problems.
The way New Zealand's local government is structured, Auckland-only ideas such as regional fuel tax, return of GST and/or other tax revenue from Wellington, or giving local government greater control are not going to happen in New Zealand. They are ideas that we can't wait around another five years for a future government to reform local government to make them workable. Central government needs to do more to understand and respond to the critical imperative of Auckland's day-to-day transport impacts on every aspect of city life, including social issues.
But if promoted right an Auckland SPV or multiple SPVs could be a way for the whole city to get long-term certainty and uplift in the pace of delivery of major infrastructure.
An Auckland SPV approach will only succeed if Wellington-Auckland differences can be put aside.
How could an SPV be structured? What "ready to go" projects would it capture? What opportunities will the private sector have? And will other critical supporting clearing steps such as a faster consenting process and overcoming our skills shortages be part of the action?
We await details, possibly in or around the upcoming Budget.
But if reducing traffic congestion and encouraging increased use of public transport is a shared urgent goal of both council and government, an obvious initial Auckland-wide SPV package could comprise the northwest busway in the west, Mill Road in the south, Penlink in the north and private sector-led park-and-ride station upgrades across the city. All have been talked about and sat on plans for years.
At stake isn't just identifying new revenue sources in which Aucklanders can see what the dividend will be in terms of people and goods being able to move around Auckland more easily and with less cost. It's about the success of New Zealand.
These ideas should also not be seen as the end of the "new funding" fix Auckland story. Across the infrastructure board, Auckland has around $40b of projects with no clear funding path.
We critically need the finance sector to put forward what further new financing mechanisms other cities and government with big infrastructure deficits are increasingly calling on for solutions. Sharing that information might seed new concepts that will help Auckland.
Michael Barnett is chief executive of the Auckland Chamber of Commerce and chairman of the Auckland Business Forum.
