Infrastructure report: City rail link a priority for Labour

Phil Twyford says Labour is "utterly committed to building the country's transport infrastructure".

Labour's transport spokesman Phil Twyford says the Auckland City Rail Link will be a priority if the Government changes.

"We're going to build the City Rail Link as a matter of priority as soon as we're elected. That's a huge civil infrastructure project," says Twyford. "We're utterly committed to building the country's transport infrastructure as a vital part of the export supply chain as well as building modern public transport systems in our cities.

"When you invest in transport infrastructure, particularly in growing cities, you open the door to really significant value up lift. Capturing that value uplift and investing it in infrastructure.

"That's the virtuous circle for urban development, and I think the city rail link offers huge potential, not only for development of the central city with for example high rise, commercial, and residential development around those railway stations but it's also a fantastic opportunity for private capital to be fully involved in that whole process.

"The nature of it is perhaps not a classical PPP arrangement in the sense that we'd use it in relation to urban transport project, but never the less it's a very symbiotic relationship between the public and private sectors."

The Labour MP is strongly critical of the Transmission Gully Motorway, green-lighted last month, saying the characteristics of a genuine public-private partnership are absent from the agreement.

"My fundamental position on Transmission Gully is that it's a very expensive, disguised private loan to fund a project that should be funded off the balance sheet of the Crown," says Twyford. "We think that there is no genuine sharing of risk and on that basis I don't think it represents value to the taxpayer. It's an extremely expensive way to fund that project."

The successful Wellington Gateway Partnership consortium will build and operate the road for 25 years. Where the Transmission Gully agreement differs from more typical transport PPPs is the lack of any patronage risk. The Government will pay back the consortium on the basis of an availability model, where the amount paid is determined by whether the road is open and available to traffic.

In the bulk of international PPP's for major transport initiatives, the private partner is responsible for collecting tolls as a part of their revenue stream - shifting a portion of the risk away from the public.

Watch: Auckland's proposed City Rail Link

Says Twyford: "The problem with transport projects if that if you're really realistic about it, the taxpayer always carries the risk. If everything falls over, the taxpayer is there to pick up the pieces, so it's very hard to genuinely share risk with the private partner.

"Our position is that we are going to look at transport projects on a case-by-case basis, but based on the record internationally you have to be sceptical about whether they deliver significant value to the taxpayer.

"The key questions are; is there a genuine sharing of risk with the private partner and what innovation will arise - can a PPP genuinely deliver gains in terms of innovation and productivity?"

Labour does however see a role for PPP projects as part of a more detailed and holistic approach to urban planning.

"Where I think there is huge potential for Government-private sector collaboration is on projects focusing on urban development and the kind of property development opened up by investment in 21st century transport infrastructure," says Twyford. "When you invest in transport infrastructure, particularly in growing cities, you open the door to really significant value uplift.

"In the whole area of commercial development and property development around transport infrastructure, there's massive potential if the Government is willing to unlock that potential by planning and investing in that infrastructure in the public space. That can open up huge development opportunities for the private sector in terms of both commercial and residential property development."

Twyford claims the National Government's approach over the previous two terms has been haphazard, with a select few handpicked projects prioritised over intelligent planning for the long term.

"Our biggest criticism of this Government is that they are a one-trick pony," he claims. "They've sucked funds from all other parts of the transport budget in order to fund a handful of urban motor projects. In doing so they've neglected state highway projects, public roads and public transport.

"You will see as much or more infrastructure under a Labour government. Our approach is to build more, and build better. We're pro-development."