Finance Minister Michael Cullen says tolls will have to be considered if a public-private partnership is used to build New Zealand's largest roading project - a $2 billion tunnel to complete Auckland's Western Ring Route.
Finance Minister Michael Cullen confirmed today that a steering group had been set up to look at the feasibility of private sector involvement in building a 5km tunnel largely under Prime Minister Helen Clark's Mt Albert electorate.
The Government wants the motorway tunnel, which it has called the Waterview Connection, to be completed by 2015 .
Dr Cullen said the deep tunnel option was much less disruptive and not more much expensive than a tunnel built by cutting into the earth and then covering it back up again.
"Once you take into account the cost of acquiring property... It is probably no cheaper and possibly more expensive than the deep tunnel option," Dr Cullen said.
Transport Minister Annette King said Sir Brian Elwood would chair a steering group to see whether the private sector should be involved and, if so, in what way.
It will report on options in June.
Material released by the minister said the completed project could be leased to a private sector company for up to 35 years and raised the possibility of tolls being charged.
The Waterview Connection is a proposed state highway extension in Auckland running from Mt Roskill to the Northwestern Motorway.
Once finished the Western Ring Route will be a single 48 kilometre motorway, bypassing the city and linking Manukau, Auckland, Waitakere and North Shore.
Ms King said Transit New Zealand would continue working on other aspects of the ring route while consideration was given to a private-public partnership for the Waterview Connection.
The Government has already passed legislation allowing the private sector to get involved in large infrastructure projects, but has never given one the go ahead.
Overseas the arrangement usually involved a private company building the project and then charging the Government or public for its use.
Dr Cullen said there would be an "issue" around whether tolling was used if the project was built.
Dr Cullen said one of the advantages of a public-private partnership was that much of the money to build the tunnel would come from the private sector.
"It reduces the pressure on other roading projects not just in Auckland but around the country."
The Government's announcement received a mix reaction.
National Leader John Key said it represented a "massive flip-flop" after years of opposing private sector involvement in roading.
The Greens believed it showed muddled thinking and the money would be better spent on public transport projects.
Newmarket Business Association General Manager Cameron Brewer said the Government was very keen to spend $2 billion to reduce social and environmental disruption in Miss Clark's electorate, but not elsewhere in Auckland.