Infrastructure Bonds and transport investment

26 August 2004

Study backs Infrastructure Bonds for transport investment

The Automobile Association believes a recent study by the Allen Consulting Group and Infometrics presents a cast-iron case for Government borrowing to complete regional transport plans faster.

“We believe the Government is on the right track with its suggestion that it could sell bonds to fund infrastructure investment and this study provides ample justification for such a programme,” AA Public Affairs Director, George Fairbairn said.

The Allen-Infometrics study assessed the economic and fiscal benefits, together with some of the environmental costs, of four transport ‘packages’ and found in each case that, even after making the annual debt payments, the Government would make a return on its investment through increased tax revenue. The four packages were: The Auckland western ring route (SH18 and SH20); The Tauranga strategic roading network; The Wellington regional land transport strategy; Transit passing lane strategy.

While the Government has increased funding and the pace of development on elements of these packages the study shows that it can afford to be bold and invest more in such infrastructure.

“The Allen study opens the door to a new approach to infrastructure investment in New Zealand and we believe it is a significant contribution to our understanding, as a nation, of the central role roading and transport plays in the economy,” Mr Fairbairn said.

Most significantly the study found that even with the additional costs of borrowing the net economic effect of the new roads meant the Government could afford to reduce taxes.

“While the Allen study is an evaluation of four specific packages there is no reason why its methods and principles could not be applied to other packages of infrastructure development. While the country is doing well fiscally and economically we need to invest in projects that continue to improve our overall standard of living. This report proves that transport is definitely one of those investments,” Mr Fairbairn said.

The study was commissioned by the New Zealand Automobile Association, in association with Greater Wellington Regional Council; Priority One (Tauranga); Infrastructure Auckland, Employers and Manufacturers Association (Northern) and Auckland Chamber of Commerce; Road Transport Forum NZ and Business New Zealand.

ENDS

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