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Ongoing ‘killer’ costs of Auckland’s rail tunnel

Auckland Council has confirmed its extra $500 million for the city underground rail project - but councillors are now recoiling at the high ongoing costs of owning and running the tunnels and trains once the project is finished.

One councillor said the operating costs would be a "killer" for ratepayers and another said that despite ultimately paying half the projected $4.4 billion cost of the City Rail Link, "I hope that we don't own it."

After a cost review that raised the price of building the tunnels and stations from the CBD to Mt Eden by $1b, the council and Government have both had to find $500m to ensure a major contract is let and the project is completed in 2024.

Auckland councillors spent more than six hours debating a plan from council officers to fund the $500m by revising spending contracts, potential sales of carpark buildings and cutting the level of cash held by the organisation. 

At one point Mayor Phil Goff said one option was for the council not to contribute the extra and effectively walk away from the whole City Rail Link - but "that would leave a long hole in the ground" that would be the political legacy of those who voted that way.

"You might even be buried in it," he joked. "I don't know what else we would use it for."

Councillors approved the package, which does not require a rates rise or extra debt that could breach limits set for international rating agencies.

But the meeting adopted an amendment from Councillor Mike Lee that it write to the Government formally asking the Crown to increase its current 50 percent share of the cost of building the tunnel. Goff said he had already made that request to ministers but a further formal appeal could be made.

"The ongoing operational expenditure of this going forward is going to be a massive mortgage for somebody."

"It might make a difference... I hope so, but I don't think so," he said.

Beyond the $4.4b capital cost, further worries emerged over how Auckland would pay for the new rail network and train services once operational after 2024. The company building it, City Rail Ltd, is half owned by the council and half by the Crown.

Councillor Christine Fletcher said of the completed system: "We need to know who is going to own it. It will be the ongoing costs of this that will be the killer. We are talking to the public about the capital costs but we know the hard yards come with the operational costs.

"What if we had one last go, in a united way, of writing to the Government and saying: 'Could you come to the party on this?' We need to bring the public on board."

Councillor Chris Darby, the planning committee chair, echoed the concern over future operating costs and who would carry that burden. "We are exposed on operating costs on the labour, the maintenance and ownership."

These costs would be more than paying to get the new rail system built by day one.

"This is where we need to have a hard conversation with the Government..... I would hope that we don't own it."

Darby quoted a letter from Transport Minister Phil Twyford to the NZ Transport Agency where he directed it to "plan, fund, supervise, construct and maintain rapid transit networks".  Darby believed Twyford was signalling the CRL future costs could be the agency's responsibility.

"The ongoing operational expenditure of this going forward is going to be a massive mortgage for somebody."

Goff said the CRL would carry 54,000 people an hour at peak times, a critical factor in increasing passenger journeys to more than double the current number "and probably double it again".

"This project has to go ahead. And when it is completed, the stations will look great and the service will be great and we will proud of what we have done."

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