Cost blowouts on 17 roads cost NZTA $1.1 billion
That’s the equivalent of the entire annual budget for state highway improvements.
A handful of roads have managed to go $1.1 billion over budget, forcing the Government’s transport agency to make tough choices to make its books balance.
It comes as a group has lodged a judicial review to challenge decisions around transport spending, saying that Waka Kotahi NZ Transport Agency had disregarded direct orders from the Government to pivot transport away from roads and towards cycling and public transport.
NZTA gets about $4b a year from fuel taxes and road user charges to spend all over the transport system, building and fixing roads, cycleways, and subsidising public transport.
But in between 2017 and 2020, $1.1b of its funding was ploughed into plugging cost overruns on 17 road projects that went wildly over budget.
The worst offenders were the Wellington Roads of National significance, which went $381m over budget, and a series of Auckland roads that went $352m over budget.
The cost overruns were revealed in written Parliamentary questions to Green party transport spokesperson and former associate Transport Minister Julie Anne Genter.
Genter said construction costs were increasing too fast.
“Construction costs have been increasing at an alarming rate over the past few years. NZTA clearly needs to do more to get costs under control.”
She laid part of the blame at the Roads of National significance programme – National Government roads that have come in seriously over budget.
“National’s mega motorway projects in particular have been blowing out by hundreds of millions over the past term of Government, reducing the amount of money in the transport budget that was available for road safety, public transport and safe cycling,” Genter said.
Genter said she would propose the Transport and Infrastructure select committee investigate construction cost inflation “so we can get a good cross-party view of the problem and potential solutions.”
“The high cost of delivering transport infrastructure in New Zealand, whether road, busway or rail, is not good for anyone. Especially when we need to urgently invest significantly in infrastructure to decarbonise our transport system,” Genter said.
National’s transport spokesperson Michael Woodhouse said his party’s caucus would have to decide whether it would support a select committee inquiry, but the “eye-watering” cost overruns needed an examination.
“Whatever form that takes it is absolutely appropriate that we examine whether that represents value for the taxpayer,” Woodhouse said.
The chair of the committee, Labour’s Greg O’Connor, didn’t indicate whether he’d support Genter’s attempt to get an inquiry started.
“Julie Anne is welcome to bring that to the committee and it will have to be discussed within the committee,” he said.
A spokesperson for NZTA said that plugging the funding hole by moving money from other parts of the transport programme. However, NZTA still planned to make the road programme fit into its three-year budget.
“Waka Kotahi is able to move funding between NLTP activity classes provided the funding allocations remain with the bottom and top of the three-year funding ranges set by the GPS for each activity class,” the spokesperson said.
“The funding range for State Highway improvements for 2018-21 is between $3b and $3.85b.
“We are currently tracking to finish the three-year funding period near the top of that range,” they said.
They also said that some cost overrun figures included next year in their calculation– making the overall figure look larger.
The intervention comes as NZTA faces questions over its alleged bias towards road building and against things like walking and cycling.
Every three years, the transport minister draws up a Government Policy Statement (GPS) telling NZTA what sorts of things it would like funded with transport money.
NZTA takes its directions from that GPS and then decides what it would like to do with transport funding within the boundaries set out by the government.
The current Government has pivoted this funding away from roading projects towards things like walking and cycling.
Despite this, NZTA is forecasting to spend nearly half a billion dollars more than the maximum amount of money the Government earmarked for state highways.
It’s also going to spend tens of millions of dollars less than the Government had earmarked for walkways and cycleways.
Former transport minister Phil Twyford said a maximum of $1.15b should be spent on state highway improvements in 2019/20 and 2020/21.
But, in an answer to a written Parliamentary question, Transport Minister Michael Wood said that NZTA would in fact be spending $1.296b and $1.483b on state highway improvements in 2019/20 and 2020/21 – a full $479 million more than the top end of the Government window.
The Government said NZTA should spend a minimum of $80m and $95m on walking and cycling improvements in 2019/20 and 2020/21.
NZTA actually plans to spend about half that - just $45.5m and $54m in each of those years.
Movement, a transport advocacy organisation (formerly known as Skypath), has lodged an application for a judicial review of NZTA’s transport decisions, saying they deviated from Government policy.
Chair Christine Rose said “The GPS on Land Transport has specific priorities for NZTA which includes fewer private car trips and reduced greenhouse gas emissions. However, despite being legally required to do so, NZTA continues to develop transport plans that are not consistent with nor ‘give effect to’, these important priorities”
Waka Kotahi NZTA said that it was confident that it’s transport funding decisions “gave effect” to the priorities of the Government.
“Waka Kotahi is confident that our investment decisions through the National Land Transport Programme give effect to the Government’s priorities as set out in the GPS. No further comment will be made on the judicial process,” said a spokesperson.
The application will be heard on February 1 next year.