Michael Barnett: Forever in transit

Michael Barnett

At a packed Eden Park gathering of Auckland political and business leaders on December 12, 2003, the Prime Minister and other senior ministers unveiled a $1.62 billion package to speed up delivery of Auckland's transport solutions.

Describing the package as "an important investment in New Zealand's economic infrastructure", Helen Clark confirmed that the $1.62 billion would come from:

* A 5 cent increase in fuel taxes, raising about $72 million a year for Auckland.

* A specific allocation of $900 million for Auckland, spread over 10 years.

* Provision for future revenue from tolls and borrowing.

The Prime Minister said: "This means money will go to the most appropriate projects, whether they be road, public transport or transport demand management."

Three months later, in March 2004, Transit New Zealand confirmed that work on seven long-planned "ready to go" Auckland state highway network projects would be accelerated as a result of the increased funding - SH20 Manukau and Mt Roskill extensions, SH18 Hobsonville deviation, and four SH1 projects (Alpurt, North Shore Busway, Esmonde Rd interchange and Waiouru connection).

Transit also confirmed that because of the increased funding an earlier start would be possible on other "very large" projects - SH20 Manukau Harbour Crossing, Avondale Extension and SH1 Harbour Bridge to City among others. The information was posted on Transit's website and made available to Auckland mayors.

Fifteen months after the unveiling, it is timely to ask: "What is the billion-dollar package doing to accelerate Auckland's transport infrastructure development?"

The answer is clear: "Nothing."

On the "critical" western corridor, none of the ready-to-go projects has been started and timelines for others have not been accelerated. Instead, Transit is not denying reports that western corridor and other projects will be further delayed.

The toll and borrowing option has been used to kick-start just one lower ranked project, the Alpurt SH1 Northern Motorway bypass of Orewa.

The work on a possible toll network for Auckland has been kicked into touch until after the election.

There is no sign of Government "urgency" to encourage Transit and its funder, Land Transport New Zealand, to follow the Sydney example of using borrowing to accelerate work programmes on critical state highway projects such as those in the western corridor.

Instead, the evidence shows two unintended consequences:

* The additional money is being used to fund cost increases of projects that Transit was planning to start irrespective of the 2003 package, not to accelerate programmes and get construction under way earlier on others.

* Much of the cost increases and project delays have arisen from organisational failures within the transport-provider bureaucracy.

On the first point, the four SH1 projects listed as ready-to-go in 2003 and which have now been started - Alpurt toll road, North Shore Busway, Esmonde Rd interchange and Waiouru connection - have had big cost increases on initial estimates. These reflect several factors:

* Changes in project scope. Alpurt began life as a simple motorway, whereas now it will be a tolled route.

* The passing of the Land Transport Management Act in 2003 means roading projects must consider wider environmental and social factors than before, although the exact impact on costs is not clear.

* Inflation and construction material cost increases, which are estimated to have added 20 per cent since 2003.

* Transit's traditional tendency to underestimate project costs until they reach the ready-to-build stage.

In 2003, the cost of the Manukau Harbour Crossing project was estimated at between $70 million and $100 million on an assumption of seeking construction funding this year.

In the latest Transit draft plan, the cost has jumped to $147 million on an assumption of a construction start in 2009. From the examples in the graphic, a cost closer to $400 million seems likely.

On the organisational front, Transit needs to be encouraged to adopt basic business practice of meeting deadlines - delivering projects on time and within budget - and to publish a comprehensive work programme for everything it proposes to do. If projects slip, reasons can be clearly set out and accountability sheeted home.

Transit's draft 10-year plan for the period to 2014 fails to detail key projects it has listed elsewhere as ready to start but not yet started (SH20 Mt Roskill and Manukau extension). There is also no clear target date for completing the agreed Auckland state highway network and budgets for projects are either indicative or "not yet determined".

Amazingly, the Transit plan fails to take full advantage of the Government's 2003 funding package which confirmed the construction industry's ability to gear up to handle $400 million of capital work a year by 2006 - double the 2003 level.

However, Transit has budgeted just $333 million for Auckland region projects in 2005-06, some $67 million short of the $400 million buildability constraint and nearly $150 million below the constraint, once a 20 per cent price premium is applied.

Two conclusions become obvious from this assessment. First, claims of price ramping by the construction industry cannot be blamed for the delay or the rising costs.

Secondly, it is unacceptable that at a time of intense international competition for roading engineers and planners, Auckland has construction and transport consultancy firms sitting around waiting for tenders to be opened and project specifications to be drafted.

Everyone who welcomed the Government's transport package in 2003 should be asking some hard questions.

Why is there no evidence that the construction of Auckland's agreed "critical" state highway projects has speeded up as a result of the $1.62 billion package?

Why have SH20 western corridor projects listed in 2003 as "ready to build" not started?

Why is Transit reporting that there may be even more slippage in building the agreed package of projects?

Why is the Alpurt project using $20 million of the package's public funds when it is going to be funded through tolls? Surely this money should be borrowed against the project and the package money used to kick-start other "ready-to-go" projects?

Why isn't Transit using the borrowing option that was unveiled in the 2003 package?

The Auckland Regional Council recently received an economic update report that highlighted inadequate roading as acting as a drag on the Auckland region's growth prospects.

The success that Sydney has shown from the $7 billion investment to nearly complete its orbital motorway during the past 10 years using borrowed funds demonstrates clearly the failure of our overly cautious and bureaucratic approach to solve what is Auckland's number one problem - increasing congestion on an inadequate roading network.

If a borrowing programme had been launched in 2003 and business disciplines imposed on Transit's operations, we would be well past this mess by now.

I am told a story from Sydney, how every Friday before the close of play the head of that city's road transport agency sends a report to NSW Premier Bob Carr and the State Minister of Transport detailing what milestones have been achieved that week.

Whether true or not, the point is that Sydney's economic progress has been fuelled by a political leadership demanding that deadlines to build the city's roading network be met in a business-like way.

A similarly decisive, politically accountable approach is needed here.

* Michael Barnett is chief executive of the Auckland Chamber of Commerce.