Inaction on energy and roads threatens growth

The Government needs to take charge to avoid a looming energy crunch and push aside local authorities to complete roading projects so growth is not strangled.

That is the message from the heads of some of New Zealand's major companies.

Fonterra chief executive Andrew Ferrier said the major issue facing his company is not regulation - "it is energy".

"We have 29 plants in New Zealand that run on natural gas," said Ferrier. "If we had to start spending money to convert those to coal over the next 10 years we would spend a huge amount of capital for no real benefit for our farmers whatsoever.

"That capital should be spent on investing in R&D, on investing and growing our value-added businesses - it's critical that there's a real focus on it now, not when these fields start running out of gas in two or three years."

Fletcher Building chief executive Ralph Waters said the "one-in-50-year" occurrence that Governments had used to explain away recent crises was a myth. "I just hope people haven't already forgotten that we did run out of power in two years out of three.

"If we keep on bringing in people and growing at a sensible rate, there will be growth in demand.

"Even if the rain does come there's a finite capacity to generate.

"It's a serious issue and quite clearly with a thousand years of coal in the place if they weren't all handicapped by Greens and tied up with Kyoto ideology - you'd build a reliable coal power station.

"It would add to your base-load and it wouldn't matter whether it rained or not."

Oil industry and power utility chiefs - along with a raft of major New Zealand industrial energy users - agree. They want the Government to get involved with this "critical economic" issue rather than focus on peripherals such as sustainability.

There is little confidence that recent moves to integrate electricity power planning or the Auckland Land Transport Package would provide the answer to vital infrastructural issues.

Auckland roading is a particular bugbear.

"It has been debated for decades and still no solution," said Hamburg Sud's Bo Samuelsson.

Westpac chief executive Ann Sherry is amazed. "I've worked in environments where governments at all levels have at least had the courage to call the fact that their infrastructure is stuffed and they've got to do something about it. Local government has captured the infrastructure debate when it's a national business growth issue.

"It's happening as an argument between Auckland Regional Council and Auckland City," said Sherry. "But there's a real lack of both foresight and political courage in taking that issue on. ... If we don't do something sharper with it, it will strangle Auckland."