Rob Salmond at Polity has a real scoop that clearly shows how National Politicians think that running the country should be done for the benefit of themselves and their ilk.
Remember Key’s announcement at the National Party conference of a $212 million package for even more roads? This was the centrepiece of his Conference speech and was essentially a list of projects that the asset sales proceeds were to be used to accelerate.
Rob has asked for details of the projects and has come up with some very surprising details the most jaw dropping of which is that one of the projects is the Kawarau Bridge in Queenstown. Its actual benefit is hard to fathom although it will allow English to get to his Queenstown home quicker from the airport and will presumably improve the value of his holding.
I say that its actual benefit is hard to fathom because with a benefit cost ratio of 1.1 this means that the amortised economic benefits of the project are slightly higher than the cost of the bridge. These benefits are because of slightly quicker travel time for people in the area. When you think that we sold perfectly good income earning power company shares to do this you have to question the economic literacy of this Government.
Rob Salmond puts it well:
NZTA considers a benefit cost ratio of 1 as an absolute minimum, as anything below that involves the country actually losing money by doing the project. Usually, of course, benefit cost ratios have to be much higher than that to attract funding, because there are so many possible good things a government can do with its limited money. That is why Budget time is a time of tension. And that is also what makes funding these marginal projects so criminal. What other Future Investment projects, in roading or elsewhere, will fall by the wayside so Ministers can make these low-return or no-return investments?
The cherry picking of projects in Ministers’ seats makes a mockery of the current funding system. Theoretically we are meant to have a funding system that allocates different sums of money to different types of projects and then ranks the projects according to criteria such as safety, efficiency and value for money. It is meant to display a sense of social and environmental responsibility when making decisions, act in a transparent manner, and have systems and procedures in place to ensure that this occurs. Projects are meant to compete for limited funding so that those that display the best combination of features get funded.
This decision trashes all of this. We may as well go back to a system where politicians make decisions about what roads are built.
Rob also highlights two other matters of concern. It is clear that the Government has put considerable pressure on the officials. The Kawarau Bridge briefing for instance implies strongly that it should not be proceeded with.
And the projects are put in two bands, those with a BCR of 0 – 2 and those with a BCR of 1 – 3. The Kawarau Bridge with a BCR of 1.1 should normally be put in the 0 – 2 category but is in the higher category for some strange reason. And shouldn’t the second category be for projects with a BCR of 2 – 3? What was it a typo?
Hopefully the Taxpayer’s Union will be along quickly to denounce this extreme politically motivated waste of public money. Waiting …