When transparency might stop a bad project

Six months ago I lodged a complaint with the Ombudsman, appealing a refusal by the New Zealand Transport Agency (NZTA) and the Ministry of Transport (MoT) to release information related to the Warkworth to Te Hana Road of National Significance project.

This week I received the Ombudsman’s final opinion on the matter. They agree with NZTA and the MOT that this information should be immune from any public scrutiny, until after decisions are made.

“Nothing to see here, move along.”

A disappointing response. But it came with a startling bonus. Hiding in plain sight, right in the middle of the reasoning for why they say they can’t tell us anything, is an implication of what we’ve long suspected:

This project is such a dog – in terms of benefits compared to costs – that saying so out loud would be the death of it.

For further coverage of this breaking story, see: Thomas Coughlan in the NZ Herald and Justin Hu from 1news.

What was I seeking, and what is a Benefit Cost Ratio?

All I wanted to know was the rough cost envelope for the project, to confirm what can be deduced from public information so far, and to allow accurate discussions of this project in the public sphere. I even offered a middle ground – no need to specify an exact dollar cost, a potential range would be fine.

I also asked for – and fully expected to receive – the project’s Benefit Cost Ratio (BCR). The BCR is of the key measures of viability of a project. It tells us nothing about the price tag, and as such has no commercial value. It simply measures the relative value to us all of a proposed investment.

As NZTA itself says, a BCR “enables different projects to be compared with each other” and is used (along with other tools) “to assess proposed investments.”

It’s a bit like the basic nutritional info of a given food. It tells you, per dollar (or per gram), how good is this for you, on the whole, which allows you to confirm whether it’s worth buying in general, and lets you compare it with other options.

Basically, it tells us how much value we’ll get back for every dollar we put in. Here’s an example, a local bike project with a BCR of 3.4, meaning for every dollar invested, society gains $3.40 of value.

Auckland Transport is looking at restarting the Henderson bike connections: a $20.5m project, with a BCR of 3.4, so an estimated lifetime benefit to the community of $69.5m. On the face of it, a solid investment.

Why would the BCR be such a state secret?

In the Ombudsman’s reply, they say NZTA opposed releasing the Benefit Cost Ratio on these grounds:

NZTA’s position as the procuring entity remains that release of the BCR information at this time would unfairly disadvantage the commercial activities of the Crown during the PPP procurement process, and undermine the ability to maintain value for money for the Crown.

This raises the question: how would sharing the BCR “unfairly disadvantage the commercial activities of the Crown during the PPP procurement process”? Either this project clears the basic bar for investment, giving the government confidence to go to market… or it doesn’t.

But wait, there’s more! NZTA and MoT then appear to say that the very act of releasing the BCR would risk the government not going forward with the project at all:

Releasing the BCR information during this process would be likely unreasonably to prejudice those commercial conversations with the respective bidders. This could create uncertainty amongst respondents if it brings into question the Government’s decision to proceed to procurement, and as such could undermine the competition amongst bidders and/or quality of bids – for example, if they no longer consider it is worth committing time and resource to as they believe a decision may be taken to no longer proceed with the project.

Let’s sit with this for a moment.

Logically, the only reason a private bidder might be concerned that the government might not proceed to procurement… is if the value of the project was so bad that the government couldn’t justify proceeding. Right?

I’m open to other explanations – but what other explanation is there?

We already knew the BCR was bad

Back in 2019, the BCR of Warkworth to Te Hana was already less than 1. As in, for every dollar invested, you’d not even get back a dollar in societal benefits. Barring  extraordinary circumstances, a BCR of less than 1 basically means the game’s not worth the candle.

And this was before the huge inflation of construction costs. So all signs now point to the current BCR for this project being catastrophically lower than that, given the project has significantly increased in cost.

But NZTA and MoT are saying that we, the public, don’t need to worry our pretty little heads about this – while they run full speed ahead, damn the torpedoes, towards locking in a contract to build this thing.

What did NZTA and the MoT say to the Ombudsman?

