New Zealand’s infrastructure crisis isn’t about spending too little money — it’s about poorly spending the money it does have, an infrastructure head says.
The Infrastructure Commission has found the country ranks in the top 10% of OECD countries for infrastructure spending but in the bottom 10% for getting bang for buck.
Speaking on Q+A, chief executive Geoff Cooper said the country was actually the largest infrastructure spender among advanced nations between 2010 and 2020, but had worse results because of poor planning and asset management.
“This is probably a surprise. A lot of people think we don’t spend enough in New Zealand on infrastructure. We do,” he said.
Founded in 2019, the commission was set up to help improve and to address flaws in New Zealand’s long-term infrastructure planning system.
Is an infrastructure pipeline possible?
There have been ongoing calls for greater bipartisan consensus on major infrastructure projects.
Last year, then-City Rail Link boss Sean Sweeney said political bickering and disagreements were one major factor costing dearly in sky-high build costs.
Sean Sweeney said politicians cancelling one project to start another is driving up prices. (Source: 1News)
Asked how a much-debated infrastructure “pipeline” could be politically certain, Cooper told Q+A the country needed to focus on what was “actually affordable”.
“We imagine a transport system that is far more like Finland and a water network that is more like Denmark — both spend less but get more. Better roads, better transportation, lower leakage rates,” he said.
“In this plan, we’re proposing to have strengthened infrastructure for a changing climate. But critically, it is funded, right? A lot of the time, I think we’ve spoken about projects that ultimately have been very difficult from a funding and project-quality point of view.
“If we can get that right, to my mind, you can start getting some pipeline certainty. “
Submissions close on the commission’s national infrastructure plan later this week and Cooper advocated that his organisation’s priorities list would be important in the future.
Infrastructure Minister Chris Bishop says he’s embarrassed about New Zealand’s low OECD ranking for asset management. (Source: 1News)
The draft plan identified 17 projects the commission believed should get priority.
“It’s the first time New Zealand has ever run a process like this, that is transparent — you can go and see the reports for each of these projects and the advice we’re providing.
“There’s only 17 on there at the moment. That is because we’ve only run one round. But we will be doing these multiple times a year in the future,” he said.
Maintenance should be the priority
“We have a rapidly ageing population — faster, in fact, than what we thought. We have a fiscal crunch, both for central government and for local government, nearing debt limits,” Cooper told Q+A.
“We have infrastructure that is wearing out faster than we are actually repairing it. We have no clear record, sometimes, of where our infrastructure is, what condition it is in, and what we need to do to fix it for a changing climate.”
New Zealand’s infrastructure deteriorated by $15 billion annually but the country spent nowhere near that amount on repairs and renewals. Cooper said.
Sean Sweeney said the costs of building infrastructure in New Zealand had a “premium”. (Source: 1News)
This eventually showed up in “hospitals that aren’t up to scratch, or mouldy classrooms that kids are learning in,” he added.
“Sixty cents in every dollar on infrastructure should go towards maintenance and renewals. That is a hard truth. The thing about it is that, if you don’t do it, if you kick the can down the road — it just ends up getting more expensive.”
The OECD ranked New Zealand fourth to last for asset-management practices, when it came to infrastructure.
The money problem
The chief of the Government’s Infrastructure Commission was critical of mega-projects that he said could be seen as taking up huge sums of the overall pie.
“We have, after you’ve done all of the renewals, about $125 billion over 30 years for new infrastructure services. Now, that may sound like a large number, but I can tell you, on an annual basis, it is not. It is a very small number,” Cooper said.
“When you’re thinking about these really large projects, you can start to get a sense of actually why these are difficult to get across the line.
“If you think about something like Auckland Light Rail or the [second] Auckland Harbour crossing — both in the order of $25 billion — that would take up approaching 50% of everything.
“That’s everything we need for hospitals, schools, defence, corrections, justice, the list goes on. It’s everything. And so it is a number that really should focus the mind, at a very minimum, starting to bring this portfolio-management approach to our infrastructure.”
A senior Government minister and National’s campaign chairperson, Bishop spoke about infrastructure spending, rising homelessness, asset sales, and the Christopher Luxon’s polling. (Source: Q and A)
Earlier today on Q+A, Transport Minister Chris Bishop was pressed about the Government’s prioritisation of the proposed four-lane Northern Expressway project.
The National Party has previously been criticised for the affordability and credibility of cost estimates on its proposed and committed Roads of National Significance.
For the full interview, watch the video above
Q+A with Jack Tame is made with the support of New Zealand On Air
