Aerial flyover of the South zone of Wellington's Transmission Gully under constriction. Video / NZTA
Julie Anne Genter says the writing was on the wall for Transmission Gully as tensions between contractor CPB and the NZ Transport Agency appear to have reached boiling point.
The 27 kilometre stretch of motorway has blown its budget, been bailed out by NZTA, suffered significant delays and has been criticised for being run like a circus.
Green Party transport spokeswoman Julie Anne Genter says National should have seen the "expensive legal quagmire" coming. Photo / Mark Mitchell.
Speaking in her capacity as Green Party transport spokeswoman, Genter said National should have seen the "expensive legal quagmire" coming.
Meanwhile, National's transport spokesman Chris Bishop has raised questions over why NZTA bailed out the contractor to the tune of $190.6 million, when the agency considered there was no liability.
The troubled lower North Island road is being built through a public-private partnership, a funding model approved under the then National Government in 2012.
The Wellington Gateway Partnership (WGP) has sub-contracted CPB Contractors and HEB Construction to carry out the design and construction.
Genter said PPPs could be compared to hire purchase agreements.
"You pay little or nothing upfront, but tend to pay a lot more down the track because of high interest rates and legal wrangling."
Earlier this year it was revealed the cost of the project blew out to more than $1 billion after NZTA agreed to pay the contractor another $190.6 million in a settlement over delays caused by the 2016 Kaikoura earthquake, and flooding around the same time.
You do realise the PPP procurement happened entirely under National? We are bound by legal agreements entered into by National. We are stuck cleaning up their expensive legal mess, which could have been avoided with a traditional procurement model.
— Julie Anne Genter (@JulieAnneGenter) May 27, 2020
Genter said the private investor in a PPP has an advantage in any legal negotiations with the Government.
"They can always threaten to walk away from the project, whereas the Government can't do that, leaving a motorway half built. So, predictably, Governments end up having to amend contracts, delay and pay more.
"So now we're also having to pay extra legal costs for variations to National's PPP contracts and this is making the motorways even more expensive."
Meanwhile, the Amalgamated Workers Union understands NZTA and CPB have been back around the negotiating table in an "unseemly stoush" over the payment of the previously agreed settlement money.
The 27-kilometre stretch of motorway has blown its budget, been bailed out by NZTA, suffered significantly delays and has been criticised for being run like a circus. Photo / Mark Mitchell.
Transport Minister Phil Twyford said the transport agency has made assurances it is committed to seeing the Transmission Gully project completed as quickly as possible.
"They are still negotiating a new completion date and working through other issues with the contractors. I am regularly briefed by NZTA on progress and I expect them to update the public with a new completion date as soon as they are able."
Twyford quoted the Transport Minister who signed off on the Transmission Gully agreement, Gerry Brownlee, who said PPPs can "increase certainty of delivery and drive better value for money, and that's exactly what's happening here."
Twyford suggested the Herald ask Brownlee whether he still agreed with that statement.
When asked whether PPPs increased certainty of delivery and drove better value for money, Bishop said PPPs had a place, but only if they were managed effectively by the Government.
"What we've seen with the NZTA is utter mismanagement of the Transmission Gully contract."
Bishop pointed to NZTA 's annual report for the year ended June 30, 2019, as one example of this.
In the report the transport agency said its view was there was no liability in relation to the settlement claim from the contractor over delays, yet it later paid out $190.6 million anyway.
At the time, NZTA interim chief executive Mark Ratcliffe said the settlement would ensure Transmission Gully was completed to a high standard, met the needs of customers, and still achieved good value for money for New Zealanders.
NZTA also reported that as part of the settlement, CPB Contractors and HEB Construction's historic claims against WGP and the transport agency were resolved, without resorting to court action which "would have resulted in further costs and delays to the project".
Bishop also said the recent tumultuous period for NZTA's top brass had resulted in the loss of commercial expertise and governance experience, and that could not be divorced from some of the problems at Transmission Gully.
NZTA has declined to comment on recent media inquiries, saying it was still in negotiations with the joint venture.
But it has acknowledged there is a high level of interest in the project and said it would provide further information as soon as it was in a position to do so.
