Transmission Gully PPP approved

November 22nd, 2012 at 9:00 am by David Farrar

The Dom Post reports:

Motorists may still have to pay a toll to use .

Excellent. Those who use roads should pay for them.

The New Zealand Transport Agency was granted permission yesterday to pursue a public-private partnership for the $1.3 billion 27-kilometre, four-lane road planned between Linden and McKays Crossing north of Wellington.

Transport Minister Gerry Brownlee says construction could start in 2014, a year earlier than expected, and be completed in 2020 if a private company built the highway.

A 2014 start would also be excellent. The Greens have made it pretty clear they want Transmission Gully scrapped, and Labour’s position on the road is unclear. If there is a change in Government in 2014, it is possible that we’ll never get Transmission Gully. But if actual construction starts in 2014, that maximises its chance of being completed.

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56 Responses to “Transmission Gully PPP approved”

  1. bhudson (4,734 comments) says:

    Hallelujah!

    This has been such a long time coming. I was a Kapiti Coast resident for about 16 years and commuting between Waikanae and Wellington daily. The poor capacity and traffic flow on the highway has long been a blight on the region – both from an economic/productivity sense and from a social perspective – lifestyle, connectedness.

    A toll might prove to be a disincentive to some, but those that are prepared to pay will gain the benefits of a smoother and quicker journey between the coast and the city. It will be beneficial to our general productivity as well as getting goods to market (domestic and export.)

    Given the region has has had too many ‘once in 100 years’ weather events in the past 10 years or so – events that close not only SH1, but also the route from Wairarapa and also the Akatarawa road linking SH1 to the Hutt Vally – this additional route will help to ensure the continued flow of people and goods in adverse conditions.

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  2. campit (462 comments) says:

    I doubt any investor will touch this with a barge pole.

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  3. campit (462 comments) says:

    More on the the failure of PPPs in Australia:

    “The public-private partnership concept has failed in Australia and should serve as a warning to superannuation funds of the high risk of investment in road infrastructure,” he writes in his current paper.

    Investors have poured more than $23 billion into 11 toll roads across Australia since 1994 and the net return on equity has been small or negative in each case.

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  4. hinamanu (2,352 comments) says:

    “Excellent. Those who use roads should pay for them.”

    Atrocious elitist statement. What do you think we spend billions on fuel taxes for.

    What an insult to all the trucking/transport companies who pay thru the nose and are heavily policed

    A slap in the face to almost all Kiwi’s

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  5. Reid (15,942 comments) says:

    Transport Minister Gerry Brownlee says construction could start in 2014, a year earlier than expected, and be completed in 2020 if a private company built the highway.

    So it’s going to take a “private company” six years and $1.3 billion to do what the US Marine Corps of Engineers offered to do for free, in six months, in 1942.

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  6. Pete George (22,804 comments) says:

    Peter Dunne is claiming some United Future credit for this:

    @PeterDunneMP

    As per UF’s confidence & supply agreement with National Green light for Transmission Gully PPP

    He also suggests that Labour could be u-turning on their previous support.

    @PeterDunneMP

    It looks like Labour now opposes Transmission Gully which it supported in govt. Pandering to the Greens? Wellingtonians beware!

    Maybe it’s not pandering, the Greens may call the shots – if not now they may have a firm grip on what Labour balls are left from 2014.

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  7. bhudson (4,734 comments) says:

    Pete,

    Whatever criticisms might be leveled at Peter Dunne, he has always been a very strong supporter of Transmission Gully

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  8. Flash (9 comments) says:

    Once again someone brings up the old canard about the Yanks being willing to build it for free while also trying to rid the Pacific of the Japs.

    Will this urban myth ever die? There is no evidence for it whatsoever (not that it makes any sense either!).

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  9. toad (3,669 comments) says:

    @bhudson 9:13 am

    I was a Kapiti Coast resident for about 16 years and commuting between Waikanae and Wellington daily. The poor capacity and traffic flow on the highway has long been a blight on the region…

    Why didn’t you catch the train?

    campit has said above pretty much everything else I was going to say on this topic.