That’s not a run-up to a joke, it’s a genuine question – if you’re as baffled as I am by the Ombudsman’s conclusion. The second point made in the Ombudsman’s reply to me provides a clue as to what NZTA may have told them:

Release of a BCR infers the internal rate of return that is the perceived profitability (or marginal value for the Crown), and this therefore weakens the Crown’s commercial value for money as the private sector could see opportunities to increase their return at the expense of the Crown’s value.

Frankly, I find NZTA’s reasoning here absolutely bonkers, to use a technical term. To repeat: in the transport investment realm, Benefit Cost Ratios are not some absolute commercial metric of ‘profit’ – they’re just a ratio that weighs the benefits compared to the cost.

They’re used to compare options to find a solution. As a yardstick to see if a solution is even worth it, and whether a given option is good value for money.

So there is great public interest in knowing the BCR of any project, especially one on this scale. It’s a clear way of confirming whether an investment is prudent, or unjustifiable. A helpful check – not just for us, but for any government aiming to secure social license, and to be seen to be well above-board in its decision-making.

And if a given project has a BCR of less than one – i.e. it will generate less value than it costs to build – well, that’s a perfect example of why BCRs should be made public.

Moreover, I’m flummoxed by the claim that the private sector might use BCRs to increase their return. The private sector will already know the BCR. They have substantial knowledge of upcoming projects and the expertise to figure out the BCR – assuming they haven’t already been provided that information as part of the process.

So why hide the BCR?

If the BCR is actually good, say over 3, then releasing it is a good way to justify the project, right? And prove my concerns wrong?

Or is NZTA afraid that the BCR they have is unjustifiable, either because it’s so low their chosen solution doesn’t make sense, or because they are cooking the numbers to get what they have?

The only practical benefit of hiding the BCR is to remove any public transparency regarding the value of the project, and to obscure how NZTA operates as an organisation.

The bigger the investment, the more transparency we need… unless it’s a Public Private Partnership apparently

Warkworth to Te Hana are set to be delivered as Public Private Partnerships (PPP), an arrangement that front-loads the financing onto a private partner, leaving the country to pay it off over a set term. Like any hire-purchase agreement, or a mortgage, you wind up paying a lot more than if you bought it out of your own pocket to start with.

Yet it seems NZTA and the MOT believe the PPP context means the whole process should be extra secret, in order to secure a good deal:

[T]he … costings in the Investment Case represent the expected costs of traditional procurement and would have the greatest potential to impact ongoing negotiations. For example, a $10m difference in availability payments equates to $250m over the life of the contract, which can be quite impactful. On balance, for this and the reasons outlined above, we considered there was good reason to withhold the information until Financial Close, at which point the information could be released.

But here’s the thing. Compared to a standard procurement, a  PPP effectively triples the overall cost to the public across time (based on other PPPs such as Transmission Gully, or Warkworth to Puhoi as examples). That is due to the way annual availability payments work.

Traditional procurement fronts the cost for the government (and the public), whereas PPPs spread them out over the terms of the deal – but these payments stay the same.

Which means overall, the lifetime cost is significantly higher. Couple that with private financing being more expensive than the public, and the cost skyrockets.

It’s kind of like a payday loan, but for billion-dollar projects funded from public money.

An example of a PPP payment profile

What this means is that this one road in Northland will potentially swallow $12bn of public money over a generation.

(And yes: PPPs also come with all sorts of other issues around speed and quality of delivery, and long-term maintenance and repair, but that’s a whole other story.)

Going by current numbers, this would suck up a huge chunk of discretionary funding from the National Land Transport Fund (NLTF) from now to the 2050s.

“Discretionary funding,” as the name suggests, is money you can choose to spend as needs arise. It’s your wiggle-room. Which is important, because there’s an endless stream of competing needs all over the motu, and extreme weather events are taking a rising toll on our transport networks. Plus, the NLTF (made up of fuel taxes + road user charges) is already a shrinking pot.

