Wednesday, March 01, 2006

Fran O'Sullivan: Transit's drive lacks coherent direction

If Transit New Zealand was a public company its shareholders would be up in arms by now.

Its 10-year strategic plan to develop the nation's roading network has proven not to be worth the very paper it was written on less than 12 months ago.

If Transit's 10-year plan was a prospectus - instead of simply a "programme" with all its extraordinarily loose accountabilities - its promoters (the Government) would be facing an uproar.

The New Zealand and foreign entities which have signed off plans to invest significant sums domestically to expand their businesses on the back of a governmental commitment to finally do something about the nation's appalling roading infrastructure would be screaming.

But we are being asked to believe Transit's predicament is the fault of two unforeseen problems: First, the oil price rise which it is claimed has had a kick-on effect leading to a potential shortfall of $685 million in the amount that Land Transport NZ can now steer Transit's way.

Second, there is the extra $300 million or so that Transit itself believes it may have to find because of increased construction costs including materials and labour.

In all there is about $1 billion at stake - which is not a huge amount when factored over some $12.4 billion of projects that Transit wants to carry out over the next 10 years.

Why get exercised, you might ask, when the Government has basically said the shortfall will somehow be made up?

Well, the problem is Transit has already shined up its figures by simply deferring a raft of highway projects until after 2016 - the end of its 10-year timeframe. Some $1.48 billion worth of projects are involved, according to Road Transport Forum estimates. The forum has also helpfully pointed out that Transit's $12.4 billion figure is to some extent illusory as just $4.7 billion is set aside for new roads - the rest goes to maintenance and upgrades.

Then there is the collusive side-deal the promoter has done with its new partner New Zealand First - to fully-fund a second Tauranga harbour bridge at a cost of $240 million instead of the original plan to part-finance it by tolls. In the days when the new partner was a crusading Opposition MP this would have been called "pork barrelling, Mr Speaker, of the highest order".

Unlike other projects - which are now subject to major deferrals - this is subject to a mere one-year slide and will be well under way by the time the promoter and its partner need the voters to tick them off for a further three years in power.

Then there is the promoter's conflict of interest. The Government, like its predecessors, makes a bundle out of excise taxes on fuels. Finance Minister Michael Cullen could simply hike the petrol excise tax and bump it across for exclusive use to fund roads instead of bumping up his own coffers.

Or Cullen could simply borrow on the Government's account to complete the projects in double quick time.

This avenue was suggested to Cullen and Transport Minister David Parker in a letter from Auckland Regional Chamber of Commerce head Michael Barnett two days before Transit unveiled the so-called "shortfall".

Barnett, with other members of the Auckland Business Forum - which includes EMA Northern, Ports of Auckland, ASB Bank and Auckland International Airport - have been on the Government's case for years claiming the region misses out on $1 billion in annual economic benefits because the roading system is still not complete.

Barnett's letter reveals that Cullen and other Cabinet ministers told key Auckland players on May 31 last year that they had instructed Transit to pursue a borrowing option to ensure the original timeline was met. But "this had not been actioned and is not being offered by Transit now".

There was more of the same with the business community over-whelmingly concurring with a report on February 15 (the same day the Prime Minister made her pro-business opening statement to Parliament) that any cutback to Transit's Auckland projects was "not acceptable".

"We agree with you that the 'duty' to address the shortfall comes back to Government," Barnett said.

"I strongly suggest that a very appropriate 'answer' is that Government announce without delay (this week) that it will provide a borrowing programme to ensure that there is no cutback to the programme to complete agreed motorway construction projects in Auckland by 2015, or earlier.

"Based on your earlier requests to Transit, this option has already been publicly approved in principle by Government. The problem is that it has not been actioned."

There is a long litany of issues between the Auckland Business Forum and Transit.

Deadlines for Transit to produce its accelerated work programme were missed, and a "ghant chart" for timelines and funding for the strategic projects to complete the State Highway 20 Western Ring Route and State Highway 1 projects was not actioned despite "subsequent confirmation to the Forum that Transit had been requested to provide such a work programme early in 2006".

It goes on: Credible reporting process: Not actioned.

The request to encourage the Auckland Regional Transport Network (which looks after public transport) and Transit to better co-ordinate the interface between the strategic state highway programme and local roads (and rail) infrastructure requirements: This has been partially actioned, through an informal project getting under way to develop an Auckland transport plan showing how ARTA and Transit will implement the Auckland Regional Land Transport Strategy 2005.

But Barnett points out that the request to have these initiatives reported to ministers and ready for announcement by 30 June was not actioned.


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