John Key MP

National Party Finance Spokesman

23 March 2006

Govt underinvesting in roading, says Treasury

A Treasury paper says Labour has underinvested in roading projects, says National Finance spokesman John Key.

The June 2005 paper obtained under the Official Information Act says: 'The methods Transfund uses to conduct the cost-benefit analyses appear to be sound - and may, in fact, be underestimating the return from proposed projects. This suggests substantial road infrastructure underinvestment: New Zealand seems to be passing up road investments that would earn a very high return...'

"This shows that the Labour Government is being told by its economic advisers that its analyses of the benefits of roading projects are too conservative and that there is not enough investment," says Mr Key.

"The paper also suggests that there are very high returns to be had in roading - higher than the returns for typical private sector investments.

"This would indicate that if Labour got the environment for public private partnerships right, investors would be falling over themselves to get involved.

"But in answer to a question in Parliament yesterday, Acting Transport Minister Pete Hodgson admitted not a single formal approach had been made to the Government about a public private partnership.

"The evidence suggests that the barriers placed in front of PPPs by the Land Transport Management Act, which was passed with heavy influence from the Greens, has had the desired effect."

Also of concern is that Treasury's Briefing to the Incoming Government noted (P16) that some regional roading projects with low cost-benefits were being funded.

"That indicates the priorities are skewed," says Mr Key. "Under Labour, low value projects are being funded and ones with high values are not. No wonder road building is in crisis in New Zealand."

ENDS

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