Brian Rudman: Look out for landmines in public-private roads

How deliciously timely that Aussie apostle of road tolling Tony Shepherd should arrive here to extol the glories of building motorways through "public-private partnerships" just as New South Wales Premier Morris Iemma is forced to announce a review into the controversial method of road building.

Premier Iemma's move is an attempt to damp down the growing fiasco surrounding Sydney's Cross City Tunnel, which since its opening last month has been widely boycotted by motorists objecting to the "excessive" $3.80 toll.

The private consortium running the motorway had budgeted on 35,000 trips a day in the first three months, rising to 90,000 by May 2007. But in the opening weeks, only 24,000 trips a day were recorded.

To "encourage" motorists into the tunnel, the consortium invoked a hitherto-secret clause in the 30-year deal with the state Government, giving the private operators the right to close, or restrict access to, up to 500 roads within a 5km radius of the tunnel.

This "road calming" measure was designed to force vehicles off local streets onto the private road, thus ensuring the private operators a profitable traffic flow.

What it did ensure was an outcry from motorists and a half-pie apology from the Premier, who said sorry but he couldn't break the 30-year deal done with the motorway consortium without being up for $908 million in compensation.

As a people-calming gesture, the operators hurriedly declared a three-week toll-free period, hoping that once they had experienced the delights of the private tunnel, motorists would learn to live with the high tolls.

To stir things up even more, former Premier Bob Carr, longtime champion of private-public partnerships, chose this moment to become a part-time consultant with Macquarie Bank on a rumoured fee of $534,000 a year. Under Mr Carr's Government, Macquarie had won major toll-road contracts.

The furore has fuelled a lively debate about what one academic calls the "tunnel industry complex". It is highlighting how, for major one-off payments up front, Governments have been willing to lock the public into long-term deals that seem to guarantee on-going profits for the private road-operators but leave the public to carry the can if things go wrong.

In the case of the Sydney tunnel, for instance, the right to close local streets to funnel cars into the pay-tunnel was one condition. Another was a promise to compensate the private operators if future improvements to the public transport system reduced car usage along the pay road.

All of which is by way of saying, to quote my ever-cautious father, beware the itinerant travelling salesman.

Especially when he turns up on the doorstep declaring a public-private partnership would be ideal for filling the missing links in Auckland's western ring route from Manukau to Albany.

Mr Shepherd's company - he is chairman of the infrastructure management giant Transfield Services - is not involved in the Sydney project but is about to own and operate a major motorway out of Melbourne.

Before the election, Rick Barneveld, chief executive of Transit New Zealand, said that even with the extra money promised by Labour during the election campaign for State Highway 20, there would be a shortfall of $1 billion if it was to be completed within 10 years. Both he and Prime Minister Helen Clark said completion would be dependent on the willingness of Aucklanders to accept some tolling.

Before that gets written in stone, perhaps someone should commission an independent - if that is possible - inquiry into the pros and cons of the public-private partnership experiences of Sydney.

It could also re-examine work already commissioned by Transit into the costs of tolling Auckland roads.

In August, just-released Cabinet papers revealed that a standalone electronic tolling system for Alpurt B2, the Orewa to Puhoi motorway, would need continuing subsidies to even cover operating costs. Even if the system was shared across another motorway, such as SH20, it would need operational subsidies for at least 18 years.

This suggests tolling is a very inefficient and expensive way of raising funds. Particularly if you have a private middleman slotted in, clipping the ticket each time a car passes through.

If we need it so badly, then what's so wrong with upping petrol tax?