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  10. campit (462 comments) says:

    @hinamanu there is an expected funding shortfall from fuel taxes of $1.7bn over the next 10 years, primarily because the Goverment is blowing the money on low cost-benefit projects such as this. The Government’s solution is to tax and spend (there is another 3c per litre tax increase in the pipeline), rather than objectively evaluate the need for these projects.

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  11. Key is our man (786 comments) says:

    DF – Even if the construction starts in 2014 and advances well before Russel Norman becomes the Finance Minister in November 2014, the communists could still stop the project dead on track. So don’t dream.

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  12. bhudson (4,734 comments) says:

    @toad,

    Perhaps because the trains stopped at Paraparaumu when I lived there toad. And for a number of years there was no bus service between Paraparaumu and Waikanae. And my place of work in Wellington was not accessible by either train or bus.

    And because I chose to pay for the privilege of driving

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  13. RRM (9,445 comments) says:

    This is great news for Wellington, although we are still a long way away from seeing any work done.

    The headline is a bit misleading as a PPP has NOT been approved – what’s been approved is merely the idea that we’re going to try to pursue a PPP.

    I’ll believe Transmission Gully is real when I see an earthworks contractor mobilised on site and there is a bunch of BIG scrapers moving dirt… until then I refuse to get my hopes up.

    I took the Northern Bypass toll road out of Auckland once, and it was two of the best dollars I’ve ever spent. :-)

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  14. iMP (2,236 comments) says:

    Roger Sowry campaigned on this in 1987.

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  15. Pete George (22,804 comments) says:

    “A PPP for Transmission Gully was a key plank of our 2011 Confidence and Supply with National and we are delighted to be able to tick that achievement off,” Mr Dunne said.

    “UnitedFuture has fought tooth and nail over a long period of time for Transmission Gully; in fact getting this road to reality has been a key plank in the three confidence and supply agreements we have negotiated since 2005.”

    “Regardless of its flavour, each subsequent government has been committed to progress Transmission Gully due to the dogged perseverance of UnitedFuture.”

    http://www.unitedfuture.org.nz/dunne-ppp-good-news-for-transmission-gully/

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  16. Luc Hansen (4,573 comments) says:

    Those who use roads should pay for them.

    While I echo hinamanu’s comment on this statement from our esteemed host, I’m more interested on the philosophical source of this principle, and whether it extends to more than just roads.

    I’m offering Mr Farrar the opportunity to seek respect and provide credible justification eg is this Hayek, Popper, Keynes, Smith… ?

    C’mon DPF, put some intellectual heft into what can otherwise only be described as lightweight crap!

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  17. Keeping Stock (10,099 comments) says:

    @ RRM – couldn’t agree more. As a sometimes-commuter to Wellington, I am firmly in the “if you build it they will come” camp. Maybe the CBA doesn’t stack up. But what cost-benefit analysis ignores is the human savings; extra time at home with their families for those who drive into Wellington every day.

    Transmission Gully is long overdue. And I may yet drive along it during my lifetime.

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  18. graham (2,214 comments) says:

    bhudson at 9:47 am:

    And because I chose to pay for the privilege of driving

    Well THAT’LL be made illegal when the Greens come to power.

    Freedom of choice, pffft, whoever heard of such a thing?

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  19. srylands (386 comments) says:

    My first post.

    I just returned from a week driving around the Sydney region. I grew up in Sydney in the 1960s and 70s. The roading network of regional Sydney is unrecognisable from when I lived there as a teenager. The traffic all moves, most of the motorways are toll roads and all the (car driving) people I spoke to really appreciat the improvements achieved in roading over the last 20 years – theior lives are better for it. This makes a lie out of the Green rhetoric that roads just fill up with new cars and we are back to square one. There obviously is induced demand from new roads but (1) This is GOOD and only to a point (2) you can deal with any excess induced demand with good road pricing.

    The counter factual to roading investment in Sydney would have been calamitous gridlock. The new roads there have mostly worked and delivered better life quality for people that live in the Sydney region, compared to the alternative of not investing.

