ACT’s transport spokesperson Simon Court can reveal that Waka Kotahi has overseen a state highway budget blowout of over $614 million across the last four financial years.
“Figures released to ACT showed cost overruns of $614,567,134 in the 2020 to 2023 financial years,” he said. The size of this overspend shows that Waka Kotahi should not be responsible for procuring and delivering major highway upgrade projects.”
“The money to pay for cost overruns like this has to come from general taxation. Waka Kotahi needs to be reminded that every dollar of taxpayers’ money wasted in this way means higher taxes on hard-working Kiwis and less money to spend on essential services, like health and education.”
“The worst overspend was $ 145,837,662 on the Peka Peka-Otaki expressway, followed by $81,200,001 on the SH3 Mount Messenger bypass and $77,522,652 on the SH 16 Brigham Creek to Waimauku safety enhancements even though that project has not yet started construction.
“Imagine the difference this eye-watering amount of money could have made if spent wisely. It’s more than half of Pharmac’s annual budget, it could have funded their entire new drug wish list with money left over, or it could have funded ACT’s alternative budget promise to increase GPs capitation funding by 13% for three years.
“The alternative to this wasteful spending is ACT’s policy to involve the private sector in the funding and construction of major highway projects. By using Public Private Partnerships, the government will be able to leave commercial risk - and cost overruns of this scale - to the private sector.
“Waka Kotahi budgets are typically based on P50 cost estimates, which means they only have a 50% probability of delivering a project for that cost. Any delay between getting budget approval and starting the work means that inflation and other risks begin to erode their financial position. It’s the taxpayer who pays for delays and poor risk management, road users stuck on congested roads, and communities living with high traffic volumes through their suburbs.
“A PPP however is responsible to their shareholders, so there is a strong motivation to price the work accurately and get construction underway as soon as possible to minimise the risk that inflation eats into profits on a fixed price contract.
“A PPP can mitigate risk by minimising delays in design and construction approvals that might take Waka Kotahi weeks or months. A long-term PPP concession could incorporate more durable materials which may be more expensive up front, but that require less maintenance and so have a lower overall cost. A long-term PPP may acquire and develop property along the route to defray the cost of construction and operations. This means motorists get better roads and taxpayers’ better value for money.
“In addition, ACT’s repeal and replacement of the RMA would allow for faster infrastructure development. We’d take the politics out of transport and infrastructure and get central and local government working together through 30-year infrastructure partnerships, devolving revenue and responsibility to regional governments and the private sector, while strengthening accountability and oversight from central government.
“We need investment in high-quality infrastructure to boost jobs, wages and growth. But the current arrangements for delivering infrastructure are inadequate and politicised.
“Infrastructure, with its very long-term horizons, is unsuited to decision-making by politicians and delivery by government departments. ACT would harness the power of private enterprise and the wealth of offshore investors to deliver the infrastructure New Zealanders’ need.”