Transmission Gully has made a lot of headlines this year for budget blowouts but as we learnt on Saturday, it’s far from the only project. Stuff’s Thomas Coughlan reports:
A handful of roads have managed to go $1.1 billion over budget, forcing the Government’s transport agency to make tough choices to make its books balance.
It comes as a group has lodged a judicial review to challenge decisions around transport spending, saying that Waka Kotahi NZ Transport Agency had disregarded direct orders from the Government to pivot transport away from roads and towards cycling and public transport.
NZTA gets about $4b a year from fuel taxes and road user charges to spend all over the transport system, building and fixing roads, cycleways, and subsidising public transport.
But in between 2017 and 2020, $1.1b of its funding was ploughed into plugging cost overruns on 17 road projects that went wildly over budget.
That’s the equivalent of the entire annual budget for state highway improvements.
The worst offenders were the Wellington Roads of National significance, which went $381m over budget, and a series of Auckland roads that went $352m over budget.
The cost overruns were revealed in written Parliamentary questions to Green party transport spokesperson and former associate Transport Minister Julie Anne Genter.
A whole year’s state highway funding over budget is deeply concerning, especially as some of them are quite considerably over budget as shown below.
It’s not clear if the figures above also include the cost increases for Transmission Gully and Puhoi to Warkworth that came about as a result of COVID delays as both projects have had other cost increases announced this year for greater than these figures. It’s also not if the Northern Corridor Improvements line also includes cost increases to the busway – which is being funded from a different activity class, which I’ll get to shortly.
I haven’t been able to find the initial costs of all projects and sometimes it’s a little difficult to tell about the timing of the increases e.g. did the increase occur before it got to construction. However, as a rough take on what I can find it suggests the costs of these projects have increased by about 25% with many higher and one project nearly one and a half times more expensive.
|Region||Project Change||Original Cost||Cost Increase||Increase %|
|Auckland||Northern Corridor Improvements (NCI)||$700,000,000||$147,325,793||21%|
|SH1 Dome Valley Safety Improvements||$35,000,000||$28,246,680||81%|
|SH1 Puhoi to Warkworth RoNS Detailed Design and Construction||$710,000,000||85,158,000||12%|
|SH16 Brigham Creek to Waimauku Safety Enhancements||$53,000,000||78,045,229||147%|
|SH20A to Airport||14,223,738|
|Bay of Plenty||W2T Waihi to Omokoroa (Safer Corridor)||$101,000,000||98,714,730||98%|
|Canterbury||Weigh Right Glasnevin||15,041,284|
|Manawatu/Whanganui||Te Ahu a Turanga; Manawatu Tararua Highway||$620,000,000||47,000,000||8%|
|Marlborough||New Ōpaoa River Bridge||$22,700,000||14,363,026||63%|
|Northland||Minor improvements 2015-18||5,485,053|
|Otago||SH6A Corridor Improvements||1,500,001|
|Stanley St Corridor Improvements(Queenstown Town Centre DBC)||1,720,001|
|Taranaki||SH3 Mt Messenger Bypass||$200,000,000||$96,926,143||48%|
|Waikato||SH1 Wex Hamilton Section||$607,000,000||$113,152,217||19%|
|Wellington||Wellington RoNS (5) – Transmission Gully||$850,000,000||195,555,600||23%|
|Wellington RoNS (6) – SH1 Mackays to Peka Peka Expressway||$630,000,000||75,522,869||12%|
|Wellington RoNS (7) – SH1 Peka Peka to Otaki Expressway||$330,000,000||111,601,664||34%|
We don’t know the reasons for why costs have increased by so much but is similar in scale to that seen on the City Rail Link which was a combination of additional future proofing, allowing for greater contingency and construction cost inflation. For these roads the latter is being targeted.
Genter said she would propose the Transport and Infrastructure select committee investigate construction cost inflation “so we can get a good cross-party view of the problem and potential solutions.”
“The high cost of delivering transport infrastructure in New Zealand, whether road, busway or rail, is not good for anyone. Especially when we need to urgently invest significantly in infrastructure to decarbonise our transport system,” Genter said.
National’s transport spokesperson Michael Woodhouse said his party’s caucus would have to decide whether it would support a select committee inquiry, but the “eye-watering” cost overruns needed an examination.
“Whatever form that takes it is absolutely appropriate that we examine whether that represents value for the taxpayer,” Woodhouse said.
Woodhouse seems almost conflicted in his comments. Like he wants something to attack the government with but at the same time many of the projects are ones started when National was last in government.
Perhaps as well as looking at construction costs, we should also look into Waka Kotahi’s processes given these large cost blowouts are clearly not isolated incidents. It’s also notable because Waka Kotahi seem to be putting a lot of pressure on local authorities to business case projects to death to ensure every I is dotted and T crossed as well as to control costs and yet they don’t apply the same criteria and stringency to themselves.
As for where they’re getting the funding from the cover this, they’re raiding the budgets of other modes
“Waka Kotahi is able to move funding between NLTP activity classes provided the funding allocations remain with the bottom and top of the three-year funding ranges set by the GPS for each activity class,” the spokesperson said.
“The funding range for State Highway improvements for 2018-21 is between $3b and $3.85b.
“We are currently tracking to finish the three-year funding period near the top of that range,” they said.
With projects like the Northern Corridor Improvements, Waka Kotahi shifted the approximate $250 million cost out of the State Highway budget and into the Public Transport budget, preventing money being available for more services. At the same time:
Former transport minister Phil Twyford said a maximum of $1.15b should be spent on state highway improvements in 2019/20 and 2020/21.
But, in an answer to a written Parliamentary question, Transport Minister Michael Wood said that NZTA would in fact be spending $1.296b and $1.483b on state highway improvements in 2019/20 and 2020/21 – a full $479 million more than the top end of the Government window.
The Government said NZTA should spend a minimum of $80m and $95m on walking and cycling improvements in 2019/20 and 2020/21.
NZTA actually plans to spend about half that – just $45.5m and $54m in each of those years.
Despite all their multimodal rhetoric, this is all feeling very much like the highway first Waka Kotahi of old.
Finally, as noted in the article, Waka Kotahi are being challenged in the courts for not following the Government Policy Statement. This isn’t directly related to the cost blowouts and primarily in relation to a project in Nelson however given what’s happening above, it seems the timing is useful.