The Government’s $12b infrastructure fund, already struggling to complete projects on time and on budget, was denied a third funding top-up at the Budget.
The NZ Upgrade Programme has twice needed top-ups since being announced in 2020.
By 2021, the cost of the roads in the scheme had nearly doubled,requiring the Government to axe some plans and tip in an additional $1.9 billion. Another $252m was tipped into the projects in December 2022.
But it appears this was the last straw for Treasury - for now at least. It recommended against funding five separate bids for the NZ Upgrade programme in Budget 2023, according to Budget documents recently released.
In notes for Finance Minister Grant Robertson for a Budget meeting with former Transport Minister Michael Wood in February, Treasury said he may wish to discuss five NZ Upgrade Budget bids that were all “currently unfunded due to concerns the Treasury has raised around timing, delivery and scope”.
These bids were left out of the draft Budget package for the transport sector.
A suggested “talking point” with Wood was whether he was “comfortable we can maintain momentum on these programmes without an immediate uplift in funding?”.
When asked whether the lack of funding for these bids would mean changes to the roads, Transport Minister David Parker told the Herald there had been “no scaling back or reconsideration of the NZUP programme”, but acknowledged it is “facing cost pressures”.
Parker said, “Officials from the Ministry of Transport and the Treasury are working with delivery agencies to develop options to manage the remaining cost pressures throughout the programme”.
He said that ministers had “deferred any funding and/or scope change decisions until they are necessary”.
Former Transport Minister Michael Wood had bids for additional funding for the NZ Upgrade Programme turned down by Finance Minister Grant Robertson. Photo / Mark Mitchell
National’s transport spokesman Simeon Brown said the Government needed to be upfront about whether roads would be culled from the beleaguered programme.
“The Government needs to be crystal clear about what other cost pressures are facing the NZ Upgrade programme, what this means for their delivery, scope, and timeframe and if any are in consideration to be cancelled and if so which ones these might be,” Brown said.
“They are struggling to deliver what are critical roading connections across New Zealand,” Brown said.
The Government has been producing monthly reports on the programme, rating each of the projects a “green”, “amber”, or “red” on a traffic light scale.
After these colours were reported by the Herald, the Government began withholding them from Official Information Act requests.
It is rated “red” for its likelihood of being constructed both on time and on Budget. The Ōtaki to North of Levin expressway is also rated “red” although it has a “green” rating for the likelihood it is built on time.
There is some good news for the South Auckland package, and two Drury projects, all of which improved from “red” ratings to “amber”.
The Budget documents also showed Wood wrote to Robertson in October last year about additional funding to meet cost pressures in the programme.
In the letter replying to Wood, Robertson invited Wood to submit more information about the kinds of cost pressures the roads were experiencing.
However, Robertson said that projects that were still at the business case stage might need further work. For these, he suggested getting advice on “phasing and scaling” projects so they could be delivered without tipping more money into the scheme.
“I am keen to understand from the programme level advice the options available for delivering the remainder of NZUP within the existing envelope, including phasing and scaling, and the risk of further cost increases (whether escalation or otherwise) on those projects beyond this point in time,” Robertson said in the letter.
In a different document, Treasury recommended another, non-NZ Upgrade, project be deferred entirely.
Parker refuses to say what this project is, but unredacted sections of the Treasury release suggest it could be one of the Government’s mass rapid transit projects like Auckland Light Rail, Wellington’s Let’s Get Wellington Moving rapid transit, or rapid transit in Christchurch.
“Treasury has recommended [REDACTED] be deferred, noting that the indicative business case hasn’t yet been completed,” notes for Robertson said.
“Adequate analysis will be required to ensure alignment with the outcomes of ‘mode shift’ plans funded in Budget 22, as well as with the Mass Rapid Transit framework currently under development,” the documents said, referring to the framework the Government is designing to fund mass rapid transit projects like light rail.
Parker’s office even refused to say whether Treasury was referring to an NZ Upgrade project or a mass rapid transit project. While the Auckland and Wellington rapid transit projects have both had indicative business cases, the Christchurch mass rapid transit project has not.
Thomas Coughlan is deputy political editor of the New Zealand Herald, which he joined in 2021. He previously worked for Stuff and Newsroom in their Press Gallery offices in Wellington. He started in the Press Gallery in 2018.
