Steven Joyce says more costs to come for Auckland's rail loop

TRANSCRIPT STEPHEN JOYCE ON "THE NATION" OCTOBER 30
(Copyright to Front Page Ltd but may be used provided attribution is made to "TV3's 'The Nation'")

Steven Joyce says more costs to come for Auckland's rail loop

Auckland’s transport system could cost rate payers a lot more than expected says Transport Minister Steven Joyce.

Speaking on TV3’s The Nation, he said operating costs for the proposed Auckland CBD rail loop hadn’t yet been taken into account, and would have to be added to current rail operating costs.

“We actually have an issue in Auckland right now in that with all the electrification we're doing and all the extra timetables and things, there's actually a shortfall starting 1 July next year, of around 30 million dollars a year to run the Auckland rail network.”

The Auckland CBD rail loop is currently estimated at $1.5 billion. Mr Joyce was evasive about much Auckland ratepayer could expect to contribute to this.

“The only thing I would say is that Auckland has now got a pretty big balance sheet, and it's one city, it's got a big balance sheet and quite a huge capacity to debt finance things.

He said the Government’s contribution was limited by rising debt, expected to reach $60 billion over the next three years.

He also poured cold water on the idea of rail to the North Shore and airport, saying the pressure to balance the country’s books meant prioritising transport projects.

“To put heavy rail to the North Shore would be $5 to $7 billion, and if it runs up the busway which is the suggestion, would only lead to an extra 480 passengers a day.

“I think there are two big projects that Auckland will have to look at pretty quickly… with central government help. One is the CBD rail tunnel, and one is the third harbour crossing. Those are the next two big cabs off the rank.”

The Nation is produced by Front Page Ltd for TV3 and NZ on Air.

'THE NATION'

STEVEN JOYCE
Interviewed by DUNCAN GARNER

DUNCAN Welcome to Transport Minister Steven Joyce, thanks for coming into the studio today Minister.

STEVEN JOYCE – Transport Minister
Good morning, Professor Garner.

DUNCAN That story there from Darryl Hutchison finished with Len Brown saying this is our time, and 220,000 people voted for Len Brown. Does he not therefore have some kind of mandate to push this through?

STEVEN Oh yeah he definitely has a mandate on a whole range of issues, I mean he's the new Mayor of Auckland. I think it's very exciting that we're gonna have one mayor and on council for Auckland, it's gonna make my job a lot easier cos you're talking to one group of people, and he also shares our vision for Transport. We're spending about five billion dollars in Auckland on Transport right now, 1.6 billion of that is going into Rail the electrification, the new trains, all that is happening, and of course we're spending on the big projects like Waterview, and Victoria Park around Auckland as well on the roading. My view has always been you’ve gotta get all the corridors running properly, because if we're gonna get this city from 1.25 to 2 million people over 20 years then actually you will have to have all the corridors set up properly.

DUNCAN But you’ve got all these other commitments, which I have read in our infrastructure plan of around 5 billion, there is not a cent set aside for the local loop effectively, apart from that study. I mean is it ever going to get built do you think?

STEVEN Oh I think the CBD loop is probably the one that is – there are two things that basically come after the current tranche of projects which will get us through till about 2014 I suspect, and by then we will have quite a significant step change in Auckland transport. People who have been travelling to and from the Airport in recent times will know that the harbour crossing at Mangere Bridge has made a huge difference and I think we'll see a very significant step change once those current rail projects are sorted, and also once the western ring route is completed. So moving on from there I think there are two big projects that Auckland will have to look at pretty quickly after that with central government help. One is the CBD rail tunnel, and one is the third harbour crossing. Those are the next two big cabs off the rank.

DUNCAN But are you saying it is entirely possible that work on the loop could start, because I think in that story there Len Brown said he wants this completed within five to seven years. Now we're talking what 2016, 2017 on completion. Is that realistic?

STEVEN Well it's just too early to say. We just don’t have enough information, and one of the things I was saying prior to the mayoral elections that actually for a lot of this stuff the numbers are so rubbery we have no idea actually what it's gonna cost, and now we're gonna have a business case which talks about what it's gonna cost, which I think is good, but I think your reporter is right the numbers have got a bit higher than they were previously.

