The draft plan to finally fix New Zealand's broken infrastructure
The Infrastructure Commission says we're spending more than most developed countries on infrastructure – while getting some of the worst returns, writes Catherine McGregor in today's extract from The Bulletin.
A scathing review of infrastructure failures
New Zealand's infrastructure is in crisis, and the Infrastructure Commission's draft National Infrastructure Plan doesn't mince words. The 30-year strategy, unveiled at yesterday's infrastructure symposium in Wellington, paints a picture of underinvestment in maintenance, chaotic project selection and dismal returns. New Zealand spends more of its GDP on infrastructure than any other OECD country, yet ranks in the bottom 10% for return on that investment. The report calls out successive governments for favouring headline-grabbing glamour projects over essential maintenance, leading to schools with leaking roofs, hospitals with sewage issues, and NZDF homes rife with mould.
The commission found that ministers repeatedly rushed to announce projects before establishing whether they were actually achievable. 'Half of the large projects seeking funding through central government's annual Budget lack business cases to demonstrate that they're ready to fund,' according to the draft plan. Short-term thinking and policy flip-flops have created a wasteful cycle of boom-and-bust in the construction sector, the report argues, making infrastructure builds more complicated and expensive than they need be.
Welcome to the era of user pays
Among the plan's most contentious recommendations is a greater reliance on user-pays systems to fund infrastructure. 'New Zealanders will soon see that rolling out in, for instance, water metering in pretty much every district, the tolling of new highways, and time-of-use charges starting on Auckland's roads,' writes Newsroom's Jonathan Milne.
Infrastructure Commission CEO Geoff Cooper emphasises this isn't about making every project pay for itself, but finding a more sustainable and equitable funding model. While social infrastructure – like schools or hospitals – is likely to remain fully publicly funded, Cooper is calling for user-pays to become the default wherever it makes sense. 'You can have urban roads that are subsidising rural roads, same with electricity transmission and distribution, but the network as a whole should cover its own costs through those user charges,' Cooper told Oliver Lewis at BusinessDesk (paywalled).
The 17 priority projects
Out of 48 submissions, just 17 projects made it onto the first round of the commission's Infrastructure Priorities Programme, a key feature of the draft plan. Six of them relate to much-needed upgrades of Defence Force housing and facilities, such as new barracks at Linton Army Camp and the regeneration of the Devonport naval base. These projects won praise from Cooper for being well-scoped, achievable and urgent.
Also endorsed was the Reserve Bank's vault upgrade and the redevelopment of Hawke's Bay Regional Prison. A major urban project to make the cut was Christchurch's 22km Mass Rapid Transit line, which aims to connect Hornby and Belfast along a 21-station route. The commission stressed that inclusion on the list doesn't guarantee funding but provides a clear signal that the project is of national significance.
What missed out
High-profile proposals that didn't make the list include KiwiRail's Marsden Point Rail Link and Auckland Strategic Rail Programme, both of which are being reworked or resubmitted. Corrections saw three prison redevelopment projects rejected, despite one – the Christchurch Men's Prison redevelopment – being underway via a public-private partnership. A multi-user ferry terminal for Cook Strait ferries, put forward by the Greater Wellington Regional Council, was also omitted.
As Lewis writes, reasons for rejection ranged from lack of readiness to insufficient national relevance. Some proposals – like a maglev rail system for the Waitematā Harbour crossing – were more aspirational than realistic. The commission is currently reviewing 70 additional submissions for the second round of the programme. For many in the infrastructure community, including rail minister Winston Peters, the rejections no doubt stung. 'We expect the Infrastructure Commission will see the light,' he said of the Marsden Point project, 'and if they don't, we will have some serious questions.'
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