Just 54% of the investments were tracking to their original time frames, with 58 investments, with a combined budget of $3.2b reporting delays of over 20%.
A Treasury commentary noted that the value of investments in planning was reducing substantially “going from $147b in the September 2023 end quarter, to $79b in the June 2024 end quarter”.
Treasury was also critical of the way agencies were