Tuesday , June 27 2017
Informed Influential Indispensable | newzealandinc.com

The Nation: Lisa Owen interviews Simon Bridges

Transport minister Simon Bridges says the Cost Benefit Ratio for Auckland’s East West Link is 1.9. He says he doesn’t have an up to date CBR for the rail alternative, but the road option is going ahead.

Bridges won’t be drawn on whether Auckland Council should sell off assets to pay for infrastructure, saying that’s a decision for the mayor and council. But he says as central government does more, “of course we want to see the council do more”.

Lisa Owen: With Auckland’s fleet growing by about 800 cars every week, the government and the council have finally made a move towards implementing congestion charges. The Smarter Road Pricing will report back on options for road pricing that could keep more vehicles off the road at peak times. So will it be the answer to the city’s traffic woes? Well, Transport Minister Simon Bridges joins me now. Good morning.

You’ve started investigation congestion charges, but it’ll be at least two years before you get through that, let alone implementing it. So is that solving any of Auckland’s problems now?
Simon Bridges: Yeah, I mean, of course, right now, no, because at the moment all it is is an investigation, albeit a serious one, more serious than we’ve ever seen before. And I think we’ve talked about this before, but if you go back to the ATAP, Auckland Transport Alignment Project, fundamentally what we try to do with council involves a range of things. It involves really strong investment in transport. We’ve seen that. We’ve got a strong, growing economy. We can afford to do that, frankly. We’ve spent a lot more, and we’re going to continue doing that, and the Budget gives us that. But then I think it is also those other things you’re talking about. Better network management and what they call demand management. But fundamentally looking at pricing.

But businesses say that we cannot wait the 10 years, potentially, that it’s going to take. By 2026, and you’d know this, 32% of time spent in traffic will be in severe congestion conditions. We can’t wait that long, can we?
I think the answer is… I appreciate the frustration, you know, and I’m up in Auckland all the time. I’m talking to Aucklanders all the time.

If you appreciate the frustration, though, why not push things along faster?
I think the truth is we are making progress. And what you’ve got to do first is you’ve got to make sure before you have the pricing, actually, you’ve got the viable alternatives. So we’re investing in a range of projects. So whether it is Waterview opening tomorrow, which won’t be the silver bullet. There is no one project that will be a silver bullet but will make a significant difference. CRL, the Northern, the Southern Motorways. We were talking about it before, but actually very significant investment in bus lanes and cycleways. All of these things over time make a difference. The pricing is a more medium-term project, but I think it is important that we come to a decision on that, because it could be, and the experts agree, it could be a really big part of the answer to this.

But even if you go ahead with congestion charging, it’s not aimed at raising extra revenue, and you’ve said that. So Auckland Council says it’s now $7 billion short in terms of its 10-year plan for infrastructure. So where do you reckon they should get that money from?
Well, I think we just have to look at where that comes from, and basically what we’ve agreed is an indicative list of projects over the next decade through this ATAP process. You’re talking about 24 billion or thereabouts. There’s no magic to that. And Phil Goff is making the case. It’s an important point. Phil Goff is making the case. Well, actually, given the strong growth, bigger than Stats NZ sort of said a year or two ago when we finished that part of our work together, look, it could be more, and he’s making that case. My point to you would simply be this — actually, through the Budget, also through other processes, we’ve got $32.5 billion of capital investment coming. So we can feel confident.

And that’s great, but you’re still short. The city is still short between $4 billion and $7 billion, depending on whose estimation you take. So let’s get some straightforward things clear on the record, and I’d like to get through some of these quite quickly. The government has said no to regional fuel tax, no to tolls, so do you think Auckland should sell some assets to fund the shortfall?
Let me be very clear. It’s worth going through it. $20 billion of the next decade. Actually, we’re there on our conventional settings, what we’ve done historically. The rest, what I’m saying to you, is if you look at the strong economy we’ve got, you look at our books, we’re investing, I think, $9 billion over the next four years in state highways, $32.5 billion in capital in infrastructure in general. I’m simply saying to you, actually, I think in terms of the government’s part of the equation, we feel confident we’ve got a bit of headroom and we’re talking to the council about the projects and the things we can do to look at that so-called funding gap.

So are you going to pay for the shortfall? Or are you expecting that the council will come up with it?
Well, I think on that front what you’ve got to say is we’re really investing strongly. I mean, it’s about two-thirds of Auckland’s transportation — we invest in about a third — are council. As we continue to do more and more of that, of course, we also want to see the same sort of strong response from the council. I think they’ve just had a budget.

