dave August 23, 2019 No Comments

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Auckland Light Rail plan questioned by National MP

The New Zealand Transport Agency (NZTA) has defended its plans for light rail in Auckland.

The new Government’s decision to scrap roading projects has led to $3.5 billion of state highway infrastructure going unbuilt, which might be a drag on economic growth. Thomas Coughlan reports.

New Zealanders are feeling the pain of billions of dollars in fuel taxes, but not reaping the benefits of better roads, and that could be putting the brakes on the economy. 

With National’s 10 “Roads of National Significance” effectively in a holding pattern, Treasury is concerned that NZTA is unable to spend all the money it taxes, which is dragging down economic growth.

Transport Minister Phil Twyford has shifted investment away from large state highway investment.
MONIQUE FORD/STUFFTransport Minister Phil Twyford has shifted investment away from large state highway investment.

The $2 billion the NZTA collects in fuel taxes is usually spent on building new roads.  

But the new Government’s decision to redirect money into road safety and public transport has meant $3.5 billion less will be spent on new state highways, according to documents released under the OIA. 

It’s also stalled its building programme for “12 to 18 months” while it comes to terms with the Government’s changes. 

The Government says its putting a bigger focus on walking and cycling now.
ROSS GIBLIN/STUFFThe Government says its putting a bigger focus on walking and cycling now.

​Infometrics economist Brad Olsen said the transport spending was a “brake on the economy”.

And Treasury agrees lower spending is concerning. 

It said industry was concerned about the 12 to 18-month stall in construction projects while the new Government was revising its transport priorities. 

There are 12 large roading projects which Treasury says are “market-ready”, but these have been effectively scrapped under the new Government’s pivot away from highway investment, although only two of the ten Roads of National Significance were fully funded before the election. 

Treasury is concerned that when the last of National’s projects wrap-up, there won’t be any new projects ready to replace them.

It said around $4.8 billion worth of “major projects” are due to be completed in the next two years, but there are only $1 billion worth of new projects getting ready to start. 

Economist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.
SUPPLIEDEconomist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.

That means there’s $3.8 billion worth of construction projects that aren’t ready to go when the current round finish. 

This means the workforce on those projects may leave the construction industry, or move offshore, possibly to Australia where the Government has announced a $100 billion transport infrastructure package. 

Olsen said this was particularly concerning, because when the new Government’s projects were finally at the stage they could be built, there might not be the workforce ready to build them.

“Noone will be ready for it,” he said. 

The NZTA’s accounts also show that it’s struggling to spend all the money it collects. While it’s managed to collect nearly $1.5 billion in fuel taxes this year, it has struggled to spend anything near what it planned to.

The Government's Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist's rendition of what light rail in Auckland could look like.
AUCKLAND TRANSPORTThe Government’s Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist’s rendition of what light rail in Auckland could look like.

Why this matters

New infrastructure investment acts as economic stimulus, as the money spent works its way through the economy and better infrastructure improves productivity.

But if the Government collects this money in taxes without spending it properly, it acts as a drag on the economy, slowing growth. 

New infrastructure also helps to absorb the impact of a growing population. This is something New Zealand has struggled to do for a decade.

Research by ANZ found that new infrastructure spending for each additional 1000 people New Zealand adds to its population fell from $142 million in 2011/12 to just $37m in 2016/17.

The Government has tried to respond to this by building an “infrastructure pipeline” which essentially lists the projects it wants to build so that they’re ready to go when needed. It’s also committed to spending $42 billion on infrastructure over the next five years. 

Transport Minister Phil Twyford said that the Government was planning to spend more on transport than the last Government.

Twyford says the Government is delivering a different mix of transport projects.
ALDEN WILLIAMS/STUFFTwyford says the Government is delivering a different mix of transport projects.

“Our Government is spending more than ever before on transport – around $4 billion a year,” Twyford said.

He said the new Government was delivering a “different mix of projects”.

“Because of our commitment to rebalance transport spending and invest more in safety, local roads, rail, public transport and walking and cycling, and demand more value for money, there are fewer new four lane expressways planned than was the case under the former government.

“Under our Government, there is a bigger infrastructure pipeline in place with more capital spending, it’s just a different mix of projects,” he said. 

But while the Government had promised more spending, it was having difficulty getting the money out the door.

Olsen said the problem isn’t so much the money that’s been promised, it’s the lack of projects that are ready to go.

National's Transport spokesperson Chris Bishop is concerned for the country's economy.
KAI SCHWOERER/GETTY IMAGESNational’s Transport spokesperson Chris Bishop is concerned for the country’s economy.

He said there needed to be more emphasis on getting projects “shovel-ready”.

“Where is the plan for now?” he said. 

The Government’s announced on Thursday that its Auckland light rail plan will not be considered by Cabinet until 2020, which means construction on the $6 billion project will be pushed out beyond the current Parliament. 

National’s Transport spokesperson Chris Bishop said that the slashing of the state highway budget was starting to have real effects on the economy.

“Important projects, many of them ready to go, have been pushed off to the never-never – all for a light rail project the start date for which has been delayed yet again,” he said. 

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