Government pulls pin on road projects in face of $6 billion dollar budget blowout
A climate-conscious and increasingly cost-conscious Government has cancelled some of its biggest promised highway projects – even where groundwork has already begun.
It has defunded or indefinitely suspended funding for Whangārei to Port Marsden, Mill Rd, Papakura to Drury South, and Te Puna to Ōmokoroa, in the Bay of Plenty. The cancellations come despite increased investment in the NZ Upgrade Programme.
The Government says that is to support New Zealand’s economic recovery, but also acknowledges the main driver is fast-rising construction costs.
READ MORE: * Jonathan Milne: New rail and bike bridge, at expense of highways * Graphic breakdown of NZ Upgrade Programme funding
Ministers said more than two-thirds of the projects would proceed as announced, despite the cost increases due to Covid. Others would be modified.
“NZ Upgrade Programme is already supporting over 1000 jobs with 13 projects underway, helping to secure our economic recovery,” said Grant Robertson, the Minister of Infrastructure.
“Covid-19 has increased construction costs around the world, and we’ve done the work upfront to understand the impact on NZ Upgrade Programme projects which were announced pre-pandemic.
“Fully funding the new estimated costs for every project would have cost up to $6 billion extra on top of the original $6.8 billion, so instead we’ve taken a balanced approach with a mix of additional investment and a handful of projects being re-scoped while also keeping a lid on debt.
"We are using an additional $1.9 billion set aside in the multi-year capital allowance to support our targeted investments – this is being used so we can keep delivering projects and creating jobs across the country to support our recovery,” Robertson said.
There was dismay and disbelief from some business leaders and local communities.
Whangārei Mayor Sheryl Mai said she was shocked at news that the four-lane highway to Marsden Point had been struck off. Just last week on May 25, councillors had met with the Transport Minister. "We asked him directly whether this project was going ahead. He confirmed then that funding was there," she said.
“There will be benefits to our region with investment in rail infrastructure for freight, and that is good news. However the road provides the connectivity that all people use – locals, visitors, and freight transporters," she said.
“To ask for our input, give us every reason to believe we have been heard, and then pull the rug out from under us with no warning is another thing altogether.
“We feel that he misled us, which is disappointing."
- In Northland, the Whangārei to Port Marsden highway has been cancelled after the costings soared from $692m to $1.3 billion. There will, however, be a new rail link to Northport and targeted major safety upgrades to State Highway 1. Officials had been consulting the local community over the past few months, as they sought to lock down the new highway corridor.
- In South Auckland, the widening of the southern motorway to six lanes from Papakura to Drury South has been indefinitely deferred (costings up from $423m to $510m). But the Government will build two new rail stations in Drury and one at Paerata, as well as electrifying the commuter railway from Papakura to Pukekohe, and building a third main rail line from Wiri to Quay Park.
- Nearby in South Auckland, the construction of the Mill Rd highway from Manukau to Drury is off, after costings ballooned from $1.354b to $3.5b. Instead the existing Mill Rd will be upgraded to two lanes between Alfriston and Papakura. Ground surveys, which began last year, will not be called off.
- And in Bay of Plenty, phase 2 of the Takitimu North highway, a 7km stretch from Te Puna to Ōmokoroa has been deferred indefinitely (costings up from $455m to $535m) though Waka Kotahi will continue work to protect the route for the future. The first state – 6.8km from Tauranga to Te Puna – is to start construction later this year, subject to property negotiations.
A full breakdown of projects is below. The biggest confirmed roading project is $1.5b for the Ōtaki to North of Levin highway. Other road projects that are now confirmed and funded include $830m for the Penlink highway link between State Highway 1 and Whangaparaoa Peninsula, the $655m first stage of Tauranga's Takitimu North highway, $420m on the Melling interchange in Lower Hutt, $115m for Queenstown roads and $300m for Canterbury roads that is due to start construction this month.
Confirmed rail projects include $318m to build a third main rail line from Wiri to Quay Park, $375m on rail electrification from Papakura to Pukekohe, $88m on the Wellington Railway Station safety improvements, and $156m on Wairarapa rail upgrades.
And as reported this morning, the Government is to spend $785m on a new cycle and pedestrian bridge across Waitemata Harbour and linking the cycleway up to Auckland's North Shore.
Business leaders are dubious. Auckland Business Forum Chair Michael Barnett said the fact the Government had been forced into cutbacks because its initial cost estimates for the Upgrade projects were so far wrong was deeply concerning.
No explanation had been given for the decision to scrap the Whangārei-Port Marsden highway project, in favour of upgrading the North Auckland rail line, Barnett said.
“Whangarei-Port Marsden was critically important a year or so ago, but now it doesn’t make the cut. What’s changed?
"What impacts will this have on the safety, efficiency and resilience of Northland’s road network? Where’s the case to support the massive increase in investment in the rail line? We need answers.”
And Barnett questioned the justification for spending $785m on a new stand-alone harbour bridge that would support only a tiny number of users.
ACT’s Transport spokesperson Simon Court called on Transport Minister Michael Wood to release the cost-benefit analysis for the walking/cycling bridge. “This is essentially Sky Path on steroids, driven by climate activists. Taxpayers deserve to know whether this stacks up."
But Wood said in light of the increased costs and climate commitments, it had been important to take another look at the programme.
“Recognising the need to decarbonise our transport system, we’re rebalancing the package to increase investment in rail, public transport and walking and cycling," he argued.
“If we had proceeded with Mill Road as originally scoped, it would have cost up to $3.5 billion and at peak produced six tonnes of CO2 emissions a day. Instead, we’ve focused on delivering important safety improvements to Mill Road, upgrades to SH1 and rail, and new rail stations connected to public transport, walking and cycling infrastructure. This rebalanced package helps manage debt, reduces emissions and supports housing growth."
His commitment to the Whangārei councillors, last week, had been to keeping the same level of investment in the region and upgrades along the route.
“The Marsden Point rail spur will be a strategic investment in Northland’s future prosperity, getting heavy trucks off the road to make the highway safer, and reduce emissions. We know safety on SH1 is a concern for locals, so there will be targeted safety upgrades, including median barriers, along the route," Wood said.
“Meeting our commitment to decarbonising transport means that we have to start doing things differently. This re-balanced NZ Upgrade Programme package shows our intent, and to guide future investment I intend to amend the Government Policy Statement on land transport to provide Waka Kotahi with the clarity it needs to make investments consistent with our country’s decarbonisation goals."
