The big blowout on Auckland’s Central Rail Loop announced yesterday will probably add another half billion to the Government’s bill and pose real challenges for the Auckland Council.
And the man most likely to become its next Mayor is willing to abandon his own party’s long held positions to do a major flip flop to deal with those challenges.
With the announcement of the funding for the Central Rail Loop and the report expected today of the Auckland Transport Alignment Project (ATAP), Auckland’s transport blueprint for at least the next 30 years will be in place.
The CRL is a major victory for Mayor Len Brown, and Beehive Ministers are also crediting him with the agreements that have been reached within the ATAP project.
And yesterday he was ecstatic at the formal agreement which he called a historic milestone.
“Central Government and Auckland Council are now in clear agreement that the CRL is at the heart of dealing with the city’s growth, with propelling our economy, and creating a future Aucklanders deserve,” he said.
The centre-right Auckland Future group welcomed the news.
But Labour MP and leading Mayoral candidate, Phil Goff, is not happy with a billion dollar blow out in estimated construction costs for the loop, and he’s not happy with the way the Government has managed it.
“If all the central agencies thought the $2.4 – $2.5 billion was sound before, what has changed?” he says.
“We are owed an explanation on that.
“And we are owed some from of assurance that these latest figures are not going to be as rubbery as the earlier figures.”
Finance Minister, Bill English, was apparently not surprised at the cost blowout.
A spokesperson for him told POLITIK that the initial estimate of the cost of the project was always expected to change once more detailed work was done, and the revised estimate was based on a more thorough understanding of the scope of the project.
She said the Crown’s share would be financed through the usual budget process.
The Council will have to pay half of the blowout, and that will impact its ability to pay for other road projects set to be announced tomorrow in the ATAP report.
Goff says he understands that report will show a substantial shortfall.
Goff is cautious about moving to the preferred option of both the Government and the Council which is traffic demand management.
However, the Prime Minister, obviously with one eye on next year’s election, is also not keen on rushing to impose what in effect would be road tolls on Auckland motorists.
“It’s not something you are going to see in the very short term; that is for sure,” he told his weekly press conference on Monday.
“Technology is changing, and it does provide opportunities in the future, but it’s not something that Auckland motorists are going to be facing anytime soon.”
Goff instead would have the Government impose a region-wide petrol tax, but Key, English and other Ministers have consistently opposed that idea.
There will be pressure soon to begin planning for demand management systems.
Auckland Council CEO Stephen Town suggested to POLITIK in July that the debate could begin when the Waterview connector was finished in the first half of next year.
The argument to bring demand pricing in soon is that the cost of future roading is going up rapidly because the cost of Auckland land is riding and anything that might restrain demand will have a big fiscal impact.
There will be other ideas of how to fund both the loop and future roads.
Auckland Future Councillor, Denise Krum, says Auckland Future has some of those ideas.
“What we need now is to back ourselves as a city for wider international investment in other projects and look at innovative private/public partnerships to take the city forward,” she said.
And perhaps surprisingly, the veteran Labour politician, Phil Goff, who campaigned as Labour leader in the 2011 election vigorously opposing privatisation now agrees with Krum.
He would sue them to fund light rail to suburbs not served by heavy rail and particularly to the airport where he says the growth of tourism means that something needs to be done to get the huge numbers arriving at Mangere into the city.
“I don’t doubt PPPs won’t be more expensive than if you have infrastructure funding that you can use yourself,” he says.
But if you do not have sufficient infrastructure funding and we want to try and bring projects forward then you have to look at PPPs.”
In many ways, the CRL announcement yesterday and the ATAP report publication today will define Auckland local body politics for the next three decades.
That is why the Government was so keen to have both events before voting started in the Council elections.