The Government’s multi-billion dollar plan to build Auckland light rail – likely the most expensive infrastructure project in New Zealand’s history – didn’t analyse value for money when its final stage Cabinet paper was drawn up early last year.
This was despite the Government spending more than two years investigating light rail proposals and $5 million on a process to work out who should even build it.
It was only in February of 2020, when a draft Cabinet paper was being drawn up to finally select who would build and run the light rail line that Treasury, the Government’s economic policy shop, warned that any final decision should be delayed for another month because a standard cost-benefit analysis hadn’t been completed to find out whether the project was actually worthwhile.
“We are concerned that the Cabinet paper does not include a value for money evaluation,” Treasury said.
So Cabinet was voting on who they should use to do a $10 billion light rail project and they didn’t even have a cost benefit analysis!!
Transport Minister Michael Wood’s office said these decisions were made by the previous minister, Phil Twyford, so he could not say whether a cost-benefit analysis was eventually carried out.
Bullshit. Of course the current Minister would know.
In November, the Auditor-General wrote to the Ministry of Transport warning that the closed process it had been running to choose who would build and run the light rail line couldn’t necessarily guarantee “the best deal for everyone” including getting “value for money”.
Maybe they didn’t do a cost benefit analysis because they knew it would show the costs would be massively more than the benefits?
The last light rail CBA I saw was for light rail in Wellington. The conclusion of the Wellington Regional Council was that it would have a benefit to cost ratio of 0.05, which is close to zero. Basically for every $1,000 spent it would deliver $50 of benefits.