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The Government is rescoping parts of its $8.7 billion NZ Upgrade infrastructure programme after escalating costs have seen the projects come under budget pressure for the second time in three years, forcing ministers to consider delaying them.
Facing cost overruns, the Government axed and pared back several of the roads in 2021.
The Herald understands such drastic action is not on the table this time, with Transport Minister Michael Wood leaning towards more minor tweaks and rephasing of the projects, meaning some are likely to be delayed.
Upgrade roads include Auckland’s Penlink, and Wellington’s Ōtaki to North of Levin (O2NL) and the Melling interchange, and Tauranga’s Takitimu North Link.
Waka Kotahi Chief Executive Nicole Rosie confirmed projects are being rescoped and the ultimate decision over whether they are pared back, rephased or axed entirely rests with ministers.
The Upgrade Programme was announced in January 2020 and included $6.8b of transport spending mainly allocated to building expressways promised by National and cancelled by Labour.
By the middle of 2021 costs in the programme had skyrocketed, doubling by some estimates. The Government effectively axed some of the promised roads, scaling them back significantly.
Ministers also tipped in an extra $1.9b and promised a new project, the Auckland cycle bridge, which was later cancelled.
The funding was necessary after individual projects nearly doubled in cost. Penlink went from $411 million in January 2020 to $830m in June 2021, O2NL went from $817m to $1.5b over the same time, and the Melling interchange went from $258m to $420m.
Transport Minister Michael Wood. Photo / Mark Mitchell
Those projects appear to have gone over budget again, with Rosie highlighting the rescoping of O2NL.
The rescoping came to light in Waka Kotahi’s annual review meeting at the Transport and Infrastructure select committee last week.
National’s transport spokesman Simeon Brown questioned Waka Kotahi officials about the programme.
Asked by Brown whether any NZUP projects were being rescoped, Rosie confirmed some, including O2NL were.
Brown asked whether more money was needed to deliver the entire NZUP
“If we don’t know the scope, we can’t tell you the answer to that,” Rosie said.
“In reality the Government has been very clear that it wants to operate within the envelope that’s available to them, so the rescoping is around looking at how they can continue on those projects within the money that’s available.”
Brown asked whether that meant some of those projects may not be delivered.
NZUP has so far allocated money for the road’s detailed business base, consenting and resourcing, and land acquisition.
Wanden said this gave him some confidence.
Although he still had concerns, especially after the devastation caused by Cyclone Gabrielle and the large rebuild required in regions further north.
“There could be a rescoping of priorities and what that means, we don’t necessarily know at this stage.
“However, we’ve seen also the commentary around how much the country needs resilience and safety, especially on our state highway network, and this project provides that for this part of the country.”
The Ōtaki to North of Levin road will connect to the recently opened Peka Peka to Ōtaki expressway. Photo / Mark Coote
Almost $80m has already been spent acquiring properties to make way for the 24km road, as of January this year.
The Crown needs to buy 175 properties in total. Of those, 64 had already been bought at a cost of $78.9m, figures obtained by the Herald under the Official Information Act have revealed.
It’s one of the largest property acquisitions Waka Kotahi has undertaken.
