Key tipped to announce $1.25b spend on Auckland rail two years early

Prime Minister John Key is expected to commit to funding half of Auckland's $2.5 billion City Rail Link two years early as part of a wider update on the government's position on Auckland's infrastructure needs this month.

It's understood Key will commit to the government's $1.25 billion co-funding of the CRL project in a speech to the Auckland Chamber of Commerce on Jan. 27.

In 2013, the government agreed to jointly fund the CRL 50:50 with Auckland Council but to not provide its share until 2020. It also said the government would consider an earlier business case and construction start date if it became clear that Auckland's CBD employment and rail patronage hit thresholds faster than current growth rates suggested.

The two thresholds were rail patronage hitting 20 million trips a year before 2020 and a 25 percent increase in Auckland CBD employment over the 2013 level - half the increase predicted in Auckland Transport's City Centre Future Access Study

Neither threshold has been met at this stage although rail trips are forecast to hit the 20 million mark by the end of this year. Patronage increased 22 percent in 2015 to just over 15 million trips a year.

Employment in the Auckland CBD has grown over 2013 levels but is thought to have not yet hit the stated trigger. Statistics New Zealand figures show Auckland CBD employment growth has increased only 7.6 percent from 2012 to 2015, or 6,760 employees.

But another factor understood to have tipped the government's decision to fund the project earlier is the amount of private sector property projects planned or underway along the CRL's inner city route where it would cost a lot more to incorporate the rail link at a later stage than during construction.

These include Precinct Properties' Commercial Bay development being built on the site of the Downtown mall which straddles Lower Queen Street and Albert Street, at the first stage of the rail link, and New Development Group's 52-level NDG Tower in Albert Street, which is at the site of the rail project's Aotea Station.

The CRL will link Britomart Station in downtown Auckland with the existing western line at Mt Eden station, allowing trains to run both ways through Britomart.

Auckland Mayor Len Brown said any statement providing certainty over government funding of the City Rail Link and an early start to that funding would be welcomed by Aucklanders. The council has been working closely with Key, Finance Minister Bill English, and Transport Minister Simon Bridges on the urgent need for the CRL given rising rail patronage and congestion at Britomart already causing delays.

Bridges, the current duty minister during the parliament's summer break, said Key's speech was still being worked on, and "comment about its content is simply speculation".

Preliminary work on the CRL started last month and it's unlikely the council would have forged ahead at this stage without a firm commitment from government that its share of the funding would kick in before 2020.

The Auckland Council's new Long Term Plan passed last year was based on construction of the CRL beginning in 2018 with completion in 2022 which would require the government to commit to funding in 2018.

Auckland Chamber of Commerce chief executive Michael Barnett said Key's address would cover the issue of infrastructure funding for the region, similar to the June 2013 speech to the chamber's membership in which he confirmed joint funding for CRL.

"I'm expecting a significant funding package similar to what Key gave in June 2013 and that he will use this occasion to say 'ok, we can give more certainty to some projects'. What we have at the moment is so conditional, it's difficult for plans to be put in place," Barnett said.

Barnett said the other projects he expected Key to comment on include the East/West Connections project which would improve connections between Onehunga and Mt Wellington which is heavily used by industry, the $380 million Penlink arterial route between Whangaparoa Road and State Highway 1 which is touted as a potential public-private partnership business model, and a second harbour crossing.

(BusinessDesk)