Auckland Council has issued a financial update relating to a major public transport project and the impact of Cyclone Gabrielle.
It shows the cost of work to complete the City Rail Link has grown by $1 billion.
As one of the joint sponsors of the City Rail Link, the council has received a formal funding request from City Rail Link Limited at the same time it’s beginning to fully understand the financial challenges caused by recent severe weather.
The council has a range of funding options available, but the significant challenges will require it to make “further tough choices” through the 10-year Budget 2024-2034, it says.
The rail link request seeks an additional $1 billion of funding for the project from the two sponsors.
“This reflects a $1.074b increase to the previously estimated total project cost of $4.4b, which was approved by the sponsors in May, 2019, to a new total of $5.493b,” the council says.
“In addition to the cost increase, the council has also been informed construction of the stations and supporting rail infrastructure is now likely to be completed by the Link Alliance in November, 2025.
“KiwiRail and Auckland Transport will then carry out the additional work required to open the CRL to its first passengers.”
Cost increases and delays have been primarily driven by the Covid-19 pandemic and associated lockdowns, which have resulted in staffing, supply chain and technical challenges associated with a project of such scale and complexity, as well as inflation in construction costs, the council says.
Its governing body will consider its share of the formal funding request and discuss the budget implications of the increased cost and project delay when it meets on March 23.
The council group says it’s continuing to assess the impacts of the recent flooding and cyclone events on its services and infrastructure, but initial estimates suggest the cost of its operational response to them and returning assets to their previous service levels could cost between $900m and $1.2b.
“These estimates include some short-term impacts on revenue, operational costs such as immediate cleaning, maintenance and repairs, as well as capital costs to renew damaged assets.”
The council says the impact of the storm and Cyclone Gabrielle will make it harder to balance its annual budget 2023-2024, which is currently being consulted on, even harder.
“Tough choices will be required in the 10-year budget to resolve this medium-term budget challenge.
“Funding options available to the council include reducing or deferring other capital spending, further sale of assets, further service reductions, and considering the level of future rates increases.”
