NZTA make a hard but not unjustified decision on Otaki to Levin Upgrade of SH1
Media Statement
13 July 2012
"The New Zealand Transport Agency's decision to scale back the final section of the Wellington Road of National Significance (RONS) is unfortunate for users of that corridor but, from a national perspective, was probably the right thing to do," says New Zealand Council for Infrastructure Development CEO Stephen Selwood.

"The Otaki to Levin section was to be the final 30km of four lane expressway of the 110km Wellington Northern Corridor linking the capital city and airport to the Manawatu. The corridor will be a game-changer for the lower North Island, with travel times, safety and resilience all benefitting heavily. Commuters from satellites such as Otaki, Waikanae and Paraparaumu can expect time savings of 20-40 minutes on trips to and from the city along a much safer section of road. That's of huge benefit if your job involves regional travel or you're trying to get exports on a ship or a plane.

"But these types of projects carry significant costs. While early estimates for the Otaki-Levin section approximated $150 million, the latest reported appear at least double that figure. Investment in the order of $400 million can only be advanced with strong, demonstrable benefits. For the section of road between Otaki and Levin, where traffic volumes have been largely static in recent years, these benefits were difficult to envisage.

"However, it would be of serious concern if this downgrade was a symptomatic of more substantive cutbacks or delays in completing the roads of national significance. While the Otaki-Levin section may not demonstrate the level of benefit necessary to attract investment, there is a long list of projects nationally, including the roads of national significance that do. Funding intergenerational investments like these on a "pay as you go" basis using current revenue flows into the national land transport fund does not make economic sense.

"A more rational approach would be to finance major projects that have positive benefit cost ratios through Crown or private finance, or an appropriate mix of the two. So long as the net benefit of early investment is greater than the cost of debt, the nation will be better off.

"If there is any suggestion that capital constraints will compromise the Government's transport investment programme, debt financing major projects that have positive benefit cost ratios is the obvious solution," Selwood says.

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