Office of Hon Simon Bridges MP for Tauranga Minister of Energy and Resources Associate Minister for Climate Change issues Minister of Transport A M, . Deputy Leader of the House er 0 lug Ice 1 5 FEB 2015 Todd Niall Dear Todd I refer to your request dated 18 January 2016, pursuant to the Official Information Act 1982, seeking: ?a copy of the most recent, detailed, ministry or departmental, or other advice/report, on the timing of central Government funding for Auckland's City Rail Link?. I note that your request has also been sent to the Prime Minister. The documents I am releasing cover the requests to both me and the Prime Minister. have received two documents that fall within the scope of your request. The first document, titled ?Treasury/MOT Report: City Rail Link: Proposal to make early financial commitment" is enclosed with some information withheld in reliance on the following sections of the Official Information Act: 0 section relating to the privacy of natural persons a section relating to the constitutional conventions which protect the confidentiality of advice tendered by Ministers or officials - section relating to the effective conduct of public affairs through the free and frank expression of opinions by Ministers or officials - section relating to negotiations being carried out without prejudice or disadvantage. The second document is a Cabinet paper entitled ?City Rail Link Project?. Some information has been withheld in reliance on the following sections of the Official Information Act: 0 section relating to the constitutional conventions which protect the confidentiality of advice tendered by Ministers or officials a section relating to the effective conduct of public affairs through the free and frank expression of opinions by Ministers or officials - section relating to negotiations being carried out without prejudice or disadvantage. Private Bag 18041, Parliament Buildings, Wellington 6160, New Zealand. Telephone 64 4 817 6835 Facsimile 64 4 817 6535 With respect to the information that has been withheld, I do not consider there are any other considerations which render it desirable, in the public interest, to make the information available. You have the right under section 28(3) of the Official Information Act to make a complaint about the withholding of information to the Ombudsman. Yours sincerely Hon Simon Bridges Minister of Transport COMMERCIAL-IN-CONFIDENCE Ministry of Transport TE MANATU WAKA lushi?i I Kaitohuwhu Erupapa Rawa A Treasury/MOT Report: City Rail Lrnk: Proposal to make early ti ncral commitment ff) 2 ?3 v? {It/xx?) Date: I 30 November 2015 Report No: TW1 File Number: ?bcoseza \f 7 Action Sought I 4: (Q {r Action So ?ht Quadline Minister of Finance Sign Camper? you becember 2015 (Hon Bill English) lDi to claisto I . Minister of Transport Sig et paper Wm 4 December 2015 (Hon Simon Bridges) Cabin Ge if, Q) 'rect of?cialst I Contact for Temp/Eon Disgg?fr?h (if"required) withheld under s9(2)(a) Name Positi Telephone 1st Contact loieterg?zQ/y lPrinciW, Treasury l044715264 (wk) WW 'whw rincipal Advisor, Minis,th 09 9854823 (wk) - i v? rt A withheld under s9(2)(a) rm. \??trons fi?k?t? Minister?s Of?ce Staff (If requrred) (O :3 . .l xx Lodge 1 abinet paper in Cabinet of?ce by 4 December if agreed, or return to and Treasury -r rq required. mi any feedback on the quality of the report Enclosure: Yes (attached) Treasury: 3351518v1 COMMERCIAL-IN-CONFIDENCE Treasury/MOT Report: City Rail Link: Proposal to make early ?nancial commitment X/l) Purpose 1. As requested by the Minister of Transport, we attach for your consideratip Cabinet paper that proposes making a ?nancial commitment to theAugklan. ity Rail xv. Link (CRL). withheld s9(2)( 59(2) Summary 0) [31 2. In June 2013 the Prime Minister announced that joint business plan for the City Rail Link with A share of funding for a construction start in 20.20% . f? Went i ?n to a ncil i roviding its 3. The Auckland Mayor has written to the for an early confirmation of at least a 50% contributidm' to the City Rail Link (CRL) project, from 2020. 4. This would enable construction Council?s desired start date of 20 . :3 (K hheld under 59(2)f(iv), s9(2)(j) . I AA, .41? xx. H. ix? withheld under 59(2)f(iv), s9(2)(j) Xxx/{A ,2 x/ i 1/ . ?59? 