KEY POINTS:
Act leader Rodney Hide is right when he calls the new steering committee looking into the role of the private sector in completing the Waterview section of the western ring route "more dithering".
"Rather than announcing some kind of progress, the minister instead announced that his Government would
be consulting, investigating and studying the feasibility of involving the private sector in the project," he said.
Mr Hide might also have added that creating a committee top heavy with pro-road, private-sector lobbyists hardly makes the process independent.
One can only presume it's a devilishly cunning plan by Finance Minister Michael Cullen and Transport Minister Annette King to neutralise three of their most voluble critics in the run-up to November's general election. Instead of constantly nagging the Government, Auckland Chamber of Commerce chief executive Michael Barnett and his counterparts at Business New Zealand (Phil O'Reilly) and the New Zealand Council for Infrastructure Development (Stephen Selwood) now have to come up with a workable scheme.
They'll have to justify their starry-eyed belief in public/private partnerships with facts and figures and, most importantly, the names of willing participants, or back off gracefully and, more to the point, silently.
Public/private partnership (PPP) is one of those now old, new right mantras that try to entice public bodies into thinking they can buy now and pay later in easy on-going instalments. Anyone who has bought a car or fridge like this knows it's only a bargain as long as you ignore the extra hidden costs involved.
Same goes for a PPP scheme. We're told the favoured Waterview Connection deep-bore tunnel is going to cost $2 billion, give or take a few million. If the Government doesn't have the cash to pay up front, then money will have to be borrowed, then paid back, out of tolls or petrol taxes or general taxation.
Governments can borrow money at a cheaper rate than anyone else, so why would you enter into a PPP scheme which has the private contractor borrowing the money at a higher rate of interest? Why would you also bring in a commercial partner who then sits and clips the income ticket for up to 35 years?
One of the members of the steering committee, Mr Selwood, was showing his colours the moment his appointment was announced.
"One would expect that a public/ private partnership will enable this essential road link to be completed earlier and delivered and maintained to a higher standard than would otherwise be possible," he said. "The injection of additional private sector finance will enable the public purse to stretch further to other major transport projects."
Mr Selwood seems to miss the point that governments can borrow private sector finance as well. And more cheaply.
Of course, a PPP scheme almost inevitably means tolling. Dr Cullen admitted as much last week when he said it would be "quite difficult" to complete all Auckland's transport projects by 2015 from fuel taxes alone.
Transit New Zealand has already consulted Aucklanders on tolling and got the thumbs-down. Only last November, the Auckland Regional Council's transport policy committee rejected tolls for this very stretch of road.
This was soon after Transit NZ had confessed that administration costs associated with collecting $2 billion to pay off the loan associated with completing the ring route by 2015 would be $800 million over 35 years.
Among those on the committee was Mr Barnett, now the ARC deputy chairman, who attacked Transit "for holding Auckland over a barrel" by starting the route then saying it was short of cash. As a member of the steering committee, will he feel bound by the ARC's opposition to tolls?
Following the privatisation of the Ministry of Works and local body works departments, the private sector already builds most of our public infrastructure. As Fletcher Construction chief executive Mark Binns wrote at the time of the Eastern Highway furore in November 2002, the PPP concept "is not the panacea for the country's significant infrastructure requirements".
He pointed to sky-rocketing costs involved in bidding for and pinning down all the legal niceties of such schemes and added that "while the private sector is incurring costs as a result of these complexities, the public sector also needs to gear up its resources, usually through the employment of private sector consultants".
Maybe they should have put Mr Binns on the committee as well. He's someone who can separate the facts from the mantras.
