The Government's plans for light rail in Auckland could cost up to $29.2 billion, according to Treasury papers released this morning.
The papers also said the cost of building light rail does not include the cost of building infrastructure to realise the additional urban development planned along the route from the central city to the airport.
In late January, Finance Minister Grant Robertson and Transport Minister Michael Wood unveiled the Government's preferred option for light running - a hybrid system running in tunnels from Wynyard Quarter to Mt Roskill and then proceeding at street level to the airport.
The ministers said the "hybrid" system had been chosen over two other options: light rail at street level costing $9b and light metro above or below ground costing $16.3b. This was because it had greater carrying capacity, was less disruptive and better aligned to a linked-up rapid transit transport network, they said.
The ministers said the new line would be designed, consented and built by the early 2030s at a cost of $14.6b.
The Treasury papers said information provided to it by the Light Rail Establishment Unit noted cost estimates with an accuracy range of -50 per cent to 100 per cent based on a "very low level of design".
This meant the costs for the Government's option "could range between $7.3b and $29.2b".
Treasury added the current level of cost estimates are not unusual for the indicative business case phase of the project and these costs "should not be relied upon to provide an accurate indication of likely final cost of the project".
The light rail project will connect the largest business and residential area in the country – the inner city – with the second largest employment area – the airport precinct. It will run past Eden Park and through suburbs that are expected to get 66,000 new homes with 150,000 more people living in them.
But Treasury said the establishment unit had not provided any costs for enabling infrastructure for the extra housing and infrastructure needed to realise the extra capacity on water, wastewater, stormwater, other utilities and additional transport requirements.
Robertson has said the Government will fund the "lion's share" of the project, but is being guarded about other funding options, including "value uplift" - a charge on businesses and developments that benefit from the project - and a possible $1000 tax on homes within walking distance of about 18 stations.
Treasury said greater commitment is also needed from Auckland Council, which is providing some resources to get the project off the ground.
In an aide memoire to Robertson last September, Treasury staff said a formal commitment needs to be signalled in the coming months between the Crown and the council for the council to undertake upzoning areas along the route, master planning along the route and agreement by council to own and operate light rail, including the operating and maintenance costs.
Treasury also wanted to see a commitment from the council to help pay for light rail and enabling infrastructure and suggested general rates, targeted rates, development contributions as funding tools.
Mayor Phil Goff has said the council would have a role to pay providing infrastructure around the project, but given its financial position it does not have the capacity out of rates to pay for light rail.
Aucklanders will contribute to the project through their taxes, he said.
National transport spokesman Simeon Brown said the Government should not be steaming ahead with its light rail "vanity project" when the cost could explode to $29b and New Zealanders are in a cost of living crisis.
"Treasury's advice was scathing of the project, saying the Government should not pick a preferred option for light rail until further analysis could be undertaken – advice the Government has clearly ignored," he said.