4,4; ?x 3' withheld under s9(2)f(iv), s9(2)(j) City Rail Link: Proposal to make early financial commitment Page 2 COMMERCIAL-IN-CONFIDENCE COM MERCIAL-IN-CON FIDENCE Background 8. In June 2013 the Prime Minister announced that the ?Government is committing to a joint business plan for the City Rail Link with Auckland Council in 2017 and providing its share of funding for a construction start in 2020". He also indicated that the Government would consider an earlier business case and construction sta specified rail patronage and 080 employment targets are met. (If the cur rowth ., - rate is sustained, rail patronage will meet the threshold but the CBD exmp target I will not be met). l? The Mayor?s proposal Transport on 12 November 2015 requesting an earlier 26. firmation of at contribution to the City Rail Link (CRL) project frorpj202b. Total costs/o?he estimated at $2 - 3 billion, with a central estimateef A funding commitment from ,thp-QreIanould enable-the Council to borrow against it and commence constgugtioh\e?rlier than envisaged?by the Prime Minister?s statementconSIderIng the hayerid a number of Issues which need to be addressed. Raf? )n xx?. - withheld under s9(2)f(iv), s9(2)(j) 11. x. . {/222- j/ gx \n/j .j 14- withheld under s9(2)f(iv), s9(2)(j) .3 City Rail Link: Proposal to make early ?nancial commitment Page 3 COMMERCIAL-IN-CONFIDENCE COMMERCIAL-IN-CONFIDENCE Economic value of the project 16. While the Council attaches considerable importance to the CRL as a city-shaping project, its economic case is not strong. Based on joint work conducted between I Government and Auckland Council in 2011 and 2012, Treasury and the Ministry of Transport consider that the likely benefit to cost ratio for the project woul somewhere between 0.4 and 0.9. This work also showed that the proje impact on Auckland?s congestion problemswithheld under ea. - x: - withheld under s9(2)f(iv), s9(2)(j) City Rail Link: Proposal to make early ?nancial commitment Page 4 COMMERCIAL-IN-CONFIDENCE COMMERCIAL-IN-CONFIDENCE 24. xxlixt?h-hel 99?me s9(2)(j) co erliPI Iere is value in Ministers 0 Whether making an earl - ding commit - to facilitate the acceleration of the CRL, as requeste Mayor, is in rnment?s best interests, and considering: Suggested decisions 25. Before signing the attached 05% r, we ,1 if so, whether in ekglorilq/che possibility of making the commitment r2 Va withheld under s9(2)f(iv), s9(2)(j) 26- - withheld under s9(2)f(iv), s9(2)(j) I I City Rail Link: Proposal to make early ?nancial commitment Page 5 COMMERCIAL-IN-CONFIDENCE withheld under s9(2)f(iv), s9(2)(j) If; a? r? 'th??ld'u?der s9 Recommended Action We recommend that you decide: 1. withheld under s9(2)f(iv), s9(2)(j) City Rail Link: Proposal to make early ?nancial commitment Page 6 COMMERCIAL-IN-CONFIDENCE COMMERCIAL-IN-CONFIDENCE 3. w1thheld under 39(2)f(1v), 4. Agree that the Cabinet paper should be amended to reflect your decisi . Agree/disagree. Agree/disagr A 1, Minister of Finance Minister of rt -- 0? --7 David Taylor - unn 3 Manager, National Infrastructure Unit a Managing stry of Hon Bill English Minister of Finance 1: City Rail Link: Proposal to make early ?nancial commitment Page 7 Commercial-ln-Confidence Of?ce of the Minister of Transport Of?ce of the Minister of Finance Chair Cabinet Economic Growth and Infrastructure Committee '7 CITY RAIL LINK PROJECT ifProposal 1. We seek the Committee?s approval to enter 'ns with a view to bringing forward the business pl rmalising'theGldvernment?s commitment to provide funding for the City 2. We will report back to Cabinet wit @s lfor discussions. Executive Summary 3. The Prime Minister annou in Ju tthe Government was ollowing committed to a joint bu plan in 20 rovide its share of funding for a construction start fr uckland planning to date, including its budgeting in the erm en focused on construction of the main works beginnin 1 ith th ct completed by 2023/24. 4. Auckla sport been working to this timeframe and has secured route pr io ope s, planning consents and let contracts for cons ru arly City Rail Link. 5. ayor of Axd has written to the Minister of Transport seeking con tion 0 at ast 50% contribution from the Crown to the City Rail Link from . 0 (total oWe project are estimated between $2 and $3 billion). The Mayor siders I certainty such an announcement would deliver would enable 'C/j'xthe pr line to be con?rmed and the project team to proceed with negotiating the ?rite; contracts from an unencumbered position of strength. The Mayor also ve tfunding certainty will assist in providing the commercial certainty for ctor investors that they are seeking. it would also enable Auckland Council ar the ?nancial costs and debt risk associated with beginning construction two Hyears ahead of any Government funding being made available. 6. Given Auckland Transport's progress, several risks and other issues of concern to the Crown as co-funder of the City Rail Link are emerging, including: withheld under 59(2)f(iv), 59(2)(j) potentIa un Ing commItment wou a so ena prow unding certainty to property developers in the CBD. withheld under 89(2)f(iv), 59(2)(j) 9. On balance, we consider that the advantages of address' to the Crown as co-funder for the City Rail Link and enabli Counc provide funding certainty for the project outweigh the disa ge associate a potential funding commitment. 