KEY POINTS:
The devil will doubtless be in the detail when a steering body assessing the feasibility of a public-private partnership completing the western ring route reports back to the Government in five months. That arrangement appeals as the most appropriate for a project as huge as the proposed 5km
deep-bore motorway tunnel and as costly as $1.89 billion - but only if safeguards are built in. Even then, it will be controversial because roads built in partnership with private companies will almost invariably be tolled.
Nonetheless, it will be the right decision for several reasons. First, and most importantly, private participation would bring cost efficiency and financial discipline. Private companies need to make such projects profitable, especially if, as should be the case, they cannot be bailed out by their public partner. They therefore make realistic risk-based assessments of cost, usage and the size of the toll that must be levied to earn a fair return over a reasonably short time. Tolling is always a risky commercial proposition when free alternative routes are available. If private companies cannot make a project viable they will want no part of it.
That degree of risk assessment is not guaranteed under the usual funding for infrastructure in this country, where the Government controls and finances the project and contracts the private sector to construct it. Often there are cost blow-outs or delays, and taxpayers are left to wonder why a more accurate analysis could not have taken place. Finance Minister Michael Cullen has made it clear that it would be "quite difficult" to complete the western link as well as other Auckland transport projects by 2015 from fuel taxes alone. That suggests tolls may be necessary for the tunnel whatever the construction arrangement.
That may be desirable, given that the point of a toll would be not only to recoup funding but to relieve congestion by providing motorists with an alternative route when it is worth their while to use it. One estimate reckons that as many as 100,000 cars a day could be siphoned away from Spaghetti Junction. If there is no tolling, the route could become just another congested inner-city motorway.
Should the Government go it alone on the proposed tunnel and its calculations go awry, motorists could pay a heavy price in tolls for years to come. That threat dwarfs the pluses of Government funding frequently enunciated by opponents of private-public partnerships. It is, as Dr Cullen says, more economic to fund projects off the Crown's balance sheet because the Government can acquire capital more cheaply than the private sector.
But there are always risks and only a private-public partnership enables these to be passed on and addressed to the necessary degree. For this to happen, ventures must be framed so that the private partner is in no doubt about the risk to itself. There should be no escape door if a project begins to flounder, whether through Government financial underpinning or tinkering with other roads to increase patronage.
Such stringency could mean no private company wants to be in the proposed Waterview tunnel partnership. If so, so be it. But if the private sector cannot make it work, why should the Government proceed with its own borrow-and-toll scheme? It would be better to revisit the much cheaper alternatives, the trench option or, as envisaged early in the piece, a motorway through Mt Albert. That may not be politically palatable, and the bulldozing of about 500 houses may carry its own cost. But that would be the responsible course.