So where is that money coming from, then? Do you think they should sell assets? It’s a simple question. Could you give me a definitive answer?
No, look, I think that’s absolutely for the mayor and his council.

What do you think, though, Minister?
No, I don’t think it is about what I think on these issues. Ultimately, what I’m saying to you is from the government’s perspective, we appreciate the import— it’s the fundamental importance to a city and to Auckland of transportation. We’re doing a lot more than we ever had, and, actually, we’re going to continue that.

But if you cut off avenues of funding, if you say no to a regional fuel tax, no to tolls, congestion charges maybe in the future, you’ve cut off those options, so it’s one of two things, isn’t it? You obviously have a direction you think they should head in, or there’s no plan at all. So which is it?
No, we’ve got a clear plan, and the growing economy’s giving us the ability to deal with it. I’m saying to you pretty simply—

But it’s for the council and that extra money. Where is that going to come from? So do you have a clear idea where they should get that from?
Look, I’m saying to you pretty straightforwardly on this issue of funding of transportation, actually, on our side we’re investing a lot more. We’re confident, and I don’t think we need to be too worried, we’re confident that that gives us the headroom to do more, to invest in some projects. We’re talking to Auckland about that. I’m simply saying to you it’s not a mathematical formula. It doesn’t mean they have to do this or they have to do that. But as we do more, of course we want to see the council do more as well.

But how do they do that more? That’s the side that— I understand everything you’re saying to me, but this is the question that you still haven’t answered. Where do you think their share is coming from?
Well, let’s go through it. They do have a range of options. They’ve just passed another budget. I don’t have the details, but I’m very interested to see that. My sense is, though, they are investing more in transport. That’s really pleasing, because I think you’ve had Steven Joyce and others on the show; we have been concerned about what looked like maybe going down, but it looks like they’re looking to address some of that. I think it’s not a matter of saying, ‘This in; that out.’ But I think it’s a matter of saying, in principle, as we do a lot more, we also want to see that strong response from council. And I think it’s also, Lisa, a question of having a sensible balance, really, between ratepayers and taxpayers, between Auckland and the rest of New Zealand with our transport investment, because, of course, Auckland’s fundamental, but we’ve got a whole country that we’re concerned about.

Let’s look at some of the specific projects you’re funding. The Auckland East-West Link Road, approximately 8 K’s of road that could cost around $2 billion. Now, the original cost-benefit ratio didn’t meet what your government would normally expect of a standard. And you’ve told the council, and Steven Joyce has told the council, to be more efficient with its spending. So why aren’t you taking your own advice?
Because I think some of that is not correct, and, actually—

Some of your advice is not correct?
No, no. The benefit cost of this project is 1.9 now. And I think what we can say is—

No, hang on, hang on. Is it 1.9 now? Because at the time in 2015 it was between 1.4 and 1.9. The cost of the project has gone up since then, so the benefits have gone down, and it’s estimated below 1.
No, I don’t accept that.

So what is the figure?
It’s 1.9

Of 2015 figures?
Well, look, on today’s sense of it.

Will you release that information to us? It’s an issue too.
Yeah, look, I think all of this is public information. But what I’ll also say to you — just remember this on the East-West — that, actually, this is a project that for a very long time — appreciate the Greens, for example, have a different view — but for a very long time has been the council’s priority, it’s been the priority that’s come through the Regional Land Transport documents, it’s been the priority almost universally of business, whether you’re talking about the Chamber of Commerce—

It doesn’t meet your own requirements for going ahead with a project. It doesn’t meet the benefit ratio that you would normally set. So you’re making an exception for this, aren’t you?
I simply don’t accept that. What we’re talking about is earlier iterations of business case. We’ve seen examples of that this week where again there’s been these sorts of issues. But on the best business case, on the options that were put forward, it’s a 1.9 benefit-cost ratio. And I’d simply say to you—

On 2015 figures?
I’m not sure, 2015, 2017.

Outdated figures, Mr Bridges.
No, I don’t think that’s correct.

