NZ paying too much for infrastructure projects

BRIDGING FINANCE
ARE WE PAYING FAR TOO MUCH FOR INFRASTRUCTURE?

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We need major investment in new roading infrastructure, but are New Zealanders being unwittingly fleeced of billions in the process? That’s the question IAN WISHART attempts to answer as he compares the cost of Auckland’s proposed new harbour crossing with similar projects overseas

You hear the numbers being batted around in the news so much that it’s easy to become immune to them: $3.9 billion, $5.6 billion, $6.7 billion. They represent various costings for either a new harbour bridge for Auckland, or a harbour tunnel.

Throw in government reports of either $2.8 billion for the Waterview tunnel first proposed for Helen Clark’s Mt Albert electorate, or $1.4 billion for a surface motorway on the same route (and eventually $1.4 billion for a tunnel again, at half the original planned length). Then add $2.4 billion for the proposed central rail tunnel, $2.5 billion for a highway between Pakuranga and Onehunga. If your eyeballs aren’t rolling around in your head by now like the lemon icons on a one-armed-bandit at Sky City, you’re probably already comatose.

It’s like Monopoly, but without the chance of picking up a Community Chest card advising “Congratulations, bank makes $15 billion error in your favour”.

With all this expenditure planned, teams of boffins and corporates are drafting proposals suggesting taxpayers and road users share the capital cost burden, with flat rate tolls as high as $8 per trip being considered for any vehicle using the motorways.

With all this money potentially being sucked out of the public’s pockets each day, you’d hope we were getting the best possible prices on our infrastructure projects, wouldn’t you?

Maybe, maybe not.

A comparison by Investigate magazine of New Zealand infrastructure costs compared with similar projects in Asia, the US, Australia and Europe raises questions about just how much fat is built into the project budgets.

To set the scene, let’s examine some of the biggest engineering marvels of the last two decades.

#1

SUTONG BRIDGE, CHINA

At 8.2 kilometres long, this cable-stayed bridge spans China’s Yangtze River between Shanghai and Nantong, and became the largest bridge of its kind in the world. The Sutong’s two towers are 306 metres high, almost as tall as the Sky Tower. It’s a six-lane motorway, like the proposed Auckland Harbour crossing, and was built by Chinese construction companies with assistance from Western engineering firms.

The industry magazine Road Traffic Technology quotes the total cost of the bridge at US$751 million (NZ$1bn), and describes how it was financed by a combination of tolls and taxpayer contributions. This figure is backed up by one of the German companies involved in the construction, which reported a “total cost” of the Sutong Bridge at US$726 million. The less reliable Wikipedia “estimated” a total cost of US$1.7 billion but now appears to have been well off the mark. It took five years to complete, and opened in mid 2008.

[Story continues in latest Investigate magazine]