DUNCAN More than two billion dollars.

STEVEN My understanding and it's very rough is it's around the two billion dollar mark just to build it, and then beyond that there's the operating costs which is the bit that everybody likes not to talk about when it comes to these projects. We actually have an issue in Auckland right how in that with all the electrification we're doing and all the extra timetables and things, there's actually a shortfall starting 1 July next year, of around 30 million dollars a year to run the Auckland rail network that should be being paid for, in fact is underwritten by what was the Auckland Regional Council, and now the Auckland Council, and I've said to Len, had a discussion with him about a week ago, at the very least let's sort that out first, because that’s actually some reasonable dosh, and if people are going to take it seriously about expanding this thing further, then they're gonna first expect central and local government together to have sorted out how to pay for what we're already building.

DUNCAN So what you're saying is they can't sort out their own troubles with the current metro system, so don’t come knocking on your door if they won’t put their hand in their pocket now for what's currently happening?

STEVEN All I've been saying is let's do that first, because logically you know if you're a ratepayer in Auckland or a taxpayer in New Zealand you'd say well let's make sure we're actually paying for what we've got before we go on from there, and currently it's about 30 million dollars a year shortfall from 2011/12 onwards and some of that’s made up with the cost of actually maintaining and renewing the network that’s already been built, and we've seen in Wellington what happens when you don’t do that. In Wellington the problem is the network’s been neglected for a long time, everybody in Wellington has been long on ideas and short on pockets.

DUNCAN They're short on pockets in Auckland too aren’t they. You bring up money and I want to look at money. I mean I covered some of Len Brown’s campaign here in Auckland, he was talking about capping rates between one and 4%, now capping rates at 1 and 4% isn’t going to fund a long term loop, and they're going to come knocking on your door. Is it not part of central government’s responsibilities to help unlock Auckland and fund it, put your money where your mouth is?

STEVEN Well we're already doing it, I mean as I say we've got 5 billion…

DUNCAN I know what you’re doing there, but the local loop I'm focusing on.

STEVEN Yeah in terms of that I agree that the central government will have to make a contribution, but also at the end of the day politics is pretty simple you know, you have a vote and you get your say and if you're ratepayers you vote for your local government, if you're taxpayers you vote for central government. So local government has a responsibility of how it spends taxpayers’ money. So that’s sort of the first split, and I'm assuming that when people in Auckland vote for more trains and things they are expecting to actually – as ratepayers, as I am an Auckland ratepayer, are expecting that the new council will actually be going to ratepayers as part of the deal and saying well actually we've gotta spend some money on this stuff.

DUNCAN So you're willing to make a contribution though because you said just at the start of that answer there that you are willing to make a contribution.

STEVEN Well that’s the obvious inferment is that central government will make a contribution but again we need to understand something in the wider sense. Central government this year is borrowing 13.3 billion dollars just to keep the country running, and at the moment our debt is projected to double from around 27 billion to getting up towards 60 billion over the next three or four years.

DUNCAN I saw that, and the cash deficit next year is going to be 10 or 11 billion….

STEVEN That’s right, these a big sums of money, so on top of that you're competing with capital aspirations against hospitals, schools, and a whole range of other things. So I'm saying yep I think in principle central government knows it has to make contribution to these sort of projects. In practice there's going to be a lot of competition.

DUNCAN We'll get on to competition shortly, but if it comes down to it do you think Len Brown can keep his ratings promise of 1 to 4% and build this, because clearly you're limited as a government, I mean we're already face debt as you’ve just said. Do you think Len Brown can keep his ratings promise and build this or not? It's realism isn’t it?

STEVEN Well it's up to Len and the Council in terms of how they obviously essay in the same way that I wouldn’t expect the Council to tell me how to sort out necessarily how transport money gets spent, I wouldn’t presume to tell them about how to do their rates either. The only thing I would say is that Auckland has now got a pretty big balance sheet, and it's one city, it's got a big balance sheet and quite a huge capacity to debt finance things if it feels like it, and I see Len’s talking about PPPs and those sort of things.

DUNCAN You're not opposed to those are you?

