Brian Gaynor: Eastern highway's costs driving off the map

COMMENT

Auckland's crammed roads hit the headlines again this week with the release of two reports on the eastern highway. This type of roading infrastructure has attracted private investors in Australia but the estimated cost of the eastern highway, which could be as high as $3.9 billion, is horrendous.

Potential investors will want to know why the 27km project could cost up to $142 million a kilometre when two similar motorways in Sydney cost only A$31 million and A$38 million a km and in Melbourne A$91 million a km.

They will also want to ascertain the impact of the Auckland Regional Council's passenger rail project on the proposed road scheme.

The main object of this week's principal report, which was prepared by Opus International Consultants, was to recommend a proposed route for the corridor and the mix of traffic it would carry.

The recommended route is from Manukau City to Pakuranga to Panmure to Orakei and on to Auckland CBD.

There are two alternative routes from Orakei to Auckland CBD, overground or through a proposed Parnell tunnel. The cost of the project, without the tunnel, is estimated at between $2.8 billion and $3.2 billion - and with the tunnel at between $3.3 billion and $3.9 billion.

These projections represent a minimum cost of $105 million a km and a maximum of $142 million a km.

Opus also recommends that the highway accommodate rail, bus, private motor and heavy commercial vehicles, cyclists and walkers.

The main focus between Manukau City and Panmure will be buses and road transport with rail playing an important role between Panmure and Auckland City.

On the latter route the proposed motorway will run alongside the existing railway line if the Parnell tunnel option is not adopted.

Land is one of the biggest contributors to the high cost of the project. According to the Opus report land costs will account for between 31 per cent and 33 per cent excluding the Parnell tunnel and between 29 per cent and 32 per cent including the tunnel.

Excluding land costs and the Parnell tunnel the corridor will cost between $72 million and $82 million a km and between $85 million and $97 million a km with the tunnel included. A number of similar highway projects have been built in Australia in recent years. These include the 21km M2 motorway that runs from northwest Sydney to Lane Cove north of the Harbour Bridge and the 22km Melbourne City Link expressway that links the main routes between Melbourne Airport, the port and industrial centres in the city's southeast.

Sydney's M2 motorway was completed in May 1997 after a three-year design and construction period. The project cost A$650 million or A$31 million a km. Hills Motorway, which is listed on the Australian Stock Exchange, built and operates the motorway but will transfer it back to the NSW Government in 2042.

The project does not include the cost of land, which is leased from the State Government, but it does include a tunnel about 0.5km long (tunnels are much more expensive than above-ground motorways).

Hills Motorway has had a chequered financial history. It failed to achieve its prospectus forecasts and has reported a net loss each year since the M2 opened. But the outlook is more encouraging since toll charges for light vehicles were increased to $3.80 a trip last July.

The group reported net earnings of A$3.5 million for the six months to December 31, compared with a loss of A$3.1 million for the previous corresponding period, and traffic figures for January and February have been strong.

Melbourne City Link is a 22km expressway toll system that was fully opened to traffic in December 2000 at a cost of A$2 billion or A$91 million a km, excluding land costs. The City Link project was expensive because it included two long three-lane tunnels (3.4km and 1.6km) under the Yarra River, a bridge over the Yarra and a six-lane elevated road through West Melbourne. Under the Melbourne City Link Act 1995 Transurban Group, which is listed on the Australian Stock Exchange, was required to design, build, finance, operate, levy tolls and maintain City Link for a period of 34 years.

Transurban also had difficult years but City Link's losses have been steadily falling.

Transurban is also involved in the WestLink Motorway consortium, which has been selected to build the M7 that will link the M5, M2 and M4 in western Sydney. The new 39km expressway, which will cost A$1.5 billion or A$38 million a km, began construction in July 2003 and is expected to be completed in 2007.

Auckland's proposed eastern highway is extremely expensive when compared with these Australian projects, particularly as it will run over several existing routes.

The cost per km, taking the mid-point between the highest and lowest projection and excluding the Parnell tunnel and land costs, is $77 million. This compares with A$31 million for Sydney's M2, A$38 million for Sydney's M7 and A$91 million for Melbourne City Link, which includes 5km of expensive tunnels (the Auckland project, including the small tunnel, could cost as much as $97 million a km, excluding land).

Not surprisingly there has been little response from private commercial investors to the proposed eastern highway. This is unfortunate as the project will be a huge burden on taxpayers and Auckland ratepayers, particularly as Auckland City Mayor John Banks is keen to spend a further $400 million on waterfront land owned by Ports of Auckland.

Private sector involvement would require a road toll but given the huge cost of the project, and comments coming from the rail sector, a toll charge might also be implemented under public ownership.

Passenger rail is another big transport issue in Auckland.

According to Auckland Rail Passenger Rail Upgrade Projects business plan, which was released in May 2003, the restructuring of the region's rail network will cost $1.5 billion. It will also require annual operating subsidies that will steadily increase over the next 10 to 15 years and peak at around $90 million.

The plan is based on increasing the number of annual rail trips from around 2.5 million to 25 million to 35 million passengers by 2011.

This plan seems to be based on hope rather than fact.

Having established a target of 25 million to 35 million trips the Rail Upgrade Project report tried to determine whether the target was likely to be met.

The analysis found that the rail system was likely to generate 9 million 11 million passenger trips in 2011 versus a target of 25 million to 35 million and 11 million to 13 million trips in 2021 compared with a target of 35 million to 45 million. In spite of these findings the report continued to focus on the target figure.

According to the business plan there are ways to resolve the rail passenger shortfall including road tolls, a fuel tax and a carbon tax on road transport vehicles and higher parking fees.

How can Auckland's elected officials claim that they are resolving the region's transport problems when they are planning to build an extremely expensive eastern highway yet at the same time the region's rail operator is suggesting road tolls, fuel and carbon taxes and higher parking fees to resolve its expected passenger shortfall?

As far as the eastern highway is concerned the Opus report has gone to a steering committee. The only firm prediction that one can make is that we haven't heard the last word on Auckland's transport problems.

* Email Brian Gaynor