Auckland lobby behind Key’s about-turn

Alignment of central and city leaders on infrastructure projects now needs to happen in Christchurch.
Prime Minister John Key’s decision to suddenly back Auckland on big infrastructure investments wasn’t simply designed to steal a march on his Labour opponents in the country’s largest voting catchment.

Behind the scenes, leading Auckland-based business lobbies – particularly the Auckland Regional Chamber of Commerce and the NZ Council for Infrastructure Development (NZCID) – had a lot to do with persuading Key’s inner circle that they need to get behind game-changing infrastructure developments in New Zealand’s economic powerhouse.

The NZCID has held meetings with Finance Minister Bill English (who holds ministerial responsibility for infrastructure) to emphasise the need to get on with projects that will enable and service business growth in the city.

The lobby had good feedback from English who has been emboldened, not simply by the business case for the projects, but also because the fiscal track is turning positive much quicker than the Treasury has forecast.

The windfall gains from Meridian Energy’s sale of wind farm assets in Australia – which were unveiled this week – have helped.

But that is just one of several factors in play.

The NZCID – led by chief executive Stephen Selwood – has been the leading advocacy group lobbying for investment in roads, public transport, electricity projects, digital infrastructure, social housing and more to close the national infrastructure deficit that National inherited from Labour when it came to power in late 2008.

To be fair to Labour, former Finance Minister Sir Michael Cullen had already begun this process by instituting work on the Waterview project in Auckland, investigating the electrification of Auckland rail, buying back KiwiRail off its Australian owner as well as a range of other projects.

But when National took power it brought forward some projects – particularly the “Roads of National Significance” – to stimulate the economy and keep construction workers employed in the post-global financial crisis environment.

Auckland Mayor Len Brown lifted the tempo when he swept to power in the first elections for the Auckland Super City in 2010 on a platform of introducing three transport projects: the Central Rail Link, another harbour crossing and an Auckland Airport-CBD rail link.

On the Government’s metrics these projects did not stack up – at least in the short term.

But the business cases have been reworked by officials from Government, the NZ Transport Agency and Auckland Transport. If growth rates in the Auckland CBD move faster than projected, then the Central Rail Link in particular may be brought forward according to a pledge Key made on Friday.

The Auckland Regional Chamber of Commerce also alerted the Government – particularly John Key – to the growing concerns in the city that decisions that should be made on Auckland’s big issues were not happening. Key was urged to show some leadership and take the opportunity to put his Government back in the box seat at a time when it was losing its own positioning in New Zealand’s commercial hub.

In April, Chamber of Commerce chief executive Michael Barnett put a case to Key to address four areas: Auckland’s long-term housing shortage, where there was an opportunity for the Government-Auckland housing taskforce to set a game-changing housing action programme; funding the completion of the strategic roading network, in particular the AMETI/East-West Link that is so essential to the movement of freight across the city’s manufacturing and logistics hubs; giving priority to the Central Rail Link to allow a doubling of train services through Britomart station coupled with improved bus services (Barnett stressed the strong public support for the service and the need to realise the benefits of the Government’s investment in rail electrification and loan for new passenger rolling stock); the need for a confirmed agenda to finalise the Auckland Unitary Plan in a way that accelerates the delivery of Auckland’s growth plans; and confirmation that the International Convention Centre would be built as soon as possible.

Both the NZCID and the Auckland Chamber have made strong business cases for the completion of these projects and for the Government to pony up with the billions of dollars necessary for it to pay its part – alongside the council – in bankrolling the projects in future years.

It has not been plain sailing.

Sources suggest Cabinet ministers – notably Transport Minister Gerry Brownlee and his predecessor Steven Joyce – were not easily persuaded to move on Brown’s big-ticket numbers.

The NZCID reckons the proposed route for the Central Rail Link does not take sufficient account of vital traffic nodes such as the Auckland University precinct or Wynyard Quarter.

Given that the project is not slotted to start for another seven years, there is time to investigate further options on the route.

Barnett has also suggested investigating a fast rail link between Auckland and Hamilton. This would enable Hamilton to become a dormitory city for Auckland where workers could commute to the big city in less than an hour’s travelling time either way and live in more affordable housing.

Both ideas are worth pursuing.

What is good from an Auckland perspective is that pragmatism has finally reigned.

Now the same formula needs to be applied in Christchurch so that both the city leaders and central Government are singing from the same hymn sheet.

Michael Barnett: Leadership can unlock the roadblocks

“Time ripe for a big gun to step up and make big business-like decisions on Auckland’s transport problems.

Transforming Britomart into Auckland’s main railway station has seen passenger numbers increase.
If a business plan was signed off by the board of a listed company knowing that it set out an investment programme that would deliver a negative result, there would be one outcome – they would lose the confidence of their investors.

