Aussie offers to build our roads - and collect tolls

Tony Shepherd

Australian businessman Tony Shepherd, who sold New Zealand its Anzac frigates in tough negotiations in the 1980s, is back offering to bankroll new roads in return for collecting tolls from them.

Mr Shepherd, chairman of the infrastructure management giant Transfield Services, says a "public-private partnership" would be ideal for filling missing links in Auckland's 35km western ring route from Manukau to Albany.

"If you roll them into one project, you've got a world-scale, world-class project which would attract international attention," he said in Auckland as guest of the Council for Infrastructure Development.

His visit coincided with Labour's agreement not to toll a new Tauranga Harbour bridge - part of the price of New Zealand First's support - but he said this should not obscure "the big picture of projects which would really kick-start your whole economy in Auckland".

Asked if the western route project would be large enough for Transfield, which has an annual turnover of more than $1.6 billion, he said: "It is billion-dollar-plus stuff; the hotels in Auckland would be full."

Transit New Zealand expects to borrow $800 million over 10 years to supplement Government funding of $3.2 billion for new Auckland roads, and wants public support for repaying this from tolls.

But Mr Shepherd said the private sector could accept most of the risk by raising money up-front for new roads, before managing them and collecting tolls for an agreed period, after which they would revert to Government ownership.

"You pay a premium for that, but boy, that is a big risk off your back."

The same applied to other infrastructure, including railways, although he was guarded about a meeting he and Council for Infrastructure Development chief executive Stephen Selwood held with the Auckland Regional Transport Authority last week.

Mr Shepherd has also met Transit, Land Transport New Zealand, and officials of several Government departments including Treasury.

He already has experience in finessing New Zealanders, at negotiations over the Anzac frigates, of which this country bought two vessels out of a 10-ship project worth more than $4 billion.

"We spent a lot of time in New Zealand making sure the New Zealand Government and New Zealand Navy were comfortable with our product."

Although construction is no longer Transfield's core business, the reformed and publicly listed company will own and operate a $3.8 billion toll road running 40km east from Melbourne when it opens in 2008.

It has raised $1.2 billion for the road through Australia's stock exchange, including from investors in Singapore and Hong Kong.

Mr Shepherd said a profit-sharing arrangement with the Victorian Government meant it would share anything above a basic agreed return from a toll which worked out at around 17.5c a kilometre, "which is the cheapest tollway so far in Australia".

"Governments have got a lot more sophisticated in dealing with the private sector on this, and making sure it's a fair deal, and the community's protected and nobody gets huge windfall gains."

Asked why a new industry was needed to collect tolls in New Zealand, rather than simply raising money from petrol taxes, Mr Shepherd said many Australian roads would not have been built without A$7 billion ($7.5 billion) of private investment in the past 10 years.

Super salesman

* Tony Shepherd chairs Transfield Services. It has 13,000 employees, 3000 in NZ.

* Completed: $750 million Sydney Harbour Tunnel project; $4.3 billion 10-ship Anzac frigate project (including two NZ warships); $2 billion 22km Melbourne City Link toll road.

* Heads: $3.8 billion Melbourne ConnectEast consortium.