    I recently moved to the Kapiti Coast and drive in to Wellington every day. The road is an economic, social, and national embarrassment. I had a visitor from Sydney last week who accompanied me on the commute to Wellington who was astounded that we put up with such bad infrastructure. She said it reminded her of Sydney in the 1960s – exactly my experience. In the last 50 years Sydney has transformed its roading. We have done nothing.

    I fully agree with DPF – TG should be a toll road. I would happily pay $4 to use it. (My Sydney visitor was also bemused about the lack of toll roads generally in NZ.)

    If the Greens stop this in 2014, I have decided to move back to Australia, after happily living in New Zealand for many years. I quite liked the Greens when they focused on making the flowers grow and solar hot water, but their economic policies will wreck New Zealand and my life. So when they gain power, I and my business, will be off. I do not think I will be alone on the plane out. And I will leave with great sadness. The Greens are a serious threat to prosperity, and to NZ having any chance of maintaining first world status.

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  20. Luc Hansen (4,573 comments) says:

    KS

    Have you checked out the toll toad in Tauranga? About the only company I get when travelling that road is trucks!

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  21. campit (462 comments) says:

    But what cost-benefit analysis ignores is the human savings; extra time at home with their families for those who drive into Wellington every day.

    No it doesn’t. Travel time savings are assigned a value and factored in. Even so the project has a value of only 0.6.

    BCR’s ignore a whole lot of other factors though, such as absolute carrying capacity, and private operating costs of vehicles. If these were considered then the BCR would be even worse.

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  22. Grizz (500 comments) says:

    I pridict that over the next 2 years there will be a mad scramble to get many major roading projects started before a probable change in government. Under Labour/Greens/populists government, all funding for major infrastructure projects will need to be channelled into the many social programmes that the country will be bribed with to elect this government into power. We talk about a lack of cost benefit etc. Well there will be even less where this money is going to be directed towards going.

    If the roading projects are at least started there should at least be some commitment to completing them. However as stated above, there is no guarantee off this. I live in the Waikato and I would love to see further segments of the Waikato Expressway started. I live in hope that the Huntly bypass will commence construction prior to the next election. However it is not just roads. Transpower is in desperate need of a major upgrade. I can see the bandaids coming out and transmission projects being on hold and money directed towards those poor voters stuck on the benefit.

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  23. Luc Hansen (4,573 comments) says:

    Griff, the best way to get the numbers on benefits down is to get the economy moving in a way that creates good jobs, not just expanding the swathe of working poor with casinos for pokies deals.

    Tell your govt to pull finger and drop its tired old trickle down policies.

    Tax the rich!

    Spend for the poor!

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  24. peterwn (3,157 comments) says:

    toad – how often do you catch the bus or train? Or are you like Sue Kedgley who had to admit that she did not have a ‘Snapper’ card confirming that Green pollies think that public transport is for ‘other people’ to use.

    Labour does seem to be between a rock and hard place here. Labour should be now sorting out with the Greens some deal for 2014 – but hey! they cannot even sort out their own party.

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  25. graham (2,214 comments) says:

    Those who use roads should pay for them.

    Just to put the cat among the pigeons, does this include cyclists? :)

    And yes I am both a cyclist and a car user, paying my fair share of taxes.

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  26. Peter (1,578 comments) says:

    Gareth won’t be using this road. He flies, of course.

    The rest of us Wellington plebs welcome this long overdue road. Sign it off and include massive penalty clauses so the Greens can’t stop in if they get elected.

    Onwards!

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  27. toad (3,669 comments) says:

    @peterwn 11:07 am

    toad – how often do you catch the bus or train?

    Train every working day from West Auckland to central Auckland, then walk or bus (depending on weather) remainder of commute.

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  28. graham (2,214 comments) says:

    Don’t see that many trains over on the North Shore, sad to say … otherwise I’d consider using them.

    .
    .
    .

    Nah, I wouldn’t, like having the freedom to drive where and when I want.