The just-released Integrated Transport Programme predicting worsening congestion in Auckland even if we find the extra $400 million a year needed to finance the Auckland Plan’s transport projects falls into that category. It charts an unacceptable future for Auckland.

The document that was signed off by the boards of both Auckland Transport and the New Zealand Transport Agency (NZTA) should concern Aucklanders and have them look at our political masters, who signed off a 30-year Auckland Plan from which the transport programme has been compiled. Isn’t their job to provide the leadership for building a thriving Auckland, and for which transport is set out in the plan as an enabler?

The one saving grace of the programme is that it is honest. It plainly states that even with the $25 billion invested to build by 2021 projects like the Central Rail Link in the central city and Ameti and East West Link in South Auckland, within 30 years Auckland’s road congestion will be worse than current levels in cities like Sydney and Melbourne, which already have much larger populations.

But it offers no solutions. At the moment Auckland cannot even fund the transport infrastructure investment programme we have agreed and want to do, let alone the further initiatives needed to head off the worsening congestion long-term.

At all levels, the decisions that need to be made right now are business-like leadership decisions – and the ground has never been as well prepared as it is now for a leader to step up to the plate and make the big calls required.

There are four things that need to happen – and fast:

First, while Aucklanders debate how to fill the $400 million a year shortfall needed to finance the immediate Auckland Plan transport projects, Auckland Transport and NZTA – our transport infrastructure and service providers – need to be demanding and seeking a much improved business-like performance from the existing transport system.

Train and bus services must be re-organised to run on time and become reliable; they must lift their game and not leave passengers waiting at stations and stops. Auckland Transport must quickly introduce integrated timetables between train, bus and ferry services, provide secure parking for cars at suburban bus and train stations, and ensure train fares are paid. They must micro manage a much improved performance from the bus and rail systems.

With some trust and certainty that these micro improvements make a real difference, I am confident thousands of commuters would leave their cars at home – and would be keen to do so.

Second, the funding shortage debate must be brought into the real world.

The debate has quickly revealed a preference for a user-pays approach – network tolls or a cordon – rather than increasing rates. There are two parts to the debate – to find revenue to ensure major projects are built within the plan’s timeline, and to bite the bullet with congestion management scheme by 2021 to head off the predicted worsening gridlock.

However, we are starting this debate without knowing what we are going to invest in or what level of return we will get from making this investment. We are not planning the funding solution in a business-like way.

The business case for the major projects has not yet been done, so there is no informed way to confirm what the measurable benefits of the projects will be.

It is remiss, surely, to promote a debate on options to raise the $400 million a year to invest with no idea of the likely return. It is like going to a banker seeking a loan for a million dollars without disclosing what the money will be used for.

Of course, the first question the bank will ask is: What do you want the money for? And the next question will be to determine whether the return on the investment is sound – does it stack up?

Third, there is no way of knowing what the rate of return to the economy has been from the billions of dollars invested in Auckland transport infrastructure in recent years – either roads or public transport – the work to make this assessment has not been done.

In general, returns on investment will depend on the nature of the projects themselves.

Judging from improved traffic flows where new motorway links have been built, this suggests the investment has been value for money. The Western Ring Route corridor benefits were calculated to be $1.40 for every $1 invested and something in the order of 1500 jobs.

Similarly, shifting Auckland’s main railway station into Britomart has seen a big jump in passengers regularly using rail.

But even though some $1 billion a year has been invested in improving Auckland transport infrastructure since about 1990, there is no firm, quantitative basis for claims about the impact of this investment on Auckland’s economy and growth. Fourth, we must stop talking about the cost of transport infrastructure and manage it as an investment.

Auckland’s contribution to New Zealand in dollar terms is significant. A 2006 study indicated that some $18 billion in revenue being paid from Auckland against which about $14 billion was returned to Auckland in services and investment.

There is no argument from Auckland about the huge central government investment going towards the Christchurch rebuild. But when you look deeper into the NZ Inc performance, you see that its economic engine room – Auckland – which generates a third of the nation’s GDP and provides a third of its employment, is still performing well below the bottom line.

Thursday’s Budget is expected to confirm NZ Inc is on an official track to budget surplus by 2014/15, a stable government (i.e. business-like leadership?), and low-levels of public debt compared to our peers in the Northern Hemisphere.

And if we deduct the cost of the investment NZ Inc is contributing to the Christchurch earthquake recovery, then the country as a whole is doing fairly well.

Assuming the business case for Auckland’s major transport projects show a positive return for the Auckland economy, it is then reasonable to ask why central government shouldn’t underwrite a fair share of the investment – which is what it is, an “investment” in Auckland and New Zealand’s growth-led future.

The scale of the investments required is clearly beyond Auckland Council’s ratepayers. A substantial central government input will be required, and that is the call our mayor and councillors should be focusing on – encouraging government to do what it is obviously going to have to do.”

Michael Barnett is chief executive of the Auckland Chamber of Commerce.

By Michael Barnett