PM Says Early Start To Mayor Len Brown’s Rail Link Will Be “Quite A Big Burden On The Ratepayers”

In a radio interview this morning the Prime Minister said that an early start to the Auckland City Rail Link would lead to “quite a big burden on the ratepayers”.

In answer to a question in Parliament yesterday Transport Minister Gerry Brownlee said the Government would not fund the project until it was obvious that targets for passenger and population growth were enough to justify the $3 billion cost of the project.

Mr Brownlee said it was unlikely those targets would be met to allow a start before 2020

Mayor Len Brown's proposal to the Prime Minister is that the Auckland Council will fund the entire cost of the City Rail Link from 2016 to 2020 when the Government would repay 50% of that cost.

The Council's 10-year Long Term Plan shows that in the 5 years to 2020 the Council plans to spend a total of $2.4 billion, funded 50/50 by the Government and Council.

The Prime Minister, last year, gave conditional agreement to support the project which was then estimated to cost $2.8 billion.

That cost is now likely to be at least $3.2 billion.

The Mayor and Council have assumed that the Government would fund half of the total cost, although the Government has not committed to that level of funding.

However the Mayor has failed, after three years of effort, to find a funding method for the Council's half-share.

The Mayor is asking the Prime Minister to provide a cast-iron guarantee that the Government will pay half the final total in 2020, and, with that guarantee, the Council would fund the entire project between now and 2020'

With no funding plan in place the Mayor will need to borrow the full cost with the ratepayers being the ultimate guarantors.

Interest on new borrowings would be funded from rates income with the result that rates would rise considerably, which is the burden the Prime Minister referred to this morning.

By increasing its total borrowings to raise this $2.4 billion the Council will reach its prudential borrowing limits, and probably its prudential interest limits.

The Mayors obsession with the Central Rail Link is leading to a very risky financial future where funding for essential basic services will be squeezed to meet the interest costs of the rocketing debt of the city.

This proposal comes from the Mayor and has not been approved by the Council as a whole, and it is now up to councillors to take control of the situation and bring some clear and sane consideration of this dangerous situation.
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