Great benefits, what about the costs?

by Matt Lowrie

Big infrastructure projects are great if you only count the benefits and none of the costs. That seems to be the position of infrastructure lobby group Infrastructure NZ based on a report they released last week about the big motorway projects built in Wellington over the last decade.

Transmission Gully and the Kāpiti Expressway are delivering major economic and community benefits for the Wellington region, a new report for Infrastructure New Zealand shows. Together the new expressways are saving millions of hours of travel time, significantly reducing deaths and serious injuries, and providing a combined benefit of $173 million during the last calendar year.

Infrastructure New Zealand Chief Executive Nick Leggett says the findings of the report prepared by Infometrics underline the importance of delivering modern large-scale infrastructure.

“Transmission Gully has not been without challenges, but the benefits are undeniable. This stretch of new road alone is saving travellers nearly 2 million hours a year, making journeys safer, faster and more reliable, and helping unlock growth across the greater Wellington region.”

The report highlights:

• Transmission Gully delivered a $79 million benefit in 2024, driven by travel time savings and improved safety, with no deaths recorded on the road since it opened.

• Across the three new expressway sections – Transmission Gully, Mackays to Peka Peka, and Peka Peka to Ōtaki – the combined benefit was $173 million in 2024, with 3.8 million hours saved for those who used the roads and significantly fewer deaths and serious injuries.

• Porirua has been a major winner, with 74,000 more people now within a 60-minute drive of its CBD. This stronger connectivity is supporting local growth and helping to close the housing price gap with Wellington City, which has narrowed by more than $63,000 since Transmission Gully opened.

“The fact is these three new stretches of expressway are building more prosperous, more connected communities,” Mr Leggett, a former Mayor of Porirua says. “This shouldn’t come as a surprise as these are the outcomes we must expect from major infrastructure projects.”

He’s right, we should expect big benefits from major infrastructure projects but that is only one side of the equation and when it comes to this report, that other side is completely missing.

The average of 9 minutes of travel time savings for Transmission Gully is less than the 11 minutes originally promised and the total monetary benefits for Transmission Gully don’t match what they say in their press release. I wonder which one is right?

It seems the real beneficiaries of these projects have been the existing home owners, sprawl developers and real estate agents who have been able to bank some impressive gains thanks to taxpayers.

One thing that’s useful about this report is it uses actual measured outcomes to determine the benefits rather than the seemingly made up numbers last year of $500 million a year in benefits to justify an expressway to Northland. Given there’s not all that much difference in the population of Northland and areas north of Wellington served by these expressways. There was also a lot more traffic on those Wellington roads prior to building the expressways than there is north of Auckland. So if they’re delivering a combined $173 million in benefits it’s even harder to see those Northland numbers as realistic.

The real issue with this report, is that it only looks at benefits. The benefits are only good if they are higher than the costs and when it comes to Transmission Gully at least we have a really easy comparison.

Transmission Gully was originally meant to cost around $850 million to build but ended up costing about $1.25 billion. Under the original deal we would be paying for the PPP from our state highways budget starting at around $125 million annually but rising over time. With the construction cost blowout it is now reported that the annual payments are now at least $180 million but the exact costs haven’t been disclosed.

The original PPP payment profile

I don’t know about you but paying $180 million a year for a project that delivers $63 million (or $79 million) in benefits doesn’t sound like a very good deal.

The only mention of costs is criticism that we spent a comparatively small amount over 15 years on upgrading the old route, which they argue could have instead been spent on bringing forward these expressways. The $75 million noted is the cost inflated to 2025 but using the same criteria, these projects combined cost about $2.4 billion. That amount of money wouldn’t have made much difference to whether these expressways were built but given it delivered projects like adding wire rope barriers to parts of the route, will be helping to keep the people still using the old routes safer.

The real purpose of this report is to argue that we should ignore the costs and just build more big roads.

[Porirua Mayor Anita Baker]: The next priority for the region must be Petone to Grenada.”

“When we look at future major projects for New Zealand, a second Mt Victoria tunnel and an additional harbour crossing for Auckland, while expensive, must be considered priorities of national importance,” says Leggett.

“The lessons from Transmission Gully and the Kāpiti Expressways are clear. Despite the well-known difficulties with the projects, they still prove that when we invest boldly, we can gain significant economic and social benefits.”

And this view that we should just ignore costs is also highlighted in an op-ed from Leggett.

They are the dividends of long-term investment in safe, resilient transport links. And yet, despite this mountain of proof, the national conversation continues to fixate on cost.

Transmission Gully’s price tag has been flogged in headlines for years, while its benefits ‒ now proven and immense ‒ rarely rate a mention. NZTA has struggled to tell the story, and successive governments have failed to champion the “why” behind these investments.

The result is a public debate distorted toward pessimism, rather than pride in what we have achieved and ambition for what comes next.

That brings us to the Ōtaki to Levin project, the critical next stage. Completing this link isn’t just about finishing a road. It’s about locking in the proven gains of safer, faster, more reliable journeys, and extending them into Horowhenua.

That Otaki to Levin project is now expected to cost $2.1 billion alone, for a road that currently carries fewer vehicles than the roads these expressways replaced. But if it’s now the case that money is no object, why are we not building the world’s best metro systems in our cities, linked up by high-speed rail up and down the country? That would certainly cost a lot but there’d be lots of benefits too.

Notably those who benefit most from a “cost is no issue” approach are the big infrastructure builders and financiers – the same ones who happen to be members of Infrastructure NZ.