Revealed: 2021 draft Cabinet paper shows Labour's last minute light rail switch
Over the last year, I've been writing a book on the story of light rail in Auckland between 2014-2024. A lot happened – much of it public, and quite a lot not – and the history of the project goes to the heart of our struggle to build things in New Zealand.
The book will be done when it's done; hopefully next year, and I'm sure many parts of the story will surprise people. But today, I want to go into one highly consequential moment: Labour's decision at the end of the 2021 refresh to opt for the 'hybrid' tunnelled option. Why? Because I kept hearing – over and over again, and from multiple sources – that this was a sudden switch of direction, away from surface light rail.
But I had no written evidence to pin down that claim.
Until now.
Some background, for context
Labour had campaigned on light rail from the city to the airport, but immediately ran into delays in their first term. After their historic re-election in 2020 with a large mandate, the new Minister of Transport Michael Wood decided to take a fresh look at the project. This led to the formation of an Establishment Unit ["the unit"] which under a tight timeframe examined three options via an Indicative Business Case:
Light Rail: surface-level modern trams using the road corridor on Queen St and Dominion Rd, then travelling along the motorway corridor to the airport.
Hybrid Surface/Tunnel: modern trams, tunnelled in the city centre and isthmus, then running along the surface to the airport.
Full Metro: automated light metro trains, tunnelled in the city and Isthmus, and motorway-adjacent or elevated to the airport.
Ultimately the unit recommended the hybrid option, and at the end of 2021 Cabinet endorsed their recommendation releasing the cabinet paper of the decision in 2022. Moving forward with the hybrid option, the government created Auckland Light Rail (ARL) Ltd, which carried the project until it was cancelled in 2024 by the current government.
The claim, which I've heard from multiple sources, was that Michael Wood originally intended to recommend surface light rail to Cabinet, with a draft Cabinet paper reflecting that recommendation, and the prevailing belief was that a 'captain's call' by Jacinda Ardern herself meant the government landed on the hybrid option instead.
Ten months since my first OIA request on this, and one complaint to the Ombudsman later, I received on the 10th of June a draft version of the 2021 Cabinet paper in question.
The draft paper recommended... surface light rail.
So let's have a look, shall we?
What does the draft Cabinet paper say, and how does it differ from the final paper?
It's important to acknowledge the draft paper is incomplete, and that it's largely similar to the final version in terms of how the Labour Government was looking to move forward to deliver light rail (such as the delivery entity). At the same time, there are some major differences.
Both papers stated clearly:
The Establishment Unit has recommended the hybrid option ‘Tunnelled Light Rail’ as its preferred mode option, although has concluded that any option would achieve the investment objectives.
The draft paper was authored only by Michael Wood, hence using the first person 'I' (whereas the final version also included Grant Robertson, and used 'we').
In the Executive Summary of the draft paper, these were Wood's core reasons for recommending surface light rail (emphasis added):
20 Informed by the recommendations from the Establishment Unit, advice from officials and following recent engagement with Auckland local government, I am recommending that Cabinet agrees that Surface Light Rail, following an alignment along Dominion Road, is this Government’s preferred option.
21 The high costs of all three options means that affordability has been a significant factor in arriving at my recommendation, especially given that the benefits of all options are broadly commensurate to the scale of investment.
22 In taking Surface Light Rail forward, I recognise the potential benefits that a degree of tunnelling between the City Centre and Dominion Road could bring to the capacity of the transport network, including by enabling a potential future connection to an additional Waitematā harbour crossing. A degree of tunnelling could also help reduce disruption to businesses and residents during construction.
Whereas the final jointly authored paper read:
18 Informed by the recommendations from the Establishment Unit, advice from Officials and following recent engagement with Auckland local government, we are recommending that Cabinet agrees that tunnelled light rail, following an alignment along Sandringham Road, is this Government’s preferred option.
19 The Establishment Unit’s work demonstrates the value that tunnelling could bring, particularly ensuring sufficient capacity of the transport network to increase patronage and drive mode shift, thereby supporting higher levels of growth than surface running light rail. Tunnelling also keeps the option of a tunnelled connection of an additional Waitematā harbour crossing, and helps reduce disruption to businesses and residents during construction.
20 In progressing this preferred option, the parameters of the detailed planning phase must reflect a greater focus on the integration of transport and urban development outcomes. This is needed to inform decisions by both Crown and Council on how to leverage investment in ALR in a way that increases density and boosts the supply of affordable housing and employment opportunities
The draft paper did not follow the recommendation of the Establishment Unit. It focused instead on value for money, noting that the government had multiple priorities, and that the lower-cost surface option would leave funding for other projects and policies. It does note the potential for a short tunnel only under the City Centre to better support a future connection to the North Shore, create additional stops, and reduce disruption.
