Given the Government’s enthusiasm for building Transmission Gully by Public Private Partnership (PPP), you’d be forgiven for believing that the NZTA has told Gerry Brownlee it is clearly the best option for financing the project .
However, reading through cabinet committee papers and ministerial briefings, a very different picture emerges.
It turns out that Cabinet asked Gerry to explore the use of PPPs and he in turn asked NZTA to look at all the projects they currently have planned and decide which might be completed via PPP.
NZTA’s response was that Transmission Gully was the best candidate for a PPP.
Note that NZTA did not say a PPP is the best way to build Transmission Gully. Rather, that if something had to be built by PPP, Transmission Gully would be the best candidate.
This is a classic case of only asking the questions that will get you the answer you want.
Asking “Which project is best suited to a PPP?” gets you a PPP whether or not the case for it stacks up.
Asking “What is the best way to build Transmission Gully?” would have got Transmission Gully built within a sensible timeframe and at a reasonable cost to the taxpayer.
So has the case been made that a PPP is the best way to build Transmission Gully?
As noted in a Cabinet Committee paper prepared for Gerry Brownlee and Bill English, the cost of capital for the private sector is higher than it is for the crown and the actual value for money proposition will not be known until the proposals have been received.
In the event that neither of the shortlisted consortia can prove that building Transmission Gully by PPP is more cost effective than doing so by traditional procurement, the Government should pull the pin on the PPP.
But according to Gerry, Cabinet has already given the NZTA approval to finance and build the Transmission Gully highway using a PPP – and NZTA has indicated this will add an extra $2 billion to its costs over the next 30 years.
National is letting ideology and its desire to use taxpayers’ money to create low-risk, high-return investment opportunities for its banker buddies get in the way of making economically rational decisions.
The winners here are the corporate giants creaming profits off public infrastructure. The losers are Kiwi taxpayers and consumers.
Who is National really working for?