7. Dr RUSSEL NORMAN (Co-Leader—Green) Link to this
to the Minister of Transport
Is it Government policy to ensure that the benefits outweigh the costs for new State highway projects prior to approving funding for them?
Hon STEVEN JOYCE (Minister of Transport) Link to this
Yes, the Government’s general approach is to ensure that not just State highways but all transport infrastructure projects are assessed for full benefits over costs and are value for money. That policy is, of course, implemented by the New Zealand Transport Agency. We also take into account the wider economic development, productivity, and safety benefits when evaluating transport projects.
What are the corridor benefit-cost ratios for each of the seven roads of national significance announced in March?
We do not yet have full benefit-cost ratios for every individual project on the roads of national significance, as the New Zealand Transport Authority is currently developing and assessing the way in which those projects will be developed. I can, however, tell the member that the Victoria Park tunnel in Auckland has a benefit-cost ratio of 2.8 and the proposed Waterview Connection has a benefit-cost ratio of 2.4. That compares with the previous Labour Government’s twin two-lane tunnel option, which had a benefit-cost ratio of 1.2
Michael Woodhouse Link to this
Has he seen any reports that go back and analyse the benefits and costs of State highway projects after construction, and look at how that compared with the pre-construction analysis?
Yes, I have. The Motu group has conducted an interesting post-construction analysis of the economic benefits of the Auckland Northern Motorway extensions to Silverdale and Ōrewa. Its report showed that the benefit of building the motorway, expressed in cost-benefit terms, was between 6.3 and 21 times the cost. This was far better than the pre-construction analysis, and it shows the potential for major new State highway projects to create strong economic benefits in the regions in which they are developed.
How can it be economically responsible for the Government to announce in March seven roads of national significance and commit an additional $1 billion towards building them, without any prior analysis of the economic costs and benefits of the projects, as the Minister admitted in his answer and as has been confirmed from this letter from the New Zealand Transport Agency, which says that even after the announcement of the seven projects, no benefit-to-cost ratio analysis has been done?
As I said, some elements of the roads of national significance have benefit-cost ratios that are known currently, and for the others that will become known as the projects develop over time. On the subject of benefit-cost ratios, I say they are only one part of the answer, because the Auckland rail infrastructure upgrades that were signed off by the previous Government, with support from the Greens, suggested that the upgrades had a benefit-cost ratio of, to quote Treasury, “about 1”. That is about the most generous benefit-cost ratio assessment I have seen Treasury come up with so far.
Does he support the commitment of his Government towards high-quality spending, and how does he know that these seven projects, involving billions of dollars of taxpayers’ money, are high-quality spending, when he announced that he would progress them before he had done the analysis as to the benefits versus the costs?
It is well known that the seven projects referred to are on corridors of absolutely national significance across the country, and of course the projects are supported by road users and others in the communities. Each project, before it proceeds, is subject to a full analysis on the construction costs and the benefit-cost ratios, and the decisions will be made on that basis.
Is the Minister not operating a double standard, because on the one hand he said to the Bus and Coach Association, with regard to public transport projects, that there has to be a cost-benefit analysis to see that they make sense in their own right, whereas when it comes to the ideologically driven, economically illiterate decisions to invest in these seven motorway projects, there is no requirement for the seven projects to have a benefit-to-cost analysis done prior to the decision to go ahead with a project—it is a double standard?
I am happy to have a conversation about economic literacy with the member opposite, at any time that he cares to name.
I raise a point of order, Mr Speaker. There was absolutely no attempt to answer or address that question. [ Interruption]
Mr SPEAKERI do not need any assistance. The member should reflect on the question he asked. Where he introduces that kind of material into the question, he can expect that kind of answer.
I seek leave to table the letter from the New Zealand Transport Agency, in which it says no benefit-cost analysis has been done on these seven major projects.