Treasury report shows tensions with the Minister of Transport Phil Twyford over ‘extremely complex’ Auckland light rail project

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A Treasury report shows tensions between the Minister of Transport Phil Twyford and Treasury over the Auckland light rail project.

The report was written by David Taylor from Treasury’s National Infrastructure Unit and highlights the delays and cost blow-outs experienced with another similar project in the UK.

“To illustrate the possible risks, we note that construction of the Edinburgh light rail suffered major time and money overruns, eventually taking six years to build and costing more than twice as much as initial estimates. Given the size of the project, the fiscal risks and the build and operational challenges, we consider a strong examination of the implementation choices is essential.”

The Treasury paper says the need for a new in-depth business case for the project is vital and will need to spell out the strategic and economic basis for the project, as well as consider alternative options and a cost benefit analysis of the preferred option.

Business case taking time

Last week www.interest.co.nz reported that the business case for the project still remains up in the air. The business case proposal was supposed to be delivered at the end of last year, but as of yet it hasn’t been made public. According to a spokesperson for the NZ Transport Agency (NZTA), which is leading the project, the business case is still a work in progress.

The Treasury report says the business case will also need to set out how the procurement process will be handled, whether the development is affordable and a management plan to ensure the project is a success.

It says it would also need to include an analyses of opportunities for more cost effective solutions and set out how the various implementation risks would be managed.

“A well-developed business plan provides assurance that the project will not end up in failure. Business cases have been put together by Auckland Transport, but we consider that these should be updated to reflect a new procurer (NZTA); and the Government’s broader urban development objectives.

“This is one of the biggest projects New Zealand has seen and extremely complex, given that it is to be built through the middle of some of the busiest streets in Auckland. It entails digging up the streets to a considerable depth, causing major disruptions to traffic and to businesses.”

Transport Minister Phil Twyford has estimated that the Auckland project will cost about $6 billion, making it the biggest transport project in New Zealand history.

The project will see two light rail lines established in Auckland. One leading from downtown Auckland out to the airport at Mangere, while a second line will run from the central city along State Highway 16 to Kumeu/Huapai.

The NZTA is leading the development of the Auckland light rail programme with the support of partners, Auckland Council, Auckland Transport (AT) and HLC, a wholly owned development subsidiary of Housing NZ.

Twyford, Super Fund waiting

A spokesperson for Transport Minister Phil Twyford confirmed that he hadn’t received the business case for the Auckland light rail project.

“Decisions around procurement are still being made by NZTA. They are making these decisions, not the minister, so you are best placed to keep in contact with them about this. They are also best placed to comment on the timing of the business case.”

As reported last week, the New Zealand Superannuation Fund says it remains committed to its proposal to build and operate Auckland’s proposed light rail network with Canadian partner CDPQ Infra.

Announcing a procurement process last May, Twyford said the Government was committed to progressing light rail in Auckland.

“It will be a magnet for private investment in urban renewal and will be able to carry 11,000 commuters per hour – the equivalent of four lanes of motorway,” Twyford said. “We are investigating innovative solutions to tackle congestion and build a vibrant and modern city.”

Twyford added that the procurement process covers both the city to Mangere and the city to North West lines. The 10-year transport plan for Auckland includes $1.8 billion in seed funding with the option of securing private investment in the network.

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