Tens of billions: Why the bill for planned Roads of National Significance keeps going up

Photo: RNZ / Angus Dreaver Has justifying our massive spend-up on roads been 'juiced by some convenient maths' or are New Zealanders not capable of seeing the big picture? If you hold the purse strings to government spending, you know there are so many things that will suck up those dollars. But while nurses, teachers and firefighters protest about the infrastructure crumbling around them, others are scratching their heads over the rapidly increasing bill for the Roads of National Significance. The latest estimates puts just 17 roads in the range of $44 - $54 billion. That's 23 Dunedin Hospital rebuilds, or half as much again as our entire 11,000 kilometre highway system is worth. Eight of the roads have had their costs increased by $5b in the past two years (without any shovels getting into the ground), some because the original estimates were based on old figures, but also because infrastructure inflation since covid has been astronomical. Prime Minister Christopher Luxon says the bottom line is that we need to act now to future-proof this country's infrastructure. Newsroom senior political reporter Marc Daalder says there's a range of factors behind the cost increases. "For some of these projects the scope of them has expanded or changed, so they're going to look different than they had previously thought. Some of the costings that National relied on during the campaign were really old costings, some of them dating back as far as 2015, so we've obviously had quite a lot of inflation since then. "Time has passed since the costings were developed and a more intensive process has been undertaken to understand how much these projects might cost, and as a result of that we've gotten some higher figures than we might have expected." There's one project that's sucking up much of the billions, and that's the Northland corridor. It's been divided into three stages which together will cost an estimated $18 - $22b. There is an argument that it's Northland's time for some road security, but advocates such as Greater Auckland director Matt Lowrie says it's a lot to pay for a road that will carry less traffic than most of Auckland's arterial roads. "We simply can't afford to be spending $15 - $20 billion on a single road that carries on average 10 - 15,000 vehicles a day," he says. "We need to find solutions that can provide improved quality service ... but should it be straight to a large four-laned highway or should we look at other options first? That includes easing corners, putting safety measures in place, putting more passing lanes in place. Those are the types of things we used to do quite regularly along large parts of our network." NZTA has said the Northland corridor will make it 38 minutes faster to drive from Te Hana and Whangārei, but according to Google maps that trip takes 59 minutes - a seemingly impossible shaving off of time. However, the fine print reveals that 38 minutes is only saved if you're in bumper to bumper holiday traffic, and without congestion the time saving is as little as eight minutes. Lowrie says the cost justification for building these roads has been "juiced by some convenient maths", with changes in the Benefit Cost Ratio calculation issued by Treasury earlier this year. "What effectively the government has done through officials is to change those rates to be more favourable to big projects," he says. Instead of being weighed against 30 years of benefits, that calculation has moved out to 60 years, and other rates have been tweaked too. The critieria has effectively been lowered quite significantly. "So that means that these big projects suddenly look a lot better ... under previous governments these projects would never have been built based on economic outcomes." The BCR is only one aspect of assessing a project and Lowrie discusses the details in Tuesday's The Detail podcast. The counter argument to this is that we underestimate the benefits from such infrastructure. Nick Leggett, the chief executive of Infrastructure New Zealand, says the parameters of the BCR can be quite narrow, and there are other factors we should consider. He thinks we don't sell the value of such projects well enough. "We don't paint a picture - people can't see why we do these things," he says. "If people can't see benefits, if they're not explained ... they won't buy into it, and all they'll see is the cost. "I think there is a cultural aspect to this in New Zealand. We do whinge about the cost of everything and we see the value maybe 10 years later once something's built." He gives as an example the building of the Auckland Harbour Bridge, seen at the time as too expensive, with not enough return on investment. The project forged ahead with tolls - "it led to the whole North Shore," he says. "Five percent of New Zealand's economy travels across that bridge every day. And if it fails - and there's a risk of it failing, it's not going to go on forever - it would be...

Tens of billions: Why the bill for planned Roads of National Significance keeps going up

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