$600m shortfall looms for roading

Transit New Zealand faces a $600 million-plus gap in its 10-year highways forecast, but the Government vows not to let projects in Auckland or elsewhere be chopped.

Finance Minister Michael Cullen yesterday confirmed a suggestion of Auckland City Mayor Dick Hubbard that revenue projections from tax on reduced fuel consumption, in reaction to high petrol prices, were likely to dent the National Land Transport Fund.

Mr Hubbard warned a land transport summit conference in Auckland of a potential $300 million to $600 million shortfall from the reduced excise, and renewed a call for the region to be allowed to toll existing roads, both to raise revenue and battle congestion.

Dr Cullen said the deficit in Transit's draft 10-year forecast, which the road-building agency plans to issue next week for public submissions, was slightly higher than $600 million - but reduced fuel consumption was not the only cause.

"It's a little bit more than that, not much more, over the decade," he said, after telling a parliamentary select committee of attempts by a group led by Associate Finance Minister Trevor Mallard to find ways to plug the gap.

He said that in a $12 billion programme spread over a decade, what was being talked about was not a massive amount, and the Government was determined to help find ways of maintaining the road-building momentum.

"We shouldn't get panic-stricken about it, but the Government is not prepared to see a slowdown in the Auckland roading programme, or indeed in programmes in the Waikato or in Canterbury, or whatever other part of the country."

He said the shortfall was because of a combination of reduced petrol consumption, higher roading construction costs, and growth in the Government's contribution to public transport.

Although Transit has only a marginal involvement in public transport, mainly through Auckland's northern busway, high costs in that sector reduce the amount of money available to it from Land Transport New Zealand.

That agency last year announced a $22 billion funding forecast over 10 years, and chairwoman Jan Wright told the Herald outside the Auckland conference that an even larger figure would be announced in July, despite the revenue setback.

Transit chief executive Rick van Barneveld also said last night that his organisation's draft forecast would be for more than $12 billion, representing a 12 per cent increase from what was flagged last year.

Dr Cullen said the Government would investigate alternative revenue sources, such as increased borrowing through the likes of infrastructure bonds.

It was also keen on exploring ways of getting better value for money on road-building contracts, such as letting them in larger blocks, allowing the private sector to come up with cost-saving efficiencies. He said it would be unfair to accuse contractors of profiteering, pointing to labour shortages and other cost pressures.

Mr van Barneveld was guarded about giving away more details of his draft forecast, or the implications of Dr Cullen's assurance on decisions already taken, such as a proposal to defer a key Waikato project.

The Hamilton City Council is waiting for a legal opinion on whether Transit's indicated deferral of a $33 million bypass of Avalon Drive, a congested part of State Highway 1 within the city's northern border, is open to a court challenge.

But he said that although completing the Auckland western ring route remained Transit's top priority, highway links in the Waikato ranked close behind.