$60m on highway: not a sod turned

20:33, Feb 28 2013
Transmission Gully route
The proposed Transmission Gully route.

More than $60 million of taxpayers' money could be spent on Wellington's Transmission Gully highway before a sod has even been turned.

The Government has already spent $33.7m on the planned 27-kilometre, four-lane link between Linden and McKays Crossing north of Wellington, since July 2006. Now it has emerged that it is planning to spend another $30.7m on the contracting process for the public-private partnership that will fund it.

The $33.7m already spent has gone on business cases, planning, investigation and design, as well as gaining resource consent.

Figures obtained by The Dominion Post under the Official Information Act show about $2.5m of that was costs associated with the board of inquiry hearings used to fast-track consents.

Transport Minister Gerry Brownlee revealed the latest $30m figure during questioning by Greens transport spokeswoman Julie Anne Genter in Parliament yesterday. "The preliminary stages of any large motorway project like that is going to be an expensive process. That's always been the case," Mr Brownlee said.

"There is a certain amount of cost involved up front. Sadly, an enormous amount seems to get paid to traffic consultants."


Ms Genter said taxpayers should be stunned by the figures.

"Public-private partnerships are supposedly about getting value for money but, once again, we see they are in fact cash cows for financiers and lawyers, while taxpayers foot the bill.

"The $30m for contracting the PPP is just the tip of the iceberg."

Under the deal, a private consortium would be responsible for financing, designing, building, maintaining and operating Transmission Gully for up to 25 years.

The first annual payments to the contractor - likely to be in the order of $120m to $130m a year - would be made after the road is completed.

Ms Genter also grilled Mr Brownlee in the House over the Labour Party's claim that financing the deal that way would add $2.4 billion in interest payments over its lifetime, roughly trebling the total project cost to $3.4b.

Mr Brownlee said Labour's maths was "like trying to compare apples with pineapples".

"You cannot compare the one-off construction costs with no-maintenance costs by adding up 25 years of financing repayments and operational costs for a PPP arrangement and then say it trebles the cost . . . it doesn't work."

Ms Genter said that if the Government persisted with building Transmission Gully - which she said would generate only $360m to $500m of benefits - then other "vital" projects, such as Auckland's city rail link, would not get built.

Iain Lees-Galloway, who took over as Labour transport spokesman this week, said the financing option for Transmission Gully was unnecessarily expensive for taxpayers. "The PPP model they [the Government] have used that front-loads all the costs is the source of the extra expense. Another way to do it would be to build the road as a fully public project."

A short list of PPP consortiums is expected to be identified by April and, subject to final borrowing approval, a contract will be awarded by mid-2014.

Construction should be finished by the end of 2020.

The Dominion Post