The New Zealand Upgrade Programme cost blowout

october 2021 - January 2022 The New Zealand Upgrade blowout

Projects in the New Zealand Upgrade Programme announced last year have now been scaled back or axed entirely, Greater Auckland's Matt Lowrie investigates

At the start of last year the government announced the NZ Upgrade Programme, a massive infrastructure programme which included $6.8 billion in transport projects around the country with around half of that being in Auckland.

The package contained some really good and much needed projects, such as the Northern Pathway, the third main between Otahuhu and Wiri, electrification from Papakura to Pukekohe along with new train stations along that section.

But the vast majority of the package, over $5 billion (75%) was for massive road upgrades, including to continue the National Party's Roads of National Significance. It was bizarre and many of the projects completely contradicted the Government Policy Statement (GPS) which is meant to guide transport priorities across the country.

There have been rumours circling for some time about

Biggest blowouts

Otaki to North of Levin $817m to $1,500m (+$683m)

It’s really hard to see how the government can justify continuing to fund this project. While traffic volumes have been increasing at the telemetry site at Ohau south of Levin and the current Annual Average Daily Traffic (AADT) is about 18,000, the business case suggested that by 2041 it is only expected to reach around 22,600. This is important as in the business case for the proposed Warkworth to Wellsford expressway, Waka Kotahi suggested the trigger for four-laning is when “Forecast traffic volumes are predicted to exceed 25,000 AADT“. I wonder what could have been achieved by instead putting that money into some safety upgrades, better connections between SH1 and SH57 to create a proper bypass of Levin and the rest into track upgrades and/or extension of electrification combined with improved rail services?

Penlink $411m to $830m (+$419m)

Penlink is a planned 7km toll road in Auckland between SH1 near Dairy Flat through to the Whangaparaoa Peninsula. It has been pushed for by locals for decades.

The $411m when announced last year was already up significantly on the $280m previously estimated by Auckland Transport. One of the main problems with Penlink has been there are just not that many people on the peninsula to use it. That and they’ll still face the same motorway bottleneck on SH1 – though I wonder if some of the extra cost could be widening SH1 too.

Auckland Transport have long term (unfunded) plans to extend the NX2 to Whangaparaoa via Penlink. Perhaps that needs to be combined with more general upzoning of the peninsula to help justify the cost.

The cost should hopefully put to bed the push for the road to be four lanes and not tolled – the toll will help in managing demand but even in 2046 only around 16,800 vehicles a day are expected to use it, so toll revenue would barely cover the interest on that construction cost.

big cost blowouts for some of these projects and the government themselves have said they’ve been going through ‘baselining’ process to review the costs.

Earlier this year they announced the outcome of that. It’s significant, with the overall programme almost doubling in cost if they were to continue all projects originally announced.

The government say they’re investing an additional $1.9 billion into the programme which will mean 26 out of the 32 original projects will continue to go ahead unchanged while the remaining projects have been changed – mainly for the better.

Cost Increases

One of the first things that stood out to me looking at the revised project costs

Takitimu North Link Stage 1 $478m to $655m (+$177m)

Stage 1 is formerly known as the Tauranga North Link and would see a new 6.8km, 4-lane road build from the current toll road (Takitimu Dr) to about Te Puna. One small positive of the project is, as Waka Kotahi say: “One lane in each direction will be used to prioritise public transport, vehicles carrying multiple passengers and/or freight“.

Melling Interchange $258m to $420m (+$162m)

This is the next in the progressive removal of at grade intersections along SH2 through the Hutt Valley and also includes flood protection works for the Hutt River and shifting the train station. The project had a business case completed in September 2019 so again it’s hard to understand how the costs could have escalated so substantially.

Canterbury Package $159m to $300m (+$141m)

As the name implies, this isn’t a single project but a bunch of projects throughout Canterbury.

was where they had increased.

The various rail projects in Auckland and Welling-

Transport Minister Michael Wood

ton along with a group of 13 smaller road projects throughout the regions all saw no to small increases in costs.

Meanwhile the bigger roading projects saw in some cases massive budget blowouts, in some cases more than doubling.

The fact that costs nearly doubled in just a year highlights there are serious issues in agencies like Waka Kotahi who provided the original estimates.

Yes, some cost escalation as projects go through more detailed design processes are understandable but projects doubling (or more) in such a short space of time suggests there are much bigger issues at play.

These are also the same people responsible for other highway blowouts. It seems to happen so regularly and with no consequences that it’s hard to tell if it’s incompetence or deliberate – after all it’s much harder for a politician to stop or delay a project that has been announced or is underway.

Project changes

One of the things that is notable from the changes is it’s clear the government are taking climate change more seriously. This is most notable in their comments surrounding Mill Road.

Transport Minister Michael Wood says in light of the increased costs and climate commitments, it was im-

Changed for the better?

Whangarei to Marsden

In Northland the planned expressway between Whangarei and Marsden is likely to have seen similar cost escalation to the other projects. As such it has been replaced with safety upgrades to the road and funding for the 19km rail spur to the port at Marsden Point which Kiwirail say is the first significant new rail line since the 1950s. There’s also funding to upgrade the line between Whangarei and Otira to handle heavier trains. Kiwirail also say that when the port moved from Whangarei to Marsden Point rail freight movements in the region dropped from about 1 million tonnes a year to about 100,000 tonnes but a Ministry of Transport business case found these improvements could see that rise to about 2.2 million tonnes.

