Escalated cost and climate policies compromise NZUP

The Government’s New Zealand Upgrade Programme (NZUP) has been in limbo while the NZTA has been doing project baseline cost analysis. The results were released today (June 4, 2021) with only two thirds of the of the original projects to proceed as originally announced, and cost cutting modifications made to others.

This means 26 out of 32 projects will go ahead unchanged, an extra $1.9 billion thrown into the programme kitty, and some projects re-scoped to reduce their greenhouse ‘emissions’.

“Covid has increased construction costs around the world, and we’ve done the work upfront to understand the impact on NZUP projects which were announced pre-pandemic,” says Finance minister Grant Robertson who says the NZUP is already supporting over 1000 jobs with 13 projects underway.

“Fully funding the new estimated costs for every project would have cost up to $6 billion extra on top of the original $6.8 billion, so instead we’ve taken a balanced approach with a mix of additional investment and a handful of projects being re-scoped while also keeping a lid on debt.” This includes an additional $1.9 billion that was set aside in the multi-year capital allowance to support the programme.

Minister of Transport Michael Wood adds that the Government’s climate policy forced another look at the programme.

“Recognising the need to ‘decarbonise’ our transport system, we’re rebalancing the package to increase investment in rail, public transport and walking and cycling.

“If we had proceeded with Mill Road as originally scoped, it would have cost up to $3.5 billion and, at peak, produced six tonnes of CO2 emissions a day.

“Instead, we’ve focused on delivering important safety improvements to Mill Road, upgrades to SH1 and rail, and new rail stations connected to public transport, walking and cycling infrastructure.”

Among the large projects back on track are: The $1.5 billion Otaki to North of Levin project, which is due to start 2025; Penlink ($830 million) due to start next year; Melling ($20 million) due to start 2023; Takitimu North Link stage one ($655 million)  due to start this year; the Wiri to Quay Park third rail line ($318 million) under construction;  The Canterbury Package ($300 million) which starts this month (June, 2021); and the Wairarapa Rail Upgrades ($156 million) expected to be completed in 2024.

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