STEVEN Not at all. So I think you know in the middle here once you get – these are the things you need. You need to understand firstly what it costs, we have no idea what it costs to build it, and what it costs to operate it, and so we need to find that out first.

DUNCAN Has he over promised in that sense?

STEVEN No, I think he's gone out with a visionary approach and I think that’s entirely his prerogative and the prerogative of the people of Auckland to decide who to vote for, and both mayoral aspirants have big aspirations for transport, but at the end of the day there's always gotta be a point where somebody says well who's gonna pay, and at that point you know we all want it – what's the line of Chris Trotter used it for me outside, we all want to go to heaven and nobody wants to die. So actually at some point we have to work out who's going to pay what.

DUNCAN And I want to look at a couple of his other promises as well. As Transport Minister do you think, and I'll make this final question on the loop. Do you actually think that Aucklanders in ten years; time will see a local loop or not, because we've seen so many problems with Auckland in the past?

STEVEN Oh I think it's a reasonable chance of that cos as I say I think there's two big projects after the current huge tranche of projects that have been launched, need to be looked at really closely, and the CBD rail loop is one, because it does unlock some of the other benefits of the other corridors and the second one is the third harbour crossing. Both of those are well worth a serious look at.

DUNCAN Now the harbour crossing is what I want to bring you to now. This is big and this has been talked about for a long time, but you're not opposed to it are you?

STEVEN Oh I think we will need a third harbour crossing, across the Waitemata at some point, the question is what goes in it, you know and what it looks like, and the challenge for the heavy rail advocates in that respect is that what I've seen so far which again is all back of the envelope stuff, so to put heavy rail to the North Shore would be 5 to 7 billion dollars, and if it runs up the busway which is the suggestion, would only lead to an extra 480 passengers a day, over what the buses are providing.

DUNCAN Is it justified then?

STEVEN Well it would be a tricky, just say starting with the numbers that we're sitting with today it's gonna take a while before that reaches the numbers….

DUNCAN Well with the numbers we're sitting with today my quick maths, with the local loop and with the 5 to 7 there, you're pushing 10 billion dollars.

STEVEN You would be pushing 10 billion dollars.

DUNCAN You haven’t got the money, rates are going to go up.

STEVEN I very much doubt that the government would have sort of money any time over the next ten years, but to be fair again to Len, he's not saying that either, he's saying from what I hear, the CBD rail is very important so we'll all sit together and work our way through that, and he's saying these other ones are in the longer term. Well it's all a matter of then when and I think everybody would agree that you'd have to work out what the benefits were, what the costs were gonna be before you embark on those sort of projects.

DUNCAN And that final project that he also talked out in his aspiration I suppose during his campaign, was that rail link out to the airports, we talked about for a while as well, is that really possible given the magnitude of those two other projects?

STEVEN Well it's another couple of billion and again all I'm saying is that you really need to have an understanding of what each one of these is going to achieve, because it's not just about whether you want something, I mean we can all draw lines on a map, I used to do that as a school kid, I was always interested in drawing out where roads and rail went, I was obviously pretty strange and preparing myself for a job as Transport Minister in later life, but the reality is then you have to decide who's going to pay for it, what's it gonna cost, all those sort of practical things. You can't just say well I'd like to do something therefore I'm gonna write out a cheque for it.

DUNCAN But Aucklanders do need to start preparing for perhaps paying directly through their rates for this, because you’ve made it quite clear today there's a contribution but it's not big.

STEVEN Well no, I didn’t say it was not big, but the reality is these things have to be contributed in a partnership sense, between central and local government. I mean these are very big numbers. Even the CBD rail loop at 2 billion dollars is a very big project. Sounds quick if you say it quick, but when you’ve got a government that’s faced with debts rising very quickly it's keeping the economy going with the injection of money that we're putting into the economy, to then say on top of that we'll have several more billion dollars for this, you'd have to have a pretty strong justification, and I speak as somebody who talks with our Finance Minister on a regular basis, and I know the pressures that he's dealing with in terms of making the country actually able to balance its books.

DUNCAN Steven Joyce thank you for joining us in the studio today. Quite clearly it's gonna be a long haul on this one.

ENDS

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