City Rail Link billion dollar blow-out: Twyford & Goff asleep at the switch

The announcement of a billion dollar cost blow-out for the City Rail Link (CRL), 3 years after start of construction, is deeply troubling. At $3.4b, that is $1b per km, the CRL was already going to be one of the most expensive rail tunnels in the world. Now the price has shot up to $4.4b ($2.2b from ratepayers) with completion pushed back to 2024. Troubling also, given Auckland Council’s level of debt which is approaching $8.5b, close to the borrowing limits recommended by the international credit agencies.

Furthermore $4.4b is an estimate – there is no guarantee that the price will not go even higher. One insider suggested to me the final cost could, as he put it “have 5 or 6” in front of it. He was talking billions of dollars course.

Council bureaucrats have responded to the increase by recommending the sale of city car parking buildings (parking earned Auckland Transport $50m last year). As most Aucklanders know, selling income-earning assets to plug a hole in the budget is a foolish strategy. Apart from the likelihood of monopoly control of city parking, it should also be borne in mind that the CRL won’t be cheap to operate. If Auckland Council sells its income earning assets, as it did last year with the ARC Diversified Investment Asset portfolio, which earned ratepayers on average $23m per annum, where will the extra money come from to pay the operating costs?

In 2016 the Key National Government after agreeing to back the City Rail Link had its assessors review the project. They recommended that the CRL build should be taken off Auckland Transport and that the two parties funding the project, that is the NZ Government and Auckland Council, should directly oversee it. A sensible idea in principle. A Crown entity was duly set up, CRL Ltd, under the chairmanship of Wellington-based Brian Roche (now Sir Brian), former PwC partner and most recently CEO of NZ Post, along with a board of largely anonymous directors.

On the face of it, this should have enabled transparency and clear accountability lines back to the funders. That was the plan, but with the departure of CRL champion Mayor Len Brown and his replacement by Phil Goff, the CRL went off the political radar. Newly-elected Goff had his own trophy project to push, light rail to the airport. But then with the election of the Labour-NZ First government, no doubt to Goff’s relief, responsibility for this poorly conceived scheme (three years on and still no business case) was famously adopted by his former colleague, Transport Minister Phil Twyford – who for good measure added another, light rail to Kumeu, which together Twyford boasted would be ‘the biggest transport project in New Zealand’s history’. (Think KiwiBuild on wobbly wheels).

Anyway call it what you like, ‘eyes off the ball’, ‘asleep at the switch’, the CRL project from that time on has been drawn virtually zero political interest, from those at the top, let alone oversight.

Whatever the talents and experience of Sir Brian and his directors in building rail tunnels, what has been missing here has been the active oversight of the shareholders, the government and the council, meaning the people who represent the public who are paying for it. I have only seen Sir Brian twice at the council since his appointment in 2016 before he appeared again last month to ask for another half a billion dollars from Auckland ratepayers.

Meanwhile the CRL first stage ‘cut and cover’ making its painfully slow way up the first 400 metres of Albert Street, is still not finished, to the consternation of Albert Street retailers, the Stamford Plaza hotel and commuters in that part of the city. Despite this, a few weeks ago Minister Twyford announced that the NZ Superannuation Fund as part of his ‘City Centre to Māngere Light Rail’ scheme was investigating a parallel tram tunnel up Queen Street just 150m away. I am not making this up. In Mr Twyford we clearly have a transport minister who doesn’t understand or care much for rail, given his obstinate refusal to even consider a 7km rail extension to Auckland Airport, and his opposition to the extension of train services on the existing line to Kumeu.

Because of the totally deficient amount of financial information given to councillors, I declined to vote for the extra half billion dollars. Instead I won support for an amendment calling on the government as the lead agency to increase its contribution.

Let me be clear, from my time as chairman of the ARC, I have been a leading proponent of the CRL which I believe to be vital strategic infrastructure for Auckland. However its construction should not be seen as an opportunity for the ratepayers and taxpayers to be ripped off by the usual suspects. Well behind schedule, and well over budget the City Rail Link project is symptomatic of what is wrong with Auckland – poor leadership at the top. Auckland deserves better than this.

 

 

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