Labour's Christchurch public transport funding promise in-depth and how the rail industry needs to steal the initiative [2]

As a follow on to my previous post [1] with the same title as this one, I have now discovered a very relevant article by financial journalist and Newsroom managing editor Bernard Hickey. His topic is a commentary on why Kiwibuild has failed as a policy and what the implications are for solving the housing crisis around New Zealand. He writes in effect that the government will never be able to get enough houses built to solve the crisis unless it can find a way to fund the infrastructure needed to support residential development.  As he puts it, “Planning and building 100,000 homes over a decade in our fastest growing cities requires much, much more than just finding people and building materials to build houses. It requires massive capital investment in transport, water, earthworks and other infrastructure, most of which require co-investment from private and council investors if the central Government is not going to step up and use its balance sheet to borrow the money to invest in the pipes and roads and railways and shopping centres and parks and industrial buildings.” In the last 35 years he notes that Government has pushed the funding costs onto local ratepayers. Hence we now have the development contributions charged by councils which are claimed with some justification to be a financial impediment to housing development. It’s an exercise in buck passing since ratepayers are also taxpayers but of course the goal was that the government could shift the political liability off itself.

Essentially this has significant implications for transport and infrastructure development in all the main centres, including Christchurch. One of the key preconditions for the development of the rail corridor to Rolleston for passenger use is it becomes a housing corridor to shore up passenger counts. This will require in turn that Christchurch City Council is willing to fund infrastructure development along that corridor, and speed up planning processes to make it all come together. If this doesn’t happen quickly, then we will be waiting for a very long time for any rail passenger services in Christchurch because the justification for them will be shaky at best. With ten years of 5% rating rises already predicted for the city, there simply will not be any money available to fund urban development along the southern rail corridor, much of which is presently in light industrial usage.

The government has made some big mistakes by stating that the $100 million offered to establish a passenger train service will also be available to fund other related passenger services (buses) and infrastructure. It will cost a significant amount to establish the passenger train service. But the problem is that it has created an incentive for the Christchurch City Council to go for the supporting services and argue that rail passenger (which mainly helps people outside its borders) does not have any relevance and should be quietly dropped. And in case, it will take many years to make passenger train services able to fund themselves to the extent seen in Auckland and Wellington. The net result is we could be waiting a long long time until the first train runs.

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