Transmission Gully paving the way for PPPs

The Puhoi to Warkworth Highway looks to be the second ‘road of national significance’ to be developed under a public private partnership (PPP) structure. Private companies will be invited to submit proposals for financing, designing and building the road. In doing so, Transport Minister Simon Bridges hopes to save up to $1 billion. This follows the model of the Transmission Gully Motorway project – there, the Government has engaged the Wellington Gateway Partnership, led by Leighton Holdings.

Candidates for the Northland roadway are to be identified by the end of this year, and the NZTA has indicated that construction will begin late 2016, and is to be completed by 2022.

The use of PPPs in these projects has polarised opinions. Some point to the opportunity for innovative funding options – PPPs afford the competition benefits of the private sector to public projects and protect state funds by spreading the risk. Others doubt that the savings are actually realised in the long run. For instance, the Green Party has highlighted the difference between Transmission Gully’s $850 million net cost and the 25 year, $125 million per year payment scheme, which works out at $3.1 billion.

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