In stark contrast, the final Cabinet paper that recommended the hybrid/ tunnelled option said this:
Note how, as well as locking in a major tunnelling project, the recommendation that went to Cabinet focuses on a higher catchment area. It also looks to have a lot more uncertainty in the design, as point 78 notes.
It's especially interesting to see the claim that tunnelling would "reduce disruption", given another section of the same paper (regarding consultation) emphasises the need to take lessons from CRL:
55 We have learned an important lesson from the City Rail Link (CRL) that a clear and principled approach to managing the disruption experienced by businesses during construction of large urban transport infrastructure project is a vital aspect of building and preserving social licence for such investments.
Surely another "important lesson from CRL" is that tunneling also comes with major disruption? It's also very odd that they seem to have been getting advice that a surface option would be more disruptive than tunnelling.
Perhaps most notable of all is the projected timeline. This is the draft Cabinet paper of late 2021:
83 The next phase of work will involve detailed planning work, directed by significant Crown decisions, culminating in an investment decision in early-mid 2024.
In other words, nearly three more years of development, moving the final decision until after the 2023 election.
Why so long? Especially given that in 2018, the Labour Government had picked up AT's well-developed plan and was ready to run with it. This garnered optimism at the time, as Matt wrote in 2018:
This is a really positive step forward. There’s always a risk when projects get announced that they can drag on for years before seeing any action. AMETI is a prime example of this.
It seems the extra time-lag is due to the additional priorities placed on the shoulders of this project (found in both versions of the Cabinet paper), specifically the push for greater integration of light rail with urban development and the wider transport network. The draft Cabinet paper, which recommended surface light-rail, concludes by suggesting a planning phase of 18-24 months:
Whereas the final Cabinet paper, which recommended the hybrid tunnelled option, set out a work programme of "approximately two years":
108 Based on current assumptions, Officials have advised that the above represents a work programme lasting approximately two years, and that this will be necessary to ensure that future funding and investment decisions can be made with confidence, based on sufficient information.
109 In advance of more detailed scoping of the next phase, Officials have advised against making investment decisions in any shorter timeframe. International examples of similar projects being developed demonstrate the significant risks of cost overruns and the need to revisit decisions when they are made early and on insufficient information, and based on. We intend to carefully work these timeframes through with Officials to ensure that we have a considered process, while retaining project momentum.
Because the hybrid option required a lot more design work, it makes sense they'd need at least a few years to develop it while also working on all the other requirements as noted in the final Cabinet paper:
But what doesn't make sense is that the timelines for both options would be so similar – even given the additional requirements to integrate urban development. As the next few years showed us, the expected timeline for the hybrid option - which would actually become the metro option - was probably correct, with 2024 being the likely point an investment decision would be made if the government didn't change. But remember, the surface option had already had half a decade of development work by this point, and there would have been no reason you couldn't rapidly progress it as a transport project while working on the urban development side.
This raises major questions around what advice was being given to the Prime Minister and other Ministers by their advisors, such that they apparently believed the hybrid option could unfold on a similar timeline to the surface option.
Speaking of which...
What advice was taken into account in making the switch?
While we probably won't ever know for sure, a few major changes stick out between the draft and final Cabinet papers – one being the section about the business case that arrived at the initial recommendation.
Here's how it reads in the draft paper:
68 Acknowledging these challenges, I welcome the approach to assurance that has been undertaken by the Establishment Unit, including independent advice to the board with overseas experts providing rapid transit and light rail experience.
69 A Gateway review has also been completed by independent experts. Because of the constrained timeline, there was little to no opportunity for the feedback from the Gateway process or overseas experts to be built into the Establishment Unit Board’s decision-making on the final recommendations.
70 I have also received ‘second opinion’ advice from the Ministry of Transport, alongside advice provided by the Treasury to the Minister of Finance.
71 Overall, while there are limitations to the IBC, no issues have been identified that would materially impact my decision on how best to proceed. I am satisfied that a robust process has been followed. I am satisfied that this project can proceed on the basis of this IBC.
Whereas the final Cabinet paper explains the process differently:
72 Acknowledging these challenges, we welcome the approach to assurance that has been undertaken by the Establishment Unit, including independent advice to the board with overseas experts providing rapid transit and light rail experience. We have also received ‘second opinion’ advice from the Ministry of Transport and the Treasury.
73 A Gateway review has also been completed by independent experts, overall assessing the project as amber on the 5-point scale, noting the high quality of the transport component (which was rated as green-amber) and recommending several areas of improvement, including:
the next phase being progressed as an integrated urban development and transport business case
a comprehensive partnering strategy is developed that ensures appropriate contractual and collaborative working arrangements between partners.
74 Overall, while there are limitations to the IBC, no issues have been identified that would materially impact our decision on how best to proceed. We are satisfied that a robust process has been followed and that the IBC provides the basis on which to proceed to detailed planning.
Clearly, the government wanted to progress this project after re-election in 2020 and hoped to avoid delays, which led to a truncated IBC. Hence the acknowledgement in the draft paper that steps like the Gateway review, a process undertaken by Treasury, were not able to be built into the Establishment Unit's decision-making – along with, seemingly, international advice.
