Thursday, February 07, 2008

and so Transmission Gully?

Martin Kay from the Dominion Post is interviewing his PC by speculating that "The potential for private investors to pick up the $470 million shortfall for the planned motorway is firmly on the table"
Given that the legislation to do this has been around since 2002, and that there has been some private interest in this, it is hardly a surprise. However, Martin Kay has clearly missed a major point. The proposal for the Waterview project is (presumably) that the full cost of the project is financed by the private sector. Suggesting the private sector finance less than half of the cost of the project, while taxpayers subsidise the rest means that taxpayers are subsidising the return to private shareholders. Indeed, the noise from potential "investors" (nice to invest some money and get a return from the money "invested" by the state too) a few years ago was that they would happily help with financing, building and operating Transmission Gully, if the government coughed up the majority of the cost.
The truth still remains that Transmission Gully has low traffic volumes, is not viable as a toll road (even if the current highway is also tolled) and the $955 million putative cost is about to undergo the same type of inflation that Waterview Connection has. Let's not pretend that a costing that is now nearly 3 years old remains accurate in todays money, it is $1.04 billion based on inflation alone. The current detailed investigation phase will probably uplift that by another 20% I suspect. The $485 million "promised" hasn't increased to compensate for that. Again it's a road that the users wouldn't pay for if they had to, nor would those who directly benefit from it, so why make others pay for it?

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