Government tips extra $252m into beleaguered road programme

The southern end of the Peka Peka to Ōtaki expressway, which the Ōtaki to north of Levin road would connect to. Photo / Mark Coote

The Government tipped an additional $252 million into the New Zealand Upgrade transport programme in the Budget.

The $8.9 billion transport infrastructure package, which includes roads like Papakura to Drury, Penlink, Ōtaki to north of Levin and Lower Hutt’s Melling Interchange, has been beset by cost overruns since it was announced in 2020.

Initially costed at $6.8b, the works exploded in cost the year after they were announced, leading to some being culled from the programme and the Crown tipping in an additional $1.9b in 2021.

They’ve now been given $252m more. Ōtaki to north of Levin could soon become the most expensive road built in New Zealand in recent times, snatching the crown held by the Waterview tunnel, which cost $1.4b when it was completed in 2017 - $1.7b in today’s money.

Transport Minister Michael Wood has said the roads would be built on time. He told Parliament he could rule out delaying the completion of the Ōtaki to Levin expressway.

“I don’t think I would be able to go into the caucus room with the local MP Terisa Ngobi if I did anything other than that, because she’s been a passionate advocate for it, and our Government’s going to get it delivered,” Wood said, citing Labour’s local candidate, who is facing a challenge from National’s Tim Costley this election.

The Budget documents say $531m will be spent on the roads in the next few years. Of that, $252m is “new” money in the Budget, and $323m draw down from the NZ Upgrade-tagged contingency.

Of the new funding, $208m was drawn from the Multi-Year Capital Allowance, and an additional $4m was given to KiwiRail for its parts of the programme.

National’s Simeon Brown said the Government should release updated costings for the Upgrade projects.

The Herald understands from people familiar with the matter that the Ōtaki to north of Levin (O2NL) expressway could cost as much as $1.9b based on one recent costing.

Wood would not comment on whether he had seen such a costing but an updated figure would “come through when we have greater certainty in terms of the commercial arrangements”.

“As you will understand when we have big procurement processes like this we need to be a little bit careful to ensure that we get the best value for taxpayers money,” Wood said.

“We are in a pre-implementation phase with that where we are acquiring land, completing some of the detailed design around the projects,” Wood said.

When asked whether there were new figures for the cost of the road, Wood said: “We have available to us further information about possible costings, but as I say, that hasn’t actually got to the stage of procurement where we can have certainty about it”.

The official current cost of the road is $1.5b, but Wood suggested this would likely rise.

“It’s fair to say that that project, like virtually every other big infrastructure project, has faced real cost challenges over recent years and we’re dealing with that at the moment,” he said.

Brown called on Wood to release the most recent costings for the project.

“The Government hasn’t released the costings of the new business case. Some could say it could be up to $2b. The entire NZ Upgrade Programme is coming under cost pressure,” he said.