Yesterday the government announced what would be funded as part of their massive $12b infrastructure spend up, that they’ve called “The New Zealand Upgrade Programme“.
As previously indicated, the package includes $6.8 billion on a variety of transport projects and we now know what those are – I managed to correctly pick many of them in my post yesterday.
The Government’s programme of new investments in roads and rail will help future proof the economy, get our cities moving, and make our roads safer.
Transport Minister Phil Twyford says these important projects will speed up travel times, ease congestion and make our roads safer by taking trucks off them and moving more freight to rail.
“The New Zealand Upgrade Programme reflects the Government’s balanced transport policy with $6.8 billion being invested across road, rail, public transport and walking and cycling infrastructure across New Zealand.
“This programme brings forward and funds significant projects, allowing them to be built sooner. The significant package is designed to give the construction industry certainty and confidence about future work.
“Many of these projects have been talked about for a long time, but we are the first Government to fund them. We have also made important changes.
“We must look to the future as we design this critical infrastructure. The projects have also been redesigned and future proofed to include provision for public transport and walking and cycling.
“We can do this and bring these projects forward because of our careful management of the Government’s books. It means New Zealanders can be assured they will be built as soon as possible.
“Our decision to fund these projects by taking advantage of historically low long-term interest rates means this Programme will free up funding in the National Land Transport Fund and Auckland transport budgets.”
That last line is actually quite important, by separately funding these projects many have been taken out of the queue for traditional funding and at the announcement Minister Twyford told me this equated to freeing up $1.8 billion from the NLTF. In other words, that is $1.8 billion that can be reallocated to other projects. I would hope that given the road heavy nature of this announcement, that freed up funding goes primarily towards walking, cycling and public transport projects.
One thing that stands out to me about the announcement is just the size of some of the numbers involved. Many of these projects have increased in cost substantially and I wonder how much of this is the result of construction cost inflation even though contractors were claiming they needed more work. For example it was only a few years ago that a $400 million project was claimed as “the biggest transport project NZ had ever seen” yet now that would be at the lower end of the scale. This is something I’ll look at more in a separate post.
Before jumping into the specific projects, I thought I’d break it down a few different ways.
Spending per region
Auckland is getting the bulk of the spending with just over half coming the city’s way. When you add in Northland, Waikato and the Bay of Plenty, the upper North Island (UNI) gets over three quarters of the total investment. As Todd Niall pointed out yesterday, Auckland deserves that given the huge growth we’re experiencing, and similar arguments could be applied to the rest of the UNI.
However if you assess the spending based on the number of residents each region has, Auckland isn’t even in the top three. In that ranking Northland comes out on top with $3,667 per person, Bay of Plenty is second $2,878 per person and Wellington third with $2,548 per person. It’s only after that where Auckland appears at $2,119 per person but that is still far ahead of the other regions on the list (and those not making an appearance.).
Spending by project type
When looking at the types of projects being built, just over $5 billion of the spending, or 75%, is going towards a handful of large roading projects – although we’d expect they’d all include upgrades to at least walking and cycling too. There was also suggestions that many of them could include transit and/or freight priority lanes.
We then have $1.1 billion going towards rail projects, $360 million towards walking and cycling and $155 million towards other projects which appear fairly multi-modal, including things such as bus priority.
With that done, let’s look at the projects.The details come from here and formed part of a booklet produced for the announcement.
SH1 Whangārei to Port Marsden – safer connections
22km – $692 million
I expected this project to be announced but it appears construction will be some time off with it not starting till 2023/24 with full completion around 2027/28. I also understand there could to be a further announcement related to it today.
Interestingly almost all of the projects are located in South Auckland which in part is a reflection of the growth that’s occurring. In addition, with the first two projects on the list it’s not clear if it being included in the announcement means the NZTA are taking them over as a state highway projects.
7km – $411 million
Positively they’ve decided to go with the sensible Penlink option with it being a two-lane tolled road. This is one of the projects that helps highlight how much costs are increasing as just a year or two ago this option was costed at about $280 million. Construction on Penlink is now scheduled to start in late 2021 with it opening in late 2025. Disappointingly there was no mention of bus lanes on SH1 north of Albany like ATAP suggests are needed.