10. We propose that the Minister of Transport ister of-Ein nter negotiations with Auckland Council with a View, i fonNachE bu ness plan rovide fundin_ he Citv Rail fl? and formalising the Government?s Link from 2020 and withheld un 11. The Prime Minister an . - that the Government and Auckl ounci fonrvard the business - . formalisi the City Rail Link, 5 ositiveres risk issues. x. Background the ter announced the Government's commitment to nd Council for the City Rail Link (total costs for the 12. In a jo' plan - . stimated$2e $2 and $3 billion) in 2017 and to provide its share of fun ?2 a co struct'on tart in 2020. He also announced that the Government wo - onside 'er construction start date for the City Rail Link if Auckland?s empl reased by 25% over the February 2012 estimate; and annual ernment?s funding commitment for fa range of funding, ownership and ll patr na track to hit 20 million trips well before 2020. I 1? 13 her 2013, Cabinet noted that signi?cant funding may be required for ty ail Link at the same time as the East West Connections and Additional i a Harbour Crossing projects Min (13) 43/6 and EGI Min (13) 29/3 I'd Auckland Council released its Long Term (Budget) Plan in June 2015, which sets aside Council funding for construction of the main works to begin in 2018 to complete the full City Rail Link by 2023/24. This assumes that the Government would provide $1 billion in funding from 2018/19, two years ahead of the 2020 timeframe announced by the Prime Minister in 2013. 15. Auckland Transport has also been working to this timeframe and has secured route protection, property purchases and planning consents for the City Rail Link. It has also let contracts worth $280 million in total for construction of early works to Page 2 of 11 relocate affected underground utilities and begin surface level construction for shallow (cut-and?cover) tunnels below Britomart and Albert Street. Auckland Council is seeking funding certainty for the City Rail Link from 2020 16. After discussion with the Minister of Transport and the Minister ce, the, Mayor of Auckland has written seeking ?con?rmation of an at lea 0 ributior?i from the Crown to the project from 2020?. -- 17. The Mayor has indicated that a Government commi?? provide certainty for Auckland Council to continue procurement for the jectt plan 1" timeframes. This will in turn provide certainty for pri investors to with developments planned in the CBD. 18. The Mayor has recognised that the timi omm to the Government being con?dent that a ssoci share of funding for the project have beactorily Rail patronage and CBD employment 19. If rail patronage continu to at its rt; it is likely to reach the 20 million threshold that was spe the ter by 2018. At this rate of growth, Auckland Trans a - has in icate are likely to be capacity issues with Britomart during ing peak around 2018 which may cause some access restr' sta . CBD employment suggest that it remains 20. Howeve recen some way fr ng the - rowth threshold, which means that the combined threshol Wi met. Rationa sideringt kland Mayor?s proposal 21. en th rogress on the City Rail Link to date, there is merit in considering portu ity tAuckland Council to complete the project as early as sible. the Government?s funding commitment from 2020 would allow the 'n ruction works fonlvard according to its preferred 2018 timeframe. Addr i@ in the early stages of project development established to re?ect the Government's interest as funding partner. The Minister Transport and Auckland Council. The expectation was that these issues would be Auckla or to bear the ?nancial costs and debt risk associated with bringing it 2. Following the Prime Minister?s 2013 announcement, the previous Minister of Transport informed the Mayor of Auckland that new arrangements would need to be \C?f?f/H indicated that, until new arrangements are established, responsibility for progressing if? the project and the associated ?nancial risks would continue to sit with Auckland ?1 addressed in a joint business plan in 2017. 1 This problem could be resolved in 2023/24 if the City Rail Link were to be accelerated on Auckland Council's preferred timeframe or in 2025/26 if the main works are constructed from when Government funding becomes available. Page 3 of11 23. As one of the biggest transport infrastructure projects to be undertaken in New Zealand, there are considerable risks attached to the City Rail Link cost escalation, construction and timing). These risks are potentially developinq now given Auckland Transport?s recent progress on the project. withheld under sQ(2)f(iv), 39(2)(j) A Providing certainty to property developers around the project ti 24. Auckland Council has set out in its 2015 Lon (Budget) the City Rail Link by 2023, based on the assum i Gov provide $1 billion of funding from 2018. As thi fr differ . ew Government's 2020 funding commitment, it certai lopers with plans along the main construction works %n Group2 tower and Victoria Residences). 6) 25. The Government may wish ucklan 'l to provide funding BD wh cted by the main City Rail certainty to property developers Link construction works. Options for Government 26. We have c? pos