Monday, July 02, 2018

National's ripoff road

Stuff has a piece on the prospect of National's Transmission Gully project ending up as a toll road, i.e. one which real people don't get to use. But in addition to the pointlessness of spending government money to promote social apartheid in transport, there's also a buried lead in there: that thanks to National funding it through a PPP, that road is going to cost more than three times as much as it should:

Paying to use the Transmission Gully motorway is creeping closer to reality after the Transport Minister was warned the $852 million road north of Wellington could make driving too attractive.

A briefing document from the New Zealand Transport Agency to Transport Minister Phil Twyford, released to Stuff under the Official Information Act, recommended he green-light investigation of a Transmission Gully toll to "shape demand" for the new four-lane expressway, which will connect northern Wellington to the Kāpiti Coast when it opens in 2020.


The previous National Government inked a deal with a business consortium in 2014 to have the motorway built by the private sector. Once it is opens to traffic, the agency will begin paying it off, along with interest, maintenance and operating costs, in annual instalments of $125m over 25 years.

Doing the maths, that means we're paying $3.125 billion for a road which will cost only $852 million to build - 3.6 times as much. What are we getting for that extra money? National got to claim they weren't borrowing as much. That's right - National signed a deal to give a private company billions of dollars of public money for no purpose other than to make them look good.

And this is why we should never use PPPs. They are dishonest and wasteful and result in us paying far more than we need to. It is always cheaper for the government to simply borrow the money itself to pay for a major infrastructure project. But that would mean being honest with the public about what they're spending - and it seems that National at least will spend billions of other people's money to avoid that.