Cost Blow-Out Could Bury Motorway Tunnel
February 5th, 2009
Transport Minister, Steven Joyce, has heeded the advice of Treasury and transport officials in calling for a review of Auckland’s proposed Waterview Connection after the estimated cost of the project blew out by 47% in just five months to $2.77bn. The review, due by April, will dust off options considered and discarded by the previous Govt, including a surface road link. Some properties along the route have already been purchased. He is concerned the risk with Waterview is if traffic volumes prove greater than expected there is no easy way to make the tunnels bigger down the track. “There’s a danger it could be full from day one.”
Limited funding options. Officials have recommended the project be funded though a PPP procurement process, saying a concession agreement is more likely to provide value for money. The Govt is hamstrung in other funding options, according to the Business Case study by Treasury and MOT. The existing Auckland regional fuel tax is currently set at 9.5c a litre, with a ceiling of 10c. A regional property tax would force rates up by 20%, or $460 per property per annum. A $2 toll, while supporting up to $410m of debt, could scare off enough drivers to cause a loss of economic benefits of $393m.
Low priority for ARTA. Officials have also raised doubts about funding via NZ Transport Agency and the Auckland Regional Transport Authority, saying Waterview doesn’t rate as a priority project within their existing plans. In any event, the business case for rushing the project is weak, according to the study. Meeting the original 2015 deadline would add $62m to the cost and is probably unachievable now. Aust experience suggests a mid-2016 deadline is achievable. The benefit/cost ratio is estimated at 1.15, or $1.15 for every dollar spent. If delayed until 2025, when traffic flows would be vastly heavier, the ratio climbs to 1.7.
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