21.5km – $1.354 billion
Mill Rd is the biggest single project on the list and the government are saying they’ll build the entire corridor all the way from Manukau to the motorway again at Drury. The first section from Manukau to Alfriston was consented by AT a few years ago but there will be much design and consenting work to do on the section south of there, including working out how it bowls through a bunch of quiet suburban streets in Papakura. Construction on the first stages is expected to start in late 2022 with the full project complete in 2027/28.
SH1 Papakura to Drury South
6km – $423 million
The existing motorway will be 3-laned from Papakura to south of Drury, where the Mill Rd corridor will connect to it via an interchange. Construction is expected to start later this year and take till late 2025 to complete.
5km – $360 million
This is the name for the combined Skypath and Seapath projects which will be built. Like all the projects, this has increased in cost a lot but it’s worth remembering that one of the reasons for this is after the NZTA took the project over, they’ve considerably upgraded the design. Construction will start early next year with the project completed in 2023/24.
Wiri to Quay Park
As mentioned yesterday, this actually comprises a few different projects, such as improving access to the port, improving the Westfield Junction and the third main. I suspect where possible we’ll start to see future proofing for a forth main too. Construction starts later this year and will take till mid to late 2024 to complete, likely just in time for the CRL to open.
Papakura to Pukekohe Electrification
19km – $371 million
This is another of those projects we’ve seen increase in cost a lot in recent years, especially considering that just a few years ago the rest of the network was electrified for for about $500 million. I understand the project includes adding a third traction feed which is likely needed for post-CRL operations anyway. Like with Wiri to Quay Park, construction starts later this year and will take till 2023/24 to complete.
Two new stations will be built at Drury, one east of the motorway where the new town centre is expected to be built and one to the west of the motorway. I’m not sure why the western station has been prioritised ahead of one at Paerata where a lot of housing is going in closer to the rail line sooner. I’m also not sure why these stations are expected to cost so much. Even the Puhunui station which is likely to be bigger and grander than these stations will be is only costing $60 million and is located on a section of track that is busier. Construction of these is slated to start in 2023 and again be completed by late 2024.
Cambridge to Piarere wasn’t included in the funding but a roundabout to improve the intersection that would be at the end of it is. Construction is due to start in 2022 and be finished by late 2024
Bay of Plenty
Tauranga Northern Link
6.8km – $478 million
As expected the TNL will be built and will be built as a 4-lane road – although they say “One lane in each direction will be used to prioritise public transport, vehicles carrying multiple passengers and/or freight“.The project will start construction later this year and be completed in late 2025.
Te Puna to Ōmokora
7km – $455 million
Perhaps one of the more surprising of the announcements will see the TNL motorway being extended to Ōmokoroa (before the TNL motorway is even finished). Like about it talks about including priority lanes. This is due to start in late 2023 and be finished in late 2027.
SH58 safety improvements
8.5km -$59 million
A number of safety improvements will be made to the road. Construction will start in the middle of the year and be completed by mid-2023.
Construction is due to start in late 2022 and be completed in 2026.
Ōtaki to north of Levin
24km – $817 million
As described yesterday this is going to be a big, expensive piece of road. Construction isn’t expected to start till 2025 and take till 2029 to be completed.
Wellington rail upgrades
This is a series of projects across the network and includes a number improvements to the Wairarapa services. It will also see the Capital Connection carriages refurbished. Construction starts this year with a phased completion till 2025.
There are a handful of roads that will get upgrades as part of the funding. Some of the focus of some projects is about adding bus priority. Construction starts in late 2022 and completes in 2024-25.
A number of rural safety improvements. Construction starts in 2021 and is finished in 2022-23.
This includes a number of projects including bus priority on SH6 and SH6A. Of all the regions, this is probably the one with the highest proportion of public transport as well as walking and cycling projects. Construction starts in 2021-22 and is completed by 2023-24.
That completes the list of projects. What’s notable is that some are not due to even start construction for many years and are only at the start of the design and consenting phases. Hardly ‘shovel ready’ like these projects were said to be. I pulled together a quick chart showing when construction of each of these will start. They will have some level of work occurring prior to that point.
In 2024 when a large number of projects come to an end, are we going to see similar calls for construction industry stimulus?