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  29. srylands (386 comments) says:

    I just returned from a week driving around the Sydney region. I grew up in Sydney in the 1960s and 70s. The roading network of regional Sydney is unrecognisable from when I lived there as a teenager. The traffic all moved, most of the motorways were toll roads and all the (car driving) people I spoke to really appreciated the improvements achieved in roading over the last 20 years. This makes a lie out of the Green rhetoric that roads just fill up with new cars and are back to square one. There obviously is induced demand but only to a point (and you can deal with any excess induced demand with good road pricing). The counter factual to roading investment in Sydney would have been calamitous gridlock. The new roads there have mostly worked and delivered better life quality for people that live in the Sydney region, compared to the alternative of not investing.

    I recently moved to the Kapiti Coast and drive in to Wellington every day. The road is an economic, social, and national embarrassment. I had a visitor from Sydney last week who accompanied me on the commute to Wellington who was astounded that we put up with such bad infrastructure. She said it reminded her of Sydney in the 1960s – exactly my experience. In the last 50 years Sydney has transformed its roading. We have done nothing.

    TG should be a toll road. I would happily pay $4 to use it. (My Sydney visitor was also bemused about the lack of toll roads generally in NZ.)

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  30. RRM (9,445 comments) says:

    :lol: the “FREEDOM” to choose whether I want to sit in the LEFT, MIDDLE or RIGHT lane of the traffic jam on the motorway each morning – LOL.

    Unlike the “If you’re not with us you’re against us” mentality of the Kiwiblog right, RRM lives in both worlds.

    I drive to work on Mondays because I have to, but I catch the train the rest of the week.

    Travelling time is pretty much identical, although my employer’s location means that by the time I’ve parked the car somewhere affordable and walked back to work it definitely takes longer door-to-door driving the car. At least on the train that time is my own, to read the papers or whatever. Whereas driving down the Hutt Road in heavy traffic is just hard work, and extra stress I don’t need before my day at work has even begun. And I say that as someone who loves driving cars under almost any other circumstances.

    The car drinks about $30 worth of gas on one round trip, and a whole week’s train travel is slightly over $100 so the train is clearly cheaper.

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  31. graham (2,214 comments) says:

    I tried catching the bus for a month or so RRM. Trouble is, because I CHOOSE to live in a semi-rural location, by the time I’d driven 20km to the nearest bus stop, caught the bus into Auckland, walked for 20 minutes to work, then reverse it all at the end, it just wasn’t convenient. Add to that the fact that sometimes I work late, and don’t want to hang around waiting for a bus. Then factor in the diversions that I often make on the way home from work – driving to my daughter’s hockey matches or squash matches, collecting her from piano lessons, picking up some shopping, and it just become too much trying to fit everything in.

    Driving the car is just so much simpler, and as I start early and finish early I don’t get caught in traffic jams! :) So no stress there at all, and it’s quicker than the bus.

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  32. Lance (2,448 comments) says:

    Doesn’t help the trains in Auck are still unreliable.
    Not as bad as they were, but going from completely a joke to unreliable might be seen as an improvement by some.
    Excellent the other day, trains fail at exam time for students. What a nightmare.
    Hopeless.

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  33. Short Shriveled and Slightly to the Left (762 comments) says:

    Jesus RRM where do you live? Masterton?

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  34. RRM (9,445 comments) says:

    One of those towns up that way SSSL.

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  35. Short Shriveled and Slightly to the Left (762 comments) says:

    Well I guess the weather and weekends make it worth it?
    Greytown is a nice little place too.. if thats the one

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  36. lastmanstanding (1,204 comments) says:

    Yet another Holiday Highway. Only kidding as one who uses the Northern Toll Road and looks forward to TNZ completed the Puhoi to Warkworth stretch asap.

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  37. lastmanstanding (1,204 comments) says:

    If previous Gumints had used the funds raised from fuel duty and taxes and Local Bodies had done likewise the amounts raised over the past 40 years would have provided a first class roading system with regular maintennance.

    The fact is Gumints and local bodies have criminally missappropraited BILLIONS of dollars for other spending.

    If they were private organisations the Directors and Managers would be doing time.

    This lot are do better. They are still fraudulently misappropriating funds but at least not to the extent of the previous administrations.

