"Scrap the 'Holiday Highway' rort," says economist

An Auckland economist says scrapping the “unnecessary” Puhoi to Wellsford ‘holiday highway’ and using the interest alone on the $8 billion price tag to help poor New Zealand communities could pluck 100,000 children out of poverty forever.

Associate Professor Rhema Vaithianathan, an economist with The University of Auckland Business School, says funding Roads of National Significance using debt is “an extremely bad idea” that will saddle future generations with debt they may not be able to afford.

The interest alone on the $8 billion needed– at 8% per annum – would fund partial co-pay dental care for the entire New Zealand population, she says, or take around 100,000 children out of poverty permanently. Giving the money required directly to Far North communities would see every Northlander receiving $2986 in their back pockets every year for the rest of their lives.

And Dr Vaithianathan warns that funding Roads of National Significance using debt will plague future generations with the cost of baby-boomer spending.

“Governments around the world are becoming very cautious about their debt levels, and to claim that these road projects are building for ‘future generations’ is an ultimate con,” Dr Vaithianathan says.

“A good example is the Waterview connection in Auckland, where 95% of the benefit is the 15 minutes of time saved during the average peak hour trip. Around 30% of peak hour trips are parents taking children to school, but increasing debt to make the school run shorter for a minority of taxpayers is absolutely crazy. The children might enjoy the sleep-in, but they will be paying for that for the rest of their lives.

“Increasing debt levels to fund roading projects for which the economic case does not stack up is merely gifting more debt to future generations who will be paying for the babyboomers who refused to pay into the Cullen Fund and refused to increase the retirement age.

“Saddling them with debt to pay for roads which they will not be able to afford - given high oil prices - is the ultimate rort.”

Dr Vaithianathan is calling for the Government to undertake an urgent review of the large roading projects, saying other spending priorities are more pressing.