Finance Minister wants better discipline in assessing benefits of big infrastructure projects

Finance Minister Steven Joyce. Photo/Mark Mitchell

Finance Minister Steven Joyce is looking for greater discipline in assessing the benefits of large infrastructure projects in the future.

Some projects in Auckland, such as the City Rail Link, did not stack up on a traditional cost-benefit basis, he said, although the Government has committed to funding for it.

"I think there is unfinished business now for all of us to think about what are the true wider benefits of some of these projects and trying to get a bit more discipline to them in the years ahead," he told the finance and expenditure committee at Parliament in response to questions from Greens co-leader James Shaw.

"From my perspective, I think it is important that we go through the benefit-cost ratio discussion.

"However I would signal that some of the projects that we collectively have all committed to, including the CRL, doesn't really stack up on a traditional cost-benefit basis."

He said the tendency in New Zealand had been for parties to commit to a project without looking way for a way to unlock some of the benefits to help pay for the project, such as a planning change.

Just about every motorway in Auckland was being expanded or was about to be expanded which would give real benefits for a few years.

He could not recall the next year that those benefits started to recede.

But that was why the Government was having a discussion with Auckland on demand management "which might achieve an outcome in the medium term which is better than what we are getting now."

"That is a conversation which is going to unfold over the next few years."

Speaking outside the select committee he dismissed any suggestion that Auckland's infrastructure costs could be funded by refunding gst to Auckland Council.

New Zealand had a very good accountability system in New Zealand where central government was responsible for the collection and allocation of taxes and local government was responsible for the collection and allocation of rates.

That has been an enduring system which has meant people know which buggers to kick out if they aren't happy with the allocation of either of those things.

Steven Joyce

"That has been an enduring system which has meant people know which buggers to kick out if they aren't happy with the allocation of either of those things."

Asked what advice he had for Auckland Council to raise revenue, he said he would start by holding costs, which is what the Government had done until it was in surplus which it was now investing in infrastructure.

"It seems to be good system that the public supports."

The city had increased its revenue significantly as the city had grown in two years from $3 billion to $4 billion.

The Government has committed to fund half of the CRL, estimated to cost up to $3.4 billion.

Joyce said that of the $20 billion that would be spent on transport in Auckland over the next 10 years, the Government would be funding two thirds of it.

"We will probably end up paying more because it is a growing city... and we have got a $32 billion [infrastructure] spend over the next four years and some of that is to be allocated."

But as to whether Auckland Council could make a bigger contribution, "the question is can they control their operating expenditure and release more of that extra revenue into their capital budget."