    Exmaple and proof # 3497 that all pollies and liars and crooks.

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  38. campit (462 comments) says:

    Handy list of Australian PPPs here here. The majority on this list are complete and utter economic failures.

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  39. srylands (386 comments) says:

    campit – that list tells you nothing about the success of ortherwise of the different PPP models – it just says that the volume forecasts were wrong – some a bit some a lot. The inflated traffic forecasts point to a flaw in the design of the contract. It says nothing about PPPs being a bad model generally – government agencies can do bad forecasts too. Neither does it say anything about the CBRs of these Australian roads after the forecasts were corrected. If some investors lost theor shirts well boo hoo, but that doesn’t mean we should stop building roads!

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  40. campit (462 comments) says:

    Of that list I can’t find a single one that has been deemed a success for both the taxpayer and the private partner.

    I can’t for the life of me see how the involvement of the likes of Macquarie Bank and hoardes of contract lawyers will add value to the project which, again I say, already has a pitifully low BCR. The Government will have to pay a guaranteed profit premium to the successful bidder. After these Australian disasters there will be even more of a premium.

    But don’t take it from me, take it from former Fletcher Construction CEO Mark Binns back in 2008 :

    If the aim was to bring projects to fruition quickly, making them PPPs would be a retrograde step, as so much time is involved in setting up the legal framework between participants in the project, he said. He also questioned whether private sector funding would be viable in the current credit environment without Government guarantees, which nullified the transfer of risk to the private sector…

    Sometimes benefits of transferring the risk of PPP projects to the private sector were illusory, it said, citing the British Government’s bailout of Metronet, the private operator of the London Underground.

    Binns suggested that if the transfer of risk was not complete, the true benefits of PPPs came down to an analysis of the funding costs, and there was a strong argument that the Government would be better off just raising debt, potentially through infrastructure bonds, to do the project using other traditional methods of contracting.

    The builder also cited major “upfront paperwork and contractual costs” on PPPs, saying the time and cost involved in this phase was significant and tended to counter any savings in the design and delivery phase.

    Nothing much has changed since then, apart from more failures across the ditch.

    Details on the most recent PPP failure (just days ago) is here.

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  41. srylands (386 comments) says:

    I must be missing something. Some investors paid too much (bad forecasting) and lost money. Were these losses transferred to Australian taxpaers? (If they were you have a point). If not, what exactly is the problem you are raising? The investors got it wrong but Sydney (and Brisbane) people still have the roads. Much better than governments getting it wrong.

    I’m not a PPP advocate. Some make money some fail. It is a secondary issue. But we need some better roads. Otherwise my Australian visitors will keep saying “mate WTF is it with the roads here?” FFS, get out of New Zealand and go anywhere in the OECD (or just about anywhere at all). Go and do some driving, and then come back here and tell me with a straight face our roads are OK. Becasue they ae so not.

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  42. campit (462 comments) says:

    The problem is PPP’s are supposed to be a **partnership**. If the Government is hoping to fund this project cost effectively through a PPP, then they aren’t going to have much luck finding partners, because all potential partners will be fully aware of the risk demonstrated in Australia and will charge a massive risk premium accordingly.

    The fact that these PPP projects have failed also means that Australians have incurred a massive opportunity cost. The billions that have been spent on projects that it turns out haven’t been needed could have been spent on other investments that would have produced a better return. With some of these PPPs, digging a hole and filling it back in again would have yielded a better return.

    As to your “we need some better roads”, well we need lots of things, and we have to prioritise them according to evidence based criteria and available budget.

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  43. NeutralObserver (93 comments) says:

    Just hope it is an International tender. A crack squad of hard working Koreans wth a container of KimChi to sustain them and we’ll be driving down the road in 12 months

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  44. srylands (386 comments) says:

    “billions that have been spent on projects that it turns out haven’t been needed”

    You are again confusing private lossesd and national economic benefits. That the investors lost heaps of money does not mean that the roads were not needed. They investors just over valued the asset. Just like Facebook IPO. Same thing.

