City Rail Link: Auckland councillors to consider $500m extra for underground tunnels

Wednesday, 1 May 2019

Auckland's City Rail Link could cost a lot more than the original estimate of $3.4 billion.

Auckland councillors are preparing to consider a $500 million cash injection for City Rail Link, after the project found itself in a $1 billion hole.

Council's Governing Body will vote on Thursday whether or not to divert $500 million in savings to the underground rail project, but not all councillors are on board.

The vote follows a massive increase in the estimated price of the twin downtown rail tunnels, which are now expected to cost the public $4.4b, $1b more than previously calculated.

Mayor Phil Goff has previously said 'nobody is surprised' by the blowout – 'no matter how unwelcome those costs will be.'

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A report to be considered by councillors on Thursday shows how Auckland Council proposes to come up with the extra $500m.

Construction work on CRL at the Customs-Albert St intersection, known as the Albert Street Trench.

It shows $50m will come from progressing an off-street parking strategy.

Councillors were being asked to assess future off-street parking requirements for Auckland, including more investment in park-and-ride facilities.

'Options for the council's city centre carpark buildings to be investigated will include the status quo alongside outright sale, partnering with developers, and concession arrangements.'

Councillor Daniel Newman is not happy about the blowout, saying council should renegotiate the funding structure with central Government.

A total of $100m would come from 'a reduction in cash holdings from improved cash management', as well as flexibility around the timing on the council's CRL payments respectively.

About $120m would be drawn from interest cost savings because of lower market interest rates.

Council officials had also re-assessed the valuation of contract commitments the council had entered into for the next ten years. The new projections freed up around $130m.

Councillor Daniel Newman on Wednesday told Stuff parts of the funding formula gave him 'the s….'.

City Rail Link chief executive Sean Sweeney during April's announcement the project will now cost $4.4 billion.

'A crown company like City Rail Link Ltd should pay the added cost,' he said.

'Aucklanders have already paid their share, it's about time the Labour-led government pays for rail infrastructure that will improve the network.

Auckland Mayor Phil Goff has called the higher CRL cost no surprise, but unwelcome.

'The mayor should re-negotiate the agreement with the Labour-led government.'

The latest $4.4b price tag was actually the result of a '$2b overrun' compared with the initial estimate of $2.5b back in CRL's early days.

Newman was personally opposed to the sale of revenue-generating carparks.

Last month, CRL chief executive Sean Sweeney detailed how the higher cost figure had been reached.

The biggest sum of $327m was due to the higher cost of construction since the 2014 estimate.

A further $310m was a contingency fund to cover possible future cost escalation due to a stretched construction sector.

A 2018 decision to making stations wider and longer to accommodate nine-car trains instead of six-car trains was a future-proofing move, costing $250m.

Additional costs around the project, but not directly due to construction, added a further $152m.

CRL's construction is overseen by City Rail Link Limited, which is jointly owned by Auckland Council and the Crown.