Stuff reports the government is divided and dysfunctional over Auckland light rail. But the really stupid thing is Labour's preferred option:
Labour Ministers are said to be increasingly keen on the NZ Super Fund option. Stuff has been told that this is based on a PPP with NZ Infra to build and run the rail network for 50 years.
Though currently equally owned equally by the Canadian and New Zealand Funds, this does not guarantee funding or returns would be equal. Stuff has been told these could be split 70-30 split in favour of the Canadian wing.
The Companies Office says NZ Infra is owned equally by the Canadian and New Zealand funds, but Stuff has been told this does not guarantee equal investment and therefore equal returns.
[...]
Some in the Government have been spooked by spiralling cost estimates and the amount of money likely to be sent sent offshore. Cost estimates shared with Stuff by sources familiar with the matter are now as high as $20 billion.
The evidence from both New Zealand and overseas is that PPP's don't work. All a private provider adds is a profit margin, meaning the government pays more for less. They're a bad deal at the best of times, but when interest rates are rock-bottom and it is effectively free for the government to borrow, they are pure stupidity.
So why is Labour keen on this? It lets them hide debt, so they can pretend to meet their (purely artificial) debt target while providing big infrastructure. But they - or rather, we - would pay premium for that dishonest "service", in the form of inflated profits flowing overseas. As for building and funding it ourselves, apparently Labour - once the party of railways and state housing, the party that built New Zealand - doesn't believe in that anymore. Which perhaps explains their complete failure over state houses and kiwibuild.
Fortunately, it looks like the Greens will stop them giving a billion dollars a year to Canada. And we should thank them for it.