    NSW Toll roads have made a huge positve economic benefit to Australia – see the attached independent EY report. Given Sydney’s population growth the counter factual is insane. Have you spent time in Sydney and driven there? Done business there? If you have, and you knew what the roads were like in 1990 you woukld not be saying “these roads haven’t been needed” That is just complete bullshit. The place would be like Saigon.

    So please stop confusing private losses with public benefits. And go spend some time driving in Sydney and then come back and tell us the roads “aren’t needed”.

    http://www.infrastructureaustralia.gov.au/publications/files/Eco_contribn_of_sydney's_Toll-Roads_EY2008.pdf

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  45. gazzmaniac (2,317 comments) says:

    My 2c -
    I think that the PPP model as used extensively in NSW and more recently in Brisbane is a pretty good scam dreamed up by a clever government to get the private sector to pay for their roads. Sadly NZ is about 5 years too late in setting one up – both Brisbane tunnels were subscribed prior to the sharemarket crash in 2008 when the sharemarket was enjoying a nice bubble.
    It wouldn’t happen today because those investors have been burned badly – if I recall, Brisconnections shares were released in three parts, with each share requiring two additional payments. At one stage (when they were still owing) people couldn’t give the shares away since the owner of each share still had to shell out $2 (on a share that was trading at less than a cent!), and the company had to run to court to enforce the subscription.

    One thing I really don’t like is the way tolls have increased substantially in the last five years, since the introduction of electronic tags. When I first arrived in Brisbane in 2007 it was $1.90 (then $2.10 and $2.40) to cross the Gateway bridge. It’s now (from memory) $4.90, plus a fee if you don’t have an account, or a fee for topping up your account without direct debit (ie giving them direct access to your bank account).

    Personally I’d rather see the gully road funded by debt and a toll than a PPP, however a PPP is better than no gully route at all. I’d also like to see a start made on the Kapiti Expressway, but I’ll believe that when I see it too.

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  46. mikenmild (10,686 comments) says:

    Remind me again what other things we could buy with a billion or two. Maybe some F-16s and warships that could go to war? Or could we just settle for transport projects that can pass simple benefit-cost tests?

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  47. campit (462 comments) says:

    So please stop confusing private losses with public benefits.

    I’m not. I’ve already pointed out that the public benefits are just 60% of the costs.

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  48. mikenmild (10,686 comments) says:

    Unfortunately, support for Transmission Gully has become some kind of political litmus test. One has to be for Transmission Gully and against light rail, or vice versa. Of course, both are equally irrational wastes of time and money, but have become touchstones for political brands.

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  49. srylands (386 comments) says:

    The 2008 ex post analysis of Sydney’s Toll Roads points to a net economic beneft of $22 billion compared to the counter factual of Sydney maintaining its previous (pre 1990) roading network. So I call bullshit in any suggestion that Sydney’s roading investments over teh last 20 years have delivered negatave economic benefits to NSW. Sure their were lots of private investor losses. The taxpayers got lucky.

    I agree investors woudl demand a risk premium here but the anlysis still needs to be done. (If we get a Greens government I can see a higher risk premium on everything.)

    I predict a $4 toll on TG. Maybe ipredict can open a market. I’ll happily pay my toll each day. If I live that long.

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  50. Viking2 (11,128 comments) says:

    Luc Hansen (4,410) Says:
    November 22nd, 2012 at 10:24 am

    KS

    Have you checked out the toll toad in Tauranga? About the only company I get when travelling that road is trucks!
    —————————————–

    Well others just don’t like your company then! :lol:

    The toll road is a God send to those that bother to think about their time. I use it constantly. No ques, no slow coaches, east driving, no traffic james, easy access from the Mount to Greerton and vice versa ( 10 minutes totoara St to Greerton),or Greerton to Matua. Piss poor for returning from Bethlehem to Greerton,11th Ave southwards to Greerton so one must endure the deliberately clutterred Cameron Rd with the Hospital and schools clogging the way.
    Lack of egress from the highway to 11th and 15th ave and highway to greerton direct. (save me even more time.)

