Cashflow difficulties caused by the Christchurch earthquakes and other factors have persuaded the Government to increase the Transport Agency's overdraft facility by $90 million.

Failure by the Ministry of Transport to record payments of $180 million from the national land transport fund has also compounded the cash squeeze, says a report to the agency's board, made public under the Official Information Act.

That meant the agency thought it had much more cash than was available, after it made a withdrawal from a Government facility of $250 million.

The facility has since been increased to $340 million after the Transport Agency's board ruled out trying to change the organisation's terms of trade for payments to local authorities and suppliers, partly for fear of undermining its reputation.


An exception has been an agreement with Auckland Transport for the agency to delay subsidy payments for some projects, including a programme of road and busway improvements around Panmure and Pakuranga.

Agency chief executive Geoff Dangerfield has defended that as "a good example of how we are working in partnership with Auckland Transport - in the interests of getting things wriggling along".

"If they have more resources they can put towards something in the short term which helps to move things along, we can come along and pick up our contribution at the back end of it," he said.

"If we said, hang on guys, don't do anything at all until we can come along with our full share, that doesn't get Auckland anywhere."

Although the agency has a moratorium on new commitments for state highway projects for the rest of this financial year, it is reluctant to ration spending on existing work for fear of degrading the construction industry before a predicted boom.

That would "have serious implications for the construction sector, particularly given its need to gear up for the Christchurch rebuild", the agency board report said.

Despite having to ask the Government for the extra overdraft allowance, Mr Dangerfield said he hoped not to have to use it.

"They have given us a further $90 million worth of leeway over a four- to five-month period, just to help us with some particular cash-flow things."

The agency had built up "a huge amount of momentum" on transport projects, and he was not overly concerned about the cashflow squeeze. "We don't get a great transport system by keeping money in the bank."

Transport Agency annual budget - about $2.7 billion
Unforeseen pressures
* Canterbury earthquake repairs ($130 million for first two years - much more to follow).

* Faster than expected progress on motorway projects such as Auckland's Victoria Park tunnel.

* Government's deferral of a 1.5c a litre increase on fuel tax.

* Accounting oversight in which Ministry of Transport did not record an outflow of $180 million from the national land transport fund