Borrowing plan mooted to solve Auckland road problems

12.00pm

The Government is considering borrowing billions of dollars to bring forward moves to sort out Auckland's transport problems.

Auckland's mayors recently asked Transport Minister Paul Swain and Finance Minister Michael Cullen to make up a spending shortfall of $2.5 billion over 10 years.

Officials told NZPA that ministers were considering an "idea" to fund the 10-year programme or even bring it forward to sort out Auckland's lack of motorways in some areas and poor public transport.

The idea was being considered by the infrastructure committee and had no status beyond that. It was uncertain when a decision would be made as there were "complex issues" to work through, officials said.

Any increased borrowing would be likely to spread over a number of years depending on economic conditions and the ability of the construction sector to do the work.

Following the meeting between ministers and mayors it was decided to form a joint central and regional working group to investigate funding sources to enable the network to be completed within 10 years.

Without the money, crucial aspects of the transport network were unlikely to be completed for another two decades, the mayors said.

The mayoral forum, which has worked together with the Auckland Regional Land Transport Committee, wants $700 million annually for the next three years.

On top of that the mayors want legislative powers to levy regional fuel taxes.

"It's not just about completing roads, but an integrated transport plan once and for all," Auckland Mayor John Banks said then.

After the meeting Mr Swain said an agreement between Auckland and the Government had been reached to work "in good faith and with urgency".

"More congested roads here are detrimental to the country's economy. This is acknowledged by government and we must do something about these problems.

"Auckland is telling us there is a shortfall of around $2.5 billion over the next 10 years. These are not inconsistent with the figures we've looked at in Government."

However, Mr Swain and Finance Minister Michael Cullen stopped short of offering the cast-iron promises that the Auckland Region Mayoral Forum had sought.

"Yes, there will be extra funding but not in the immediate future."

Prior to the budget, Dr Cullen said he would consider "priming the pump" through increased spending on roading or housing if the economy declined more rapidly than expected.

NZPA understands that plans to sort out Auckland's transport problems were not connected to a desire to stimulate the economy.

Ministers are concerned that Auckland's problems are creating a drag effect on the economy that has to be removed in the medium term.

Treasury officials warned that bringing forward spending for a quick fix could overstretch the construction industry increasing costs of the project and stimulating inflation throughout the country.


Dr Cullen said many options were being considered but that any decision was some way off.

"We're in the process and I would hope that... before the end of the year we'll be able to have some clarity around looking for alternative forms of funding," he said.

"I don't want to raise expectations too high at this stage. There are lots of other things involved in Auckland roading development apart from money."

Dr Cullen said he had made a commitment to Auckland mayors that the Government would look at alternatives "to try to ensure that we can fill the substantial funding gap that they identified as being required to meet Auckland's roading needs over the next decade".