So if the government signs this contract, it is committing us in advance to spending a generation’s worth of rainy-day transport funding on one stretch of motorway that will end in the middle of the countryside, Te Hana (pop. 120).

(And no, tolling it wouldn’t even touch the sides – if anything, it’d reduce usage.)

So we really deserve to know if this project stacks up. Which is why I asked for the BCR.

What’s the official point of the Official Information Act?

My original request in October 2025 was simple. I just wanted to understand the thinking behind the $40-50 billion Roads of National Significance programme. Yet the Ministry of Transport and NZTA withheld even the titles of documents.

So to the Ombudsman I went. After my complaint, certain information was released, including about the $22bn four-lane motorway to Whāngarei. However, other information remained redacted, regarding what’s projected to be the most expensive new road yet built in New Zealand, the $4bn section between Warkworth and Te Hana, which is itself just one stage of a $22bn motorway all the way to Whāngarei.

Hence my complaint remained, and hence the final response this week.

I still do not understand how the Official Information Act does not enable the release of basic, non-commercial information regarding Warkworth to Te Hana.

My request was made on the grounds of public interest. If the most expensive roading project ever agreed to in New Zealand doesn’t meet the threshold of public interest… what does?

And while the goal of the Official Information Act is laudable, its shortcomings become apparent when organisations are operating in partial faith, or outright bad faith.

Late last year Te Waihanga, the NZ Infrastructure Commission has called for more transparency in large projects. That’s backed up by international studies such as the Transit Cost Project, which argues that itemised costings of major infrastructure should be transparent and public. And in just the last week we’ve seen similar calls for clarity around the almost-finished CRL – a project that’s been far, far more transparent than Warkworth to Te Hana.

The point is, whatever the merits of individual projects, there’s public consensus that we need to be able to have full confidence in the process.

Warkworth to Te Hana is the perfect example of why transparency is essential. It’s a low-value, over-scoped, gold-plated project – and the organisation in charge of procuring and delivering it is refusing to publicly justify why they’ve prioritised it, and whether the numbers back it up.

The key conclusion to be drawn from this whole process is that the reason NZTA and the MoT have dug in to the extent they have, is because – as they seem to have admitted in their correspondence to the Ombudsman – they know this project doesn’t wash its own face.

And this is also why we suck at doing big infrastructure projects in New Zealand. We will never get better at it if the zone is flooded with outdated numbers and unscrutinisable claims from agencies, politicians and lobbyists, while billions of dollars of public money are quietly funnelled into bad projects with zero opportunity for public oversight.

What next?

Currently, the government appears bent on signing a contract for this ridiculous road as fast as it can. Potentially, within the next month. This would lock us into a gold-plated zombie motorway project that will lumber onward into the 2050s, hoovering up an enormous chunk of the nation’s discretionary transport funding as it goes.

If this goes ahead, what are our options – aside from enormous break-fees to end the project before it begins? Our only other out may be to wish for ridiculous levels of inflation, which might eat away at the “value” of the annual payments we’d be shovelling towards whichever private entity wins this contract.

That’s… really not a sustainable plan, by any measure.

Meanwhile, despite the Official Information Act, the public is not allowed to see any official information about the scale of this nonsense, until after the signatures are on the dotted line!

Who benefits from secrecy, amirite?

That said, the scale of this debacle wouldn’t remain secret for long – and it will be a very uncomfortable political epitaph for whomever gave it the green light.

A glimmer of hope and rationality

Ironically, even though my appeal for information was turned down, we now know one thing for sure: there’s significant official concern that the government will hit pause on Warkworth to Te Hana, if basic details like the BCR were to be made public.

Next week is Budget Week, and all the advance talk is about cutting costs. You’d assume a prudent parliament would promptly put a pin in this particular project.

Especially given the Minister of Transport has already signalled an urgent need to re-scope and/or re-stage the RoNS programme.

And besides, who’d want this multi-billion-dollar millstone around their neck in perpetuity, let alone in an election year?

The government knows what to do. Will they?

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