Mayor Len Brown has kicked off a debate about how to fund the City Rail Link [Herald Dialogue Page, 30th January].  But  before figuring out how to raise the money to pay for it we should  first discuss what the funding gap for Auckland Council will actually  be.  The two issues I particularly want to explore are the probable order of costs, and the likely contribution from Government.

I  am not going to deviate into discussing the merits of the proposed link  under the central city except to say that while a few argue that it is  unaffordable, many more of us know that we simply cannot afford not to  build it.  My model is Sydney  which began developing its underground system 85 years ago when its  population had also just passed 1.5 million people heading rapidly  towards 2 million.

Costs: The  most authoritative costing for the Link was in the May 2011  Parsons-Brinkerhoff business case which gave a range of costs from $1.99  to $2.38 billion.  At the behest  of Government, Council has ordered a thorough review of the costs and  projected benefits which is due for release in a few months.  In the meantime I shall use the average of those two figures: $2.2 billion.

Although that is a huge amount of money, it will not require payment all at once.  About $200 million will be required this year and next for planning and land purchase.  The  rest of the cost will be incurred as a series of progress payments  during construction which is expected to take about four years.  Assuming that the target date for completion is 2018, repayment could be manageably spread over the next six years.  Payments could be smoothed over an even longer time by using debt funding, though this would add interest charges to the bill.

Thus the annual repayments would never exceed $500 million per year – still eye-watering but manageable.  By comparison, Auckland Transport has already budgeted $586 million for capital works this year.  While  they could use part of existing budgets for some of the Link  expenditure, Auckland Transport cannot be expected to cancel most of  their other capital projects for years on end in order to pay for it  all.

So Len is correct in saying that we need to investigate other sources of funding specifically for this project.

Graeme Easte, former City Councillor, long time member of the Campaign for Better Transport and Albert Eden Local Board member

First published in the NZ Herald 8 February 2013