Auckland's $1.4 billion Eastern Busway facing funding problems

The third and final stage of Auckland's $1.4 billion Eastern Busway is facing fresh uncertainty over funding issues and commercial negotiations with the contractors.

The last 5km stretch of the busway between Pakuranga and Botany is in the final design phase with a budget of $867 million, but listed as a "key risk" in the city's 10-year transport plan.

This is the second setback in less than a year for the biggest public transport project in Auckland after the $4.4 billion City Rail Link.

The Eastern Busway, similar to the Northern Busway, includes bus interchanges at Pakuranga and Botany and a flyover for vehicles at Pakuranga.

Once built, it is expected to carry 30,000 people a day between the rapidly growing southeastern suburbs and the rail network at Panmure, making it possible to travel by bus and train between Botany and Britomart in 40 minutes - 20 minutes quicker than now.

Transport Minister Michael Wood. Photo / Alex Burton

Midway through last year, the busway had its completion date pushed back from 2025 to 2027 because of a funding wrangle between Auckland and Wellington.

Last October, Transport Minister Michael Wood stepped in with funds from the abandoned cycle bridge over the Waitemata Harbour to bring the timeframe for completion forward.

The latest uncertainty was raised at the regional transport committee on March 31 where transport officers mentioned a funding shortfall from the NZ Transport Agency and uncertainty around the regional fuel tax.

The busway was categorised as a "key risk" on the basis higher subsidies from the transport agency, Waka Kotahi, do not materialise and may need additional council and Crown funding.

AT chief executive Shane Ellison said a number of elements are at play, including finalising recent public consultation and ongoing commercial negotiations with the Eastern Busway Alliance to get agreement and finalise a detailed business case.

"These negotiations are commercially sensitive and come at a time when there is significant pressure on Auckland Council's financial position and budgets for 2022/3 due to reduced revenue and inflationary pressures – both of which may have implications for Auckland Transport," he said.

AT is running out of money to run the city's buses, trains and ferries at current levels and the council is facing similar problems from reduced revenue that could lead to service cuts.

The Eastern Busway from Panmure to Botany is expected to carry 30,000 passengers a day. Photo / Supplied

Wood said the council and AT need to find 20 per cent of the cost for the third stage because the Government has agreed to allocate $200m from the New Zealand Upgrade programme and Waka Kotahi will top up Wellington's contribution to 80 per cent of the cost.

The minister noted the project is being supported by funds from the Regional Fuel Tax. The council has an unspent surplus of about $300m from the tax.

Inflation and rising construction costs are likely to lead to an increase in the budgeted $867m cost of the last stage.

"I am advised that final costs will be clarified once the design is confirmed in the coming month," said Wood.

Auckland Mayor Phil Goff is confident the final state of the busway will go ahead as planned, subject to the funding issues being confirmed.

He said the fuel tax can only be spent on projects set out and moving funding from one project to another would require a change in regulations by the Government and come at the expense of other projects.

"While expenditure of the fund is currently lagging behind the revenue collected, this will change as the construction phases of the projects funded commence," Goff said.

He said the major threat for the project would be scrapping the Regional Fuel Tax by a new mayor or National following through with its promise to scrap the tax.