However, there must have been issues that would "materially impact our decision on how best to proceed," given the decision between surface or tunnelled options changed completely between the two papers.
So what shifted the government's thinking?
Rumours seem to suggest that "disruption" played a big part in this decision. Given the tunnelled option was presented by advisors as less disruptive than surface light rail, this seems to align with what's in the papers. (Although as I've said, the example of CRL clearly shows that tunnelled transport projects can also be very disruptive - they just represent different kinds of disruption).
However, another key factor that seemed to influence the decision was the idea of building something that would last for many decades into the future (i.e. the tunnelled version), rather than something that would potentially reach capacity sooner, as the surface option was said to. Of course, as has been well argued, reaching capacity quickly isn't necessarily a 'failure' – it can in fact be a sign of success, in that the project has proven eminently buildable, and thus exists and is working as planned.
We can see this difference in the first point of the executive summary. The draft paper talks about the need to prioritise funding, and strikes a prudent note regarding mega-projects (emphasis added):
ALR will be New Zealand’s largest and most complex infrastructure project. Our response to climate change is changing the way we prioritise our investment, including an expectation that we build less to achieve our outcomes. This means the threshold to progress a mega-project of this nature is higher.
Whereas the final paper is more grandiose and oddly specific (emphasis added):
ALR will be New Zealand’s largest and most complex infrastructure project. Our response to climate change is changing the way we prioritise our investment, meaning that we need to shift the focus of some of our investment and to consider large-scale ‘trunk’ transport infrastructure in our larger urban centres.
It's important to note that while the Establishment Unit's IBC recommended the hybrid option, it did so with the caveat that all options would achieve the stated objectives. There are reasons you might, say, wish to build a metro over a surface light rail line, as the IBC would outline you would get bigger outcomes for bigger spend – and these are things to be carefully considered. Especially in regards to cost, which looked to be the basis for the initial recommendation in the draft Cabinet paper, to "build less to achieve our outcomes" and thus ensure funding for some of the government's many other aspirations.
So who made the call to go for broke?
Whatever caused the change between the draft and final Cabinet papers seems to be related to the government and their advisors. In my research, the belief this was due to a captain's call by the Prime Minister herself has been pretty consistent, from multiple different sources.
Crucially, it should be noted that Cabinet operates under a collective decision-making framework. This means whatever decisions are made inside Cabinet, the relevant Minister – even if they may personally disagree – will represent the consensus. Additionally, since this is the highest decision-making body in the country, these discussions are also very much confidential. But as we've seen with the current government, things do leak out.
Regardless, simply by looking at the differences between the draft and final versions of that 2021 Cabinet paper on Light Rail, there are some notable changes that do seem to align with the rumours.
The draft paper's sole author was the Minister of Transport, Michael Wood, and the paper was lodged with what was called the "Cabinet Economic Development Committee", membership of which (based on the 1 December 2020 terms of reference) seemed to be:
By contrast, the final paper was presented by both the Minister of Transport, Michael Wood, and the Minister of Finance, Grant Robertson, and was lodged with what was called the "Cabinet Priorities Committee", which had far fewer members and is chaired by Jacinda Ardern:
Additionally, various parts of the paper changed between draft and final, including more involvement from other ministers.
For example, the draft paper recommends that the Minister of Transport consult with the Ministers of Finance (Grant Robertson) and Housing (Megan Woods) for future announcements.
Whereas the final paper includes consulting with the Office of the Prime Minister:It seems likely the decision was made by senior members of the Labour Government to switch from surface light rail to the hybrid tunnelled version.
And at this point, I find the suggestion of a "captain's call" by the Prime Minister most credible, as in my view it seems unlikely other senior government members would be involved in such a major switch given from what I understand only Michael Wood, Grant Robertson, and to a much smaller extent Minister of Housing Megan Woods were closely involved with light rail. In the case of the Minister of Finance Grant Robertson, the prevailing view seemed to indicate that he was unlikely to be in favour of the solutions that came at such a significantly higher cost (the hybrid and metro), and probably favoured the surface option.
Regardless, a call was made, whether by the captain by herself or with many of her crew; and whether out of fear of disruption or confidence about mega-investments... and it would change the course of transport in Auckland for at least the next half decade.
You can read the papers here: the draft paper on pages 1-25, and an unredacted version of the final Cabinet paper on pages 26-69.
As for the rest of the story about light rail over the last decade (and believe me, it's a rollercoaster!) you'll just have to wait until I've finished this book.
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That's amazing work Connor! Thanks for doing the research and writing what will be a very interesting book.
I think the TLDR for the whole sorry saga is that we all know now how easily Labour can be bought - it took just six power point slides to destabilise the project and produce a change. That kind of information is damaging to Labour.
Great work @Connor Sharp.