Despite some pushback, the $1 billion cost blow-out on the City Rail Link project will be split 50/50 between Auckland Council and Central Government, the Government’s Budget has revealed.

The Covid-19 pandemic, lockdowns, staffing issues, inflation and the supply chain breakdown had been blamed for the 25 percent budget blow-out, which will see the project delivered in 2025, a year later than expected.

The project had originally been approved at $4.419b by both the Council and Government in 2019.

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It is now estimated to cost $5.493b.

Auckland Mayor Wayne Brown had previously implied the Council expected or wanted central government to stump up more than half its share of the $1b bill.

The Council is in a difficult financial position as it is with a seemingly ever-growing $325m budget hole it is seeking to fill through cuts to services, the sale of its stake in Auckland International Airport and a general rate rise.

The Budget hole does not include the CRL obligations.

The 2023 Budget showed $197m had been allocated towards “enabling timely delivery” of the project.

Combined with $360m allocated in the 2022 Budget, that is the Government’s $537m share in the cost blow-out, which Transport Minister Michael Wood said would be matched by Auckland Council.

“The Government and Auckland Council are co-sponsors of the project and are committed to jointly funding the project,” Wood said.

“We have confirmed $537m in funding, with Auckland Council also having confirmed it will match that amount. Collectively, sponsors will therefore contribute an additional $1.074b to the project.”

Auckland Council hadn’t yet announced it would meet its 50 percent funding obligation for the additional costs.

Wayne Brown’s press secretary Josh Van Veen declined to respond to Newsroom, saying an announcement was forthcoming.

Auckland Council’s Transport and Infrastructure Committee chair John Watson said despite any posturing to the contrary out of Council, the 50/50 split was agreed on back when the deal with Central Government was first agreed back in 2016.

“I’m assuming the notion was that there would be an attempt to negotiate a different deal with the government, to make a plea to their good nature to say well, okay, these suckers have paid enough just give them a break.”

Watson doesn’t speak favourably of the agreement cracked to fund the project.

“In retrospect, it wasn’t the wisest deal in the world, in terms of committing council, not just to a pretty significant cost of the project at the start, but also, each subsequent increase which as everyone knows, have turned out to go up in big lumps of a billion dollars.

“The number of increases has shown that it was an agreement that we’re paying for paying for big time, but that’s the agreement, so there’s no way out of that.”

He said advice given to Council by bureaucrats had to be questioned, and compared the deal to the watertight agreement on the Central Interceptor stormwater project that insulated Council from any overruns.

Operational and enabling infrastructure costs are still to be hashed out between the two parties.

Despite the funding issues, he said it would be truly transformational for Auckland once complete, “What we really now need to do is make sure that we leverage it to the absolute max.”

City Rail Link is New Zealand’s largest-ever transport project and once complete will double the capacity of Auckland’s rail network and will carry up to 54,000 passengers an hour at peak time.

Wood said Aucklanders and businesses had made it clear that the biggest barrier to the success of the city was persistent congestion, which Labour was on track to fix.

“The CRL project is a long-term investment in Auckland infrastructure to improve congestion, cut down trip times, and provide more reliable and frequent trains for commuters.

“We want an unclogged, connected, and future-proofed transport network so Aucklanders can get to work on time, and don’t need to wake up earlier just to get their kids to school – the City Rail link is central to achieving that.”

Andrew Bevin is an Auckland-based business reporter who covers major industries, markets, regulation, aged care and fisheries.

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