An artist's impression of a proposed light rail project at Dominion Road. Image / Supplied
An artist's impression of a proposed light rail project at Dominion Road. Image / Supplied
OPINION:
Official watchdogs don't bark like self-appointed breeds do.
Parliament's appointee emits a rumbling growl in that barely audible way of trained sheepdogs. The Auditor General's report on Auckland light rail attracted some attention last week but it could have been louder.
The AG growled about "rules of procurement" notbeing followed when the Government set up a "parallel process" for the consideration of two quite different rail schemes.
"Procurement" means paying a lot of money to providers of a public project. It goes to the heart of probity in government.
The principle rule is that the project should be open to competitive bids and information made available to all potentially interested providers. In the Government's "parallel process" for light rail one scheme was following that rule, the other was not.
One scheme, conceived by Auckland Transport and adopted by the Labour Party for the 2017 election, envisaged light rail from the city centre to the airport via Dominion Rd. The other, proposed by the NZ Super Fund in association with a Canadian fund, offered a faster train to the airport on its own track, requiring viaducts and tunnels.
It was to be financed by the pension funds on terms that were not disclosed. The funds would expect a return on their capital from fares or government subsidies, probably both, and it was all too likely they would want the return to be risk-free with a government guarantee.
I once asked Phil Twyford, Transport Minister at the time, whether he thought the financier should accept risk and he said he was "agnostic". I'm not sure he understood the question.
In any case, that issue was further down the track than the complaint to the Auditor General about the integrity of the project assessment.
Former Transport Minister Phil Twyford has said he was 'agnostic' about whether he thought the financier should accept risk.
The Auditor General notes the pension funds' joint venture, called NZ Infra, submitted a proposal to Twyford in April 2018. The following month the Cabinet asked the NZ Transport Agency to lead the development of a business case for the scheme Labour had put to the election.
The agency is supposed to operate at arm's length from governments and has well established rules of procurement. In July it began what it calls a market engagement based on the scheme the Government had given it, which was not primarily for airline passengers. It was to be a catalyst for intensive housing and urban renewal through Mt Roskill, Onehunga and Māngere.
In August, NZ Infra submitted its proposal to NZTA. The agency proceeded to assess it against guidelines developed by the Ministry of Business, Innovation and Employment for unsolicited proposals, and similar criteria used by Australian states.
The guidelines allow an unsolicited proposal to be exempted from competitive procurement rules if it satisfies specified conditions such as meeting a need a government has not foreseen. In November, NZTA decided the NZ Infra proposal did not warrant an exemption but Twyford wanted a second opinion.
According to the Auditor General, Twyford told the Cabinet the Infra proposal had been further developed and was a potentially credible alternative and he had asked the Ministry of Transport and the Treasury to assess it. At the same time NZTA was to continue with its work on the initial scheme.
NZTA would not go along with that. In February the agency informed the market that any further engagement would pause while the ministry and the Treasury assessed the Infra proposal.
The AG reveals the Treasury's Infrastructure Transactions Unit also cautioned ministers against considering a single proposal outside a competitive procurement process, noting there was "considerable interest from overseas investors and contractors and that there was a risk market participants would withdraw from engaging with NZTA if sole negotiations were pursued with NZ Infra."
Nevertheless, Twyford convinced the Cabinet to endorse the parallel process last year and he replaced the board of NZTA. In August the agency, now chaired by Sir Brian Roche, agreed to participate in the parallel process.
Roche, it was reported in the Herald, had been talking to the Government and the NZ Super Fund about an alternative proposal since early 2018.
The Auditor General is Parliament's watchdog for public servants, not politicians.
When the office finds fault with ministers' decisions it blames deficiencies in the advice provided to them. But often we could have expected better judgment from those we have elected.
This case is symptomatic of the Labour mind. It seems unable to think past vague values and visions. If those are in conflict or it must choose one over another – rapid transit or urban regeneration in this case – it dithers.
Twyford has been demoted and Covid-19 has devastated patronage of public transport but Labour says it's still committed to Auckland light rail.
The Auditor General says, "I intend to maintain a watching brief on this subject." They've been warned.
