The announcement that procurement would begin immediately for the light rail line connecting Māngere to the city centre was not a surprise. That procurement would also begin straight away for the northwest line, however, was a surprise. And the revelation that the New Zealand Superannuation Fund will bid for full funding, construction and operational control of both projects, that was a real shock.

Not that Fund managers will literally roll up their sleeves and run the trams. The Super Fund, if successful in its bid, would contract the work to transport operators, just as Auckland Transport does with bus companies.

The Super Fund is not given to rash decisions. In fact, it's one of the best-performing sovereign wealth funds in the world, with annual returns in recent years of around 15 per cent. As much as anyone in investment finance, it knows what it's doing.

But the big financial question is not whether it's a good investment for the Super Fund, or whoever else bids for the work. It's whether it will also be a good deal for taxpayers. That's because there's a danger with public-private partnerships (PPPs) and similar mechanisms: the financial risk remains public but the profits are privatised.


The Super Fund is Crown owned, so its bid will not involve a PPP as such. But the principles will be the same. You have to hope the Fund is interested in the projects for their inherent value, and not simply because they see them as an easy source of guaranteed income.

And what is the inherent value? For the Fund, it could be significant. According to Auckland Transport data, a light rail line, operating every five to 10 minutes, can carry close to 11,000 people per hour. That's the equivalent of a four-lane motorway.

Business in Auckland should be salivating. Within the next few years, the city will have many of the components of a rapid transit network in place. It will include those two major light rail lines, plus a doubled capacity on the existing three heavy rail lines, thanks to the City Rail Link. It will also include an expanded dedicated busway in the north and similar busways in the east and the south.

The roads will not magically become congestion-free. But the creation of this network is the key to keeping them functional. And for many users, efficiency will improve. The rapid transit network will make it much more realistic, for hundreds of thousands of Aucklanders, to leave the car at home.

Those who do need to take the car will find it easier to do so. As for freight carriers and other businesses that need efficient roads, they will be among the biggest winners.

That will strengthen the economy, and that will strengthen the Super Fund. There's some more joined-up thinking going on here.