20 Apr 2021

National defends Transmission Gully after serious planning flaws found

6:43 pm on 20 April 2021

The National Party is defending its role in the Transmission Gully, following a scathing review that found the project was flawed from the get-go.

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Transport Minister Michael Wood. Photo: RNZ / Richard Tindiller

An interim review into the 27km highway has found serious flaws at the planning stage of the public-private partnership project (PPP), along with a lack of transparency.

Transmission Gully was the first motorway in New Zealand set up under a PPP model by the National government in 2012.

The road was supposed to be completed in April 2020 but was delayed by more than a year because of significant re-estimation of earthwork requirements, storm events, the Kaikōura earthquake and Covid-19.

However, a report commissioned last year after the Transport Agency had to pay more than $200 million to get it back on track, found the project was flawed from the start.

Transport Minister Michael Wood said the planning, governance and oversight of the project was clearly lacking.

"The fact this project was proceeded with on a non-PPP basis, but jammed into a PPP model, the fact that the affordability threshold - which is how much the government was willing to pay for the project - was described by bidders as, quote, 'dubious, and quote demonstrably unrealistic'.

"All of these things revealed that this is a very poorly conceived process, but it doesn't have leadership from the government at the time," he said.

Green Party transport spokesperson Julie Anne Genter said her party noted from the beginning that National was underestimating the cost.

"PPPs have been sold as being more efficient and saving costs, but there's no real evidence that they do.

"In fact, this is just one more piece of evidence that it's actually very difficult for the public sector to transfer the risk and cost to the private sector. And ultimately, it's the public that ends up paying the cost," she said.

Genter said the National Party and the National transport minister at the time "really needs to take full responsibility for dodgy assumptions that were used to try to get the project over the line".

Wood pointed the finger at National's ex-transport minister Steven Joyce.

Joyce said he oversaw the selection of Transmission Gully as a project for the Roads of National Significance programme, but the PPP was set up after he left the portfolio.

The minister after him was Gerry Brownlee.

National's current transport spokesperson Michael Woodhouse stood by National's actions in 2012.

"At least the previous government got things done and in five months time Wellington will have Transmission Gully, a project that's been talked about for over 60 years. It's going to be a reality very soon," he said.

He hit back at the report's comments on the PPP.

Michael Woodhouse

Michael Woodhouse. Photo: RNZ / Cole Eastham-Farrelly

"The report makes some quite outrageous comments that imply that the contractors were forced into signing up to a contract - if they were not satisfied with the terms of the arrangement at $850m they should not have put ink [on] paper," he said.

The project has now ballooned from $850m to $1.25 billion.

Woodhouse said costs would have increased anyway because of inflation, speed changes and Covid-19, not because this was a public-private partnership.

"Sometimes costs still escalate, the costs that shouldn't have escalated is that nearly $200m that they paid when they were advised they shouldn't have," he said.

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