CBD Rail Tunnel: where to from here?

As I noted in yesterday’s post, some big questions are starting to be asked about what infrastructure projects will, and will not, proceed over the next few years as a result of the Christchurch earthquake. In particular, with so much central government funding having to be dedicated to rebuilding infrastructure in and around Christchurch, the ability of the government to contribute to funding infrastructure projects over the next few years has obviously been reduced. This is picked up on in an article in today’s Herald – with specific reference to the Auckland CBD rail tunnel:

Some of New Zealand’s largest infrastructure projects – including Auckland’s downtown rail loop and the Puhoi “holiday highway” project – face delay or cancellation as money and resources are diverted to Christchurch….

…That could delay some projects on which work has started, and mean the axe for some projects such as Auckland’s downtown rail loop which the Government has not yet accepted.

Mr English also suggested the Government was looking at the partial sale of state-owned power companies to free cash for Christchurch’s recovery.

A Government source last night said Auckland’s $2 billion rail loop now had only a remote chance of being built.

“That was a situation where the Government said it didn’t have any money sitting around for that, and that’s probably even more so now,” the source said.

The Herald understands the quake will not affect the $1 billion electrification of Auckland’s rail network or other passenger rail projects in Auckland or Wellington.

I didn’t actually see the government chipping in much, if anything, out of its general fund for the CBD Rail Tunnel in any case – but it seems now the bar is even higher when it comes to central government involvement: notwithstanding Bill English’s comment yesterday that it might be the timing of various projects that requires greatest consideration of amending, rather than whether they go ahead at all.

As I noted in yesterday’s post, I think care does need to be taken in terms of ‘turning off the tap’ on Auckland too much. This is picked up by Mike Lee later in the article:

Transport committee chairman Mike Lee said a recovering Canterbury and the country would not be served by having “a weak stagnating Auckland”.

“Auckland must stay strong, Auckland must stay purposeful, Auckland must advance,” he said.

“I think there is a compelling need to help Canterbury within our means, but that doesn’t mean we down tools and stagnate.

“We have to keep marching on, but there has to be national leadership – I believe there has to be a national levy that every New Zealander, and not just Auckland, will pay.

Mr Lee said he was concerned that people might be using the Christchurch earthquake “to reinforce their own prejudices which we have seen on display for so many months” after the release of the business case and its compelling arguments for the rail link.

There will actually be increased pressure on Auckland over the next few years to ‘raise its game’ when it comes to economic performance. There is also likely to be some increased pressure on infrastructure if people shift away from Christchurch permanently (it seems reasonably likely a number would come to Auckland).

If we look at the CBD Tunnel specifically, the business case for the project suggested that a completion date of 2021 was reasonable, and probably necessary to avoid the CBD stagnating and/or the city’s route becoming completely choked with cars and buses. A completion date of 2021 is also laid out in the Regional Land Transport Strategy. Len Brown had wanted to complete the tunnel earlier than that, but those hopes may now need a reality check.

If we take 2021 as our ‘completion year’, and work back six years of construction, we find that 2015 is the year we need to start building the project. That’s four years from now. I’m not sure what the timeline for fixing up Christchurch’s infrastructure will be (and I can certainly appreciate that it will be measured in years), but one would hope that four years down the track the bulk of the infrastructure work (which is the stuff the government will need to pay for) will be completed.

Furthermore, if there’s some sort of agreement between Auckland Council and central government to split the cost of the CBD Tunnel “50/50”, theoretically Auckland Council could pay for the first three years of construction, with central government not having to contribute until 2018. The business case estimated the timing of expenditure required for the project – this is outlined below: I think what’s really important at the moment is that we continue with the steps that need to be taken to making the CBD Rail Tunnel a reality before we start spending big bucks. Things like getting the designation sorted out, undertaken the detailed design, undertaking any smallish enabling works that are necessary and so forth. All of this is critical to the project. The business case outlined a possible future timeframe for the project:

The planning workstream should still continue as planned, because that’s a cost to Auckland Council and not a cost to the government. Furthermore, compared to actually building the thing it’s a relatively low cost. We can do all of that, then see where we are in 2015 in terms of Christchurch’s recovery, what our other infrastructure priorities are, what the price of petrol is and so forth – and then make a final decision about funding construction at, or around, that point. The project would still not really be delayed from current timeframes.

The potential stumbling block in this approach is if the government is very determined to stuff things around. While Auckland Transport has led the work on this project so far, my understanding is that KiwiRail would be the likely agency to actually designate the rail route: because they own the rail corridors throughout NZ. If Steven Joyce really doesn’t want the project to shift ahead, I am guessing that he could ban KiwiRail from lodging the notice of requirement (the application to designate) – which would make things a bit more difficult. I suppose in that situation, perhaps Auckland Transport could step in to take KiwiRail’s place: completely excluding central government from the project at this point.

Overall, I think it’s important to keep in mind that we can still get on with advancing the CBD Rail Tunnel project, even if we haven’t quite yet figured out how to pay for it. There’s a lot of planning, design, consultation, land-purchase and other work that needs to take place before we can put our tunnelling machines in the ground. Most of that work is relatively inexpensive – so Auckland Council should make it happen, regardless of whether the government’s onside at this particular point in time.

After all, we may well have a different government by the time it comes around to finding money for the project.

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