Brian Rudman: Don't turn down a free ticket to ride

Illustration / Peter Bromhead

Talk about kicking a gift horse in the chops. With an election looming, Transport Minister Simon Bridges is dangling the distinct possibility the Government will now fund the SkyPath cycleway across the Auckland Harbour Bridge. But instead of ululating with excitement and offering him the freedom of the city, what do the council bureaucrats do?

They pack a sad and say they want to do it their way - persisting with their fast crumbling plans for a public-private partnership (PPP), which even the proponents now admit will cost ratepayers and cyclists around $248 million over the next 25 years in fees, construction costs, tolls and the like.

With the mayor on bended knees in Wellington pleading for more money for public transport, rail lines to the airport, you name it, this recalcitrance from his officials seems absolutely bonkers.

The PPP project seems almost dead anyway. Earlier this year, the chosen builder, Downer Construction pulled out claiming the project was too small and unique to work as a PPP. They said they could no longer agree with the fixed price set in July 2016 for the construction of the $34m project. As a result, the long-time enthusiasts who put together and drove the project, the SkyPath Trust, followed suit saying they didn't believe it was a suitable project to be delivered as a PPP. Bevan Woodward, the driving force behind the SkyPath, now says the PPP was a dreadful deal for Aucklanders which would have involved tolling users for 25 years and annual revenue underwriting by Auckland Council.

Despite all this, the council sponsor for SkyPath, Auckland Tourism, Events and Economic Development (Ateed) remains doggedly committed to the PPP proposal, as do the investment bankers, Morrison & Co.

I admit I've been a sceptic of the project ever since proponents came cap in hand to council asking ratepayers to underwrite the scheme via a PPP arrangement. PPPs are a device where savvy investment bankers and advocates of pie-in-the-eye "must have" schemes endeavour to bamboozle politicians and their bureaucrats into taking on the financial risk.

With the mayor on bended knees in Wellington this recalcitrance from his officials seems absolutely bonkers.

The Spark nee Vector Arena in downtown Auckland is a perfect example. At the turn of the century, every capital city in Australia had one, said the promoters and unless Auckland got one, we'd become a regional backwater. The proponents convinced the doubters on the Auckland City Council that the way to save ratepayers money was to build it as a PPP. Actually it was a variation on the theme, called a BOOT - build, own, operate, transfer. This means when the BOOT agreement ends in 2047, by which time the arena is worn out and ready for demolition, the owner-operators hand it back to council, which will then have to cover the cost of restoration or demolition.

By the time the arena opened in April 2007, ratepayers had forked out $72.5m, which was more than $4m in excess of the total proposed cost of the whole project when work began in 2004. Since then, as a ratepayer, I've had a jaundiced view of PPPs.

Meanwhile, back on the SkyPath, in May 2015, when the partnership was signed with the merchant bankers, the council put out a dewy-eyed release saying what a good deal it had done. "In return for underwriting the project, council will receive a share in the revenue upside and take ownership of the $33 million asset."

At the time I mocked the idea of a revenue "upside" apparently based on the dream of 781,284 cyclist-pedestrians in its first year, each paying up to $10 for a return ride/walk. Woodward, who put forward these figures at the time, now claims the PPP scheme will cost users and ratepayers $248m over 25 years, confirming my worst fears.

The transport minister and National Auckland Central MP Nikki Kaye are both now saying if the project is technically feasible - which everyone agrees it is - and supported by a sound business case, it will be considered for funding through the Urban Cycleways Programme.

It sounds like a very large pre-election nod and a wink to me. Why are the council bureaucrats being so churlish?