Mill Road/South Auckland

Mill Rd is the most high-profile change and comes after the costs blew out from $1.354 million to about $3.5 billion – likely combined with pressure from advocates over its environmental impact. That environmental impact was even called out by Transport Minister Michael Wood.

Mill Road will become a smaller scale project, with a focus on addressing safety issues. It is expected to involve an upgrade of two lanes instead of four between Flat Bush and Alfriston tying in the existing urban Redoubt Road dynamic lanes. There will also be targeted safety improvements between Alfriston and Papakura.

Some suggest that a big factor behind the cost escalation for Mill Rd is Auckland’s runaway land prices.

It was always bizarre that we’d build both Mill Rd and an upgrade of the parallel SH1 at the same time.

As part of the announcement, Stage 2 of the motorway widening from Drury to where Mill Rd would have joined in south of Quarry Rd (including a new interchange for Mill Rd) has been deferred.

The overall package of works in South Auckland remains about the same total value but they say the savings “will allow investment in transport upgrades to release housing and local centres in Drury in a way that supports the Government’s decarbonisation goals“.

Finally in South Auckland, the initial NZUP announcement included $247 million for two new of the three planned new trains stations between Papakura and Drury. They’re now going to build all three.

Takitimu North Link Stage 2

Takitimu North Link Stage 1 is still going ahead, albeit with an increased cost. Stage 2 was a further 7km to Omokoroa and presumably experienced similar cost escalation to the other projects. Stage 2 has now been deferred with funding just for route protection. They also say it will now be required to be funded from the normal National Land Transport Programme and that it’s unlikely to occur within the next 10 years.

portant to take another look at the programme.

“Recognising the need to decarbonise our transport system, we’re rebalancing the package to increase investment in rail, public transport and walking and cycling.

“If we had proceeded with Mill Road as originally scoped, it would have cost up to $3.5 billion and at peak produced six tonnes of CO2 emissions a day. "Instead, we’ve focused on delivering important safety improvements to Mill Road, upgrades to SH1 and rail, and new rail stations connected to public transport, walking and cycling infrastructure. "This rebalanced package helps manage debt, reduces emissions and supports housing growth.

“The Marsden Point rail spur will be a strategic investment in Northland’s future prosperity, getting heavy trucks off the road to make the highway safer, and reduce emissions. "We know safety on SH1 is a concern for locals, so there will be targeted safety upgrades, including median barriers, along the route.

“Meeting our commitment to decarbonising transport means that we have to start doing things differently. "This re-balanced NZUP package shows our intent, and to guide future investment I intend to amend the Government Policy Statement on land transport to provide Waka Kotahi with the clarity it needs to make investments consistent with our country’s decarbonisation goals,” Wood concludes.

This is great to see and hopefully we’ll see a lot more of it, maybe even through some of the projects above where the costs increased.

Northern Pathway canned

Earlier this year, the Government announced plans for a much needed second harbour crossing for Auckland. The issue that many New Zealanders had with the project was that it would be a bridge for cyclists and pedestrians only, doing nothing to alleviate Auckland's growing congestion.

The Government has now decided not to go ahead with the project, saying it did not get the public support needed.

“The Government has both listened and acted, meaning that the Northern Pathway standalone bridge will not be going ahead,” Transport Minister Michael Wood says.

He says work will now continue on a public transport-led additional harbour crossing. "We allocated $60 million in the Auckland Transport Alignment Project (ATAP) earlier this year for planning work and property acquisition to occur.

“The cancellation of the standalone bridge means we can support a range of other projects consistent with our plan for a transport system that both reduces emissions and supports new housing,” Wood says.

Funding will be allocated across four main categories: - Continued work to improve pedestrian and cycle access across the Waitemata - Delivering high priority transport projects in Auckland - Accelerating the rollout of the Auckland strategic cycling network - Delivering a range of high quality regional transport projects

“Auckland will continue to see significant investment to support the economic recovery and get the city moving – which is why it’s our intention to use part of this funding to bring the Eastern Busway forward,” Wood says.

“East Auckland can’t afford to wait longer for better public transport. This project will achieve similar objectives to the bridge of reducing emissions and congestion.

“Another project we want to bring forward to give East Aucklanders more choices is a 1.9km link between Glen Innes and Panmure to connect the new Eastern Busway cycleway with the Glen Innes to Tamaki cycleway. "Additional work will occur in the coming months to identify other key links in the Auckland strategic cycling network that can be delivered.

“We will also continue to recognise the importance of better pedestrian and cycling access across the Waitemata.

“The Seapath cycleway project will continue, with some re-design at the harbour bridge end. "We will run a short process to investigate lower cost options to create a connection for walking and cycling across the Waitematā before the additional harbour crossing is built.

“I know there will be calls from some to permanently allocate a lane on the existing bridge for walking and cycling but decisions about access to the state highway network formally sit with the Waka Kotahi Board. "I have formally written to them to express my support for a temporary trial that could occur over the quiet summer holiday months, subject to safety considerations being met," Wood says.