Martin Williams says that we have under invested in infrastructure for decades relative to our OECD peers.
Martin Williams is chair of the Hawke’s Bay Regional Transport Committee and a Hawke’s Bay regional councillor.
OPINION
One trillion dollars.
That is the potential size of our infrastructure deficit to 2050, according to a recently released ASB economist’s report, in order to bring New Zealand’s infrastructure up to scratch and to be able to meet our climate change commitments.
$1,000,000,000,000.00.
This staggering assessment is supported by New Zealand Infrastructure Commission modelling and sets the context for the current conversation about central government tax cuts as promised through the 2024 budget (on the one hand), and the swathe of eye watering local government rate rises storming across New Zealand, on the other.
The reality is that we have under-invested in infrastructure for decades relative to our OECD peers, across both hard infrastructure like transport, electricity, water, waste and telecommunications, and soft or social infrastructure such as schools and hospitals.
The chickens have truly come home to roost and now with the heavy tailwinds of climate change sweeping in behind them.
Compounding that under-investment, ever since the Think Big investment programme of the 1980s, we have had successive governments across the political divide lurching between a range of trophy-scale project proposals, investing millions in consultant fees to get them to the starting line, only for the next administration to come in and cancel them before a sod is turned.
Even the Covid billions failed to deliver investment in new hospitals at scale, amidst a one-in-a-century level health crisis.
Instead, it was all about Auckland light rail and Project Onslow, both now consigned to the dustbin, with more recent mention of a Wellington tunnel while the Cook Straight inter-island ferry procurement gets sent back to the drawing board.
National’s proposed National Infrastructure Agency to better co-ordinate central government infrastructure funding and delivery is a step in the right direction, but essentially misses the point and does not go anywhere near far enough.
What we need is a truly bipartisan approach, or as the ASB report puts it, political parties need to be on the same page to provide greater certainty for investment, with a broad consensus required including over public funding options.
To that end, in my view the Parliament should establish an independent panel of experts to propose an Infrastructure Plan to at least 2050.
This plan would work back from our estimated population in 30 years’ time accounting for immigration, and detail the nature, range and broad location of all key hard and social infrastructure needed over that timeframe; what it would cost, and how it should be funded.
Another option would be to build from the existing Infrastructure Commission (Te Waihanga).
The Commission has already prepared a 2022-2052 Infrastructure Strategy and could be given more statutory clout so that if not binding, its recommendations must at least be given significant weight in generating the bipartisan investment programme, so desperately needed in this country.
Successive governments could adapt and refine the programme, but bigger picture the Infrastructure Plan should be something all parties commit to, and our communities and economy can bank on.
The Infrastructure Plan at national level could be built up from mandatory regional scale spatial planning of the kind we are currently progressing for Hastings and Napier through the soon-to-be-notified Future Development Strategy.
This then leaves funding.
While all options must be on the table including government bonds, public-private partnerships, user pays and so called ‘value capture’, the fact is New Zealand has one of the lowest debt to GDP ratios in the world.
Kiwibank chief economist Jarrod Kerr recently recommended we should give up our current 30 per cent debt limits to fund sufficient infrastructure to support future immigration, taking a longer-term view. The ASB report makes a similar point.
To give a local example of this approach, at the regional council we are proposing to borrow over a 20-year term to fund our share of the $250m investment programme in new stop banks, recognising the intergenerational benefits of those investments in terms of better flood resilience.
However, councils generally don’t have the balance sheet flexibility and capacity which the Beehive enjoys, and whether through the government’s proposed ‘regional deals’ or otherwise, we desperately need more support. Talk of tax cuts in this context while our ratepayers scream blue murder over rates increases, seems extraordinary to say the least.
As I see it, we need this NZ Inc bipartisan infrastructure planning and funding model urgently, and we need it badly. Whatever the sums involved ultimately turn out to be, the infrastructure required to plug the massive deficit ahead will never again be as cheap, as it is right now.
Vi was born Violet Blanche Avison, in Waipawa in 1924.