COMMENT:

Light rail from Auckland's CBD to the international airport. Sounds sexy doesn't it? And in a narrow (but short-sighted) commercial sense, it is.

But is it also political vanity on steroids?

When the Government already has an unsolicited offer from the NZ Super Fund and a Canadian institutional investor in its back pocket to bankroll the multi-billion dollar project and keep it off the Government's books, what could possibly go wrong?

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The unsolicited offer just happened to land with impeccable timing.

Clearly the proposal would arguably keep the project off the books, to a degree, as far as Auckland ratepayers are concerned.

But not obviously the travelling public that will have to pay a sufficient level of fares to ensure the Super Fund and its consortium partner CDPQ Infra (Caisse de depot et placement du Quebec which is building a Montreal 26 station light rail network) get a suitable return on their investment.

Nor will the Government be able to offset all political and financial risk as "off the books" projects have a habit of rebounding on the taxpayers' purse in the event of failure. Having the Super Fund invest in infrastructure is the type of smart, pragmatic deal that meets favour with a large proportion of our key business decision-makers.

In the recent Herald Mood of the Boardroom survey, nearly 80 per cent of CEO respondents felt that entities like the Super Fund (and ACC, iwi and KiwiSaver funds) should be encouraged to invest directly in new infrastructure.

The answer to another question, specifically about whether the Super Fund and its proposed Canadian partner should be awarded the contract to design, build, own and operate Auckland's light rail project if it keeps debt off the Government's balance sheet, was more nuanced.

Nearly two-thirds were in favour. Some 22 per cent were unsure.

The first issue, as lobby group Straight to Airport Rapid Trains (Start), pointed out this week is whether running light rail from the Auckland CBD to Auckland Airport makes sense in the first place.

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Should Auckland simply run heavy rail by building a spur from the airport to the city's existing rail commuter network at Puhini?

This would not be sexy compared with the light rail option which provided plenty of glitzy images for Labour during the 2017 election campaign. But it would arguably be more likely to be able to cater for the big expansion of tourist numbers into Auckland in an efficient manner.

It is also the type of investment which must be tested against other priorities for Auckland infrastructure.

Unfortunately, the Government's infrastructure advisory entity is not expected to be up and running until the middle of 2019.

This is a pity as the ranking of this project, against other alternatives for a CBD-airport link, is exactly what the independent body should be doing, and, if it does not stack up, simply "tell truth to power".

In the box seat are the NZ Transport Agency, Auckland Council and Auckland Transport.

Also Transport Minister Phil Twyford who is sponsoring the project from a political perspective and has nailed his colour to the wall on this project.

NZTA has made clear any PPP for this project has to be part of a competitive procurement process.

But the views from business leaders operating in the construction, infrastructure delivery and tourism platform space are pointed. There is a consensus that capital providers should compete evenly and openly for the opportunity to develop infrastructure, tempered with a sense there has to be proof the consortium is best placed to deliver the solution.

Many can point to more pressing transport needs. But there is also strong questioning of the project and whether there is a real benefit, relative to the cost, of doing the light rail project at all.

When it comes to keeping the PPP risk off the Government's books, the sentiment is unclear. Some view Super Fund investment as State investment by stealth. Others say there should be an honest and transparent accounting of the impact of such funding mechanisms.

The problem the Government faces is it made the project an election promise. Twyford, and also Jacinda Ardern who campaigned on light rail, may not want to take another look.

But from a taxpayer perspective the onus is on them to ensure it is appropriately tested when it comes to financial viability of the proposed CBD-airport link.

If it does not stack up against alternatives, the politicians should simply abandon it.
Anything else would be political vanity.