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The disestablishment of the Ministry of Transport’s work on the Auckland Light Rail project will likely cost millions of dollars spent over six months and will involve the disposal of property and land, as well as “settling obligations” - a Government Cabinet paper has revealed.
It comes after an alleged $228m has already been spent on the project without a metre of track laid.
The Cabinet paper proactively released yesterday by the Ministry of Transport (MOT) has revealed that “existing funding” to ALR Ltd will be “sufficient to fund” its disestablishment.
Minister of Transport Simeon Brown. Photo / Alex Cairns
The Cabinet paper lists that of the $153.4m operating expenditure in the ALR Ltd budget, $33.6m is available. Only $302,000 of ARL Ltd’s $26m in capital injection appropriation is left available. And $98m of ALR Ltd’s $131m strategic land acquisition appropriation budget is left available.
Added up, the Cabinet paper shows a total $178.5m in the ALR budget has been spent.
When Brown announced the project was being scrapped in January he cited $228m in funds spent on the project that has been in the planning stages since 2017.
“The previous Government committed to building light rail to Mt Roskill within four years of being elected,” Brown said.
“After six years and over $228 million spent on the project, not a single metre of track has been delivered and congestion has only worsened in the city.”
It is not clear where the extra $49.5m which Brown identified as having been spent on the project has come from - on top of the $178.5m identified in the Cabinet paper - to reach the $228m figure.
The $98m in remaining land acquisition budget will be returned to the Crown, the Cabinet paper says.
The Cabinet paper states that MOT expects an “additional amount of up to $33.6m” will be returned to its budget, but that “the amount returned will depend on the costs of disestablishing ALR Ltd”.
This projection means the ALR disestablishment process could still cost millions of dollars, based on the remaining budget of the project that is still unspent and the rate at which ALR Ltd. had been spending money.
Auckland Light Rail will be separated from other road users to minimise disruption. Photo / Supplied
Figures released in April last year showed taxpayers were forking out $1.2m a week to keep the wheels turning on the Auckland project.
ALR was paying about $920,000 a week to two engineering companies to plan and design the central city-to-airport light rail project and a further $310,000 to its own contractors and consultants.
“The best way to stop work on the ALR project is to change the purpose of ALR Ltd from a focus on developing the project’s business case, to managing an orderly disestablishment,” the Cabinet paper says.
“Officials expect that it could take up to six months to substantively complete the disestablishment process.”
Background in the Cabinet paper on the ALR also details disagreements on the design of the infrastructure project.
“The project has faced challenges to progress. The ALR Sponsors were not unanimous on whether the tracks should be built above or below ground. The project recently missed a significant milestone of lodging the Notice of Requirement to protect the corridor, because the ALR Ltd board did not think it was appropriate to make that decision at that time.”
A recommendation of the Cabinet paper is also to make changes to ALR Ltd’s board so it can “support the new purpose” of disestablishment.
This will involve: “reducing its size to 2-3 directors [which may involve the need to remove or appoint new directors depending on the skills of existing directors and their willingness to continue on the board]”.
The Minister of Transport is invited in the paper to report back to Cabinet on the progress of disestablishing ALR Ltd “including the future of its land holding and disposition of its other assets and the settlement of obligations and liabilities” by the end of March 2024.
She said the light rail from Wynyard Quarter to Mt Roskill within four years, followed by light rail from Mt Roskill to the airport and light rail to West Auckland within 10 years.
Tom Dillane is an Auckland-based journalist covering local government and crime as well as sports investigations. He joined the Herald in 2018 and is deputy head of news.