Okay, so you’ll give us an up-to-date cost-benefit ratio? You’ll make that available to us?
Sure. The latest benefit-cost is 1.9. But I think we got back—

But there are cheaper options, aren’t there? There are rail. A third main rail link in Auckland, Westfield to Wiri — that project, the assessment of that says the forecast benefits significantly exceed the expected cost. It’s about $58 million. Hey, it’s cheaper than your other option. It’s got better cost-benefit ratios. Is it just the truck lobby that’s stopping this happening instead?
I think, Lisa, that demonstrates, and I don’t want to get very complicated on these things, but what we’re talking about here, that’s a very early business case. I happen to be in favour of that project.

So the business case on that East-West project is right, but the business case on the rail is wrong?
In respect, in relation to both, you’re dealing with much earlier businesses cases than the final ones. I don’t know what the final cost of the third main will be. I think it’s potentially one of a range of projects we should fund. I’ve made that clear to KiwiRail. But I come back to East-West.

Why don’t you do that ahead of the road, then? Because the cost-benefit ratio and all the benefits from that seem to be a lot more than the road.
Well, we may end up doing that. But I think you’ve got to go through the proper process—

May or will?
May. But I think when you’re talking about the East-West, we’ve gone through a very strong process. It’s been a priority for many, many years. And I think—

Your critics would argue you haven’t been through a strong process, that you pushed it through even though the numbers don’t add up.
I disagree. Quite simply, I disagree with that. And I think what’s also worth saying about the East-West link is that this is a project into not just the industrial hub of Auckland, but of New Zealand. It’s incredibly bad congestion there right now. And this project will make a really big difference.

The rail option — do you know how many hours that will save in congestion? Do you know?
Look, I don’t. Primarily that’s about freight.

Do you know how many trucks it will take off the road?
But I think the point on that, Lisa—

No, Minister, this is important. Do you know how many trucks that rail link would take off the road?
You’re talking about the third main line?

Yeah. It would take 400 trucks, heavy vehicles, off the road a week.
But, Lisa, the point is this — I agree that’s potentially a really important project. It’s got to go through the same strong process that East-West did before we fund it. It will be a budget bid. It’s in an early iteration. But as I say, I’ve made quite clear to KiwiRail and to others I think that is a potentially important project that we should fund. But it’s got to go through the same strong process East-West has and come out through the other side.

Okay. So, in a strong process, there should be a flow of information. Now, you’ve been told off this week by the Ombudsman. Your office has been given a serve for trying to influence KiwiRail and holding back information about the rail project we’ve just been talking about. So KiwiRail told you didn’t want it out there because you were extremely uncomfortable with that information. So do you believe that kind of information should be held back, Mr Bridges?
I don’t accept your characterisation of it, but I think what is true is if you look at— Everything we’ve just talked about, you’ve actually demonstrated why—

No, do you think information like that should be held back, or was that an exceptional case?
It’s been put out, but I think, actually—

Only after the fact, Mr Bridges. And not in full.
I think, actually, what we’ve demonstrated here is exactly why my office was right and within its rights to say, actually, it shouldn’t go forward. Because what it demonstrates is it was a very early — I think the earliest — iteration of a business case. It was materially wrong in a number of regards.

KiwiRail’s lawyers looked at that and said there was no real reason for it not to be released. It wasn’t going to prejudice any ongoing negotiations. I’m wondering, where is the clause in the OIA that says you should withhold information because of ministerial discomfort? Because your office was uncomfortable with it. Is there a clause for ministerial discomfort?
I hadn’t seen the business case. I wasn’t aware of any of this until very late in the piece. But I think—

So you complet—?
Can I just have a go at the substance of what we’re talking about here? Because I think ultimately, Lisa, there are really strong grounds over a long period of time in terms of convention, practice and the law as to why my office, I think, was right to say, ‘No, this shouldn’t go out.’ And funnily enough—

So the KiwiRail lawyers are wrong? They were wrong?
Well, I think, you know, there are many views on these things. They’re entitled to their opinion. I think, though, the point of this is we were and are entitled to be consulted on this and entitled to our opinion. But can I just get to the fundamental—?

Do you think that your office—?
Can I just get to the substance of this?

No, no, this is the substance of it. Do you think that your office overreached, and as a minister you overreached in this?
No. And I think what has happened today is a really good example of why, in fact, with respect, we were right, even though it is out there now. And that’s simply this. This was a very early wrong business case in terms of its numbers, in terms of much of what it said. I happen, as I say, to actually be in favour of the project in general. I think it’s one that is part of a range of projects that may well come through. But in that area, I don’t think we did anything wrong.

We’re out of time. Look forward to getting that other information that you said you’d release to us.

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