    Generally 7 out of 10.
    Still must not complain as without the road Tga traffic would be a nightmare. Even though its cost the ratepayers its still good. They raised the tolls from $1.00 to $1.50 which is a pain. $2.00 would have been better. Trucks get it cheap because they will go through the resdiential other wise.
    The other problem is that the road was built with the northern road attached so the out of TCC population pay zilch for the use of the road. If those from Bethlehem north had to pay the road would have paid for itself by now. But stupoid arse johnny come lately Aucklanders managed to prevent that. Hope they are happpy with their rates.

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  51. Kevin (1,122 comments) says:

    We are the most over infrastructured country per capita in the world. Ask the hard questions.

    Why not just contract the yanks or Chinese to build it in six weeks? Why is road building a protected subsidised industry in New Zealand?

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  52. Luc Hansen (4,573 comments) says:

    V2

    You missed my point. I love that road, too, but the locals avoid it like the plague. Tolls can be counterproductive, as in this case. Taxpayers all over NZ paid for the bulk of the road, it’s there, it should be open and free. End of story.

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  53. mikenmild (10,686 comments) says:

    I hear Greece is very well provided with toll roads financed by Germans and completely unused by locals. I don’t know this for a fact; but it sounds good enough to be true.

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  54. libertyscott (356 comments) says:

    Yes would be nice if users of Transmission Gully paid for it, but I don’t think paying 15-20% of the cost through tolls really counts. If you take that and add up the revenue from fuel tax and RUC consumed on the route, you get to about 50% of the cost….

    so the argument that this is users pays is simply nonsense.

    Let the private sector buy the land, build the road and toll it at full cost recovery, and watch nobody turn up. That’s the dirty honest truth, that politicians have been pushing for something that wouldn’t be viable in the real world.

    The desire by the government to make this a profitable operation for private enterprise is purely corporatist, and involves a subsidy from other road users to the future owners.

    After all the entire state highway network now is self-sustaining and generates enough money for a wide range of targeted improvements, but let’s not pretend that Transmission Gully isn’t just a political boondoggle.

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  55. mikenmild (10,686 comments) says:

    Except that I believe that the government has skewed future road funding heavily in favour of new construction over maintenance, so that self-sustaining part might not last much longer.

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  56. Road Pricing Blog (1 comment) says:

    Campit: Thank you for noting my blog article, but it is important to understand the context of PPP toll roads in Australia. There have been four which have been failures from the point of view of investors, and a few others which have been disappointing, but others which have been positively successful. I noticed the NZ Green Party’s press release from Julie Anne Genter which is misleading as it is not a comprehensive list of projects. Melbourne Citylink is a roaring success though this is underplayer. ConnectEast was disappointing but far from a disaster. The M5 Sydney is not listed, although it had higher usage figures that were forecast (though the NSW Govt foolishly offered to subsidise certain users’ tolls). The Eastern Distributor in Sydney has also been a success.

    Likewise, it is clear that the cost and traffic volumes for Transmission Gully are such that it could not recover more than a small minority of capital costs from a toll. That may be good in reducing the burden from other motoring taxes, but does raise questions as to whether those benefiting from the road are paying adequately for the travel time savings they will gain (as the project appears to have a few safety benefits, and is probably also a transfer of wealth to property owners living adjacent to the current route).

    The E&Y report on the economic contribution of toll roads in Sydney does take the whole idea of wider economic benefits, which are controversial, as few study the lack of such benefits in many cases.

    http://www.infrastructureaustralia.gov.au/publications/files/Eco_contribn_of_sydney's_Toll-Roads_EY2008.pdf

    However, there can be little doubt that the major toll roads in Sydney and Melbourne have transformed access and transport costs for those cities, particularly for freight and particularly for business and commuter trips that are not focused on central business districts. “Smart Growth” advocates may not support this, as they tend to support intensive central city business activity with clusters around public transport nodes, but both Sydney and Melbourne have very well developed suburban rail networks that whilst critical to commuting to their excellent downtown areas (and being alternatives on the radial corridors), do little for freight or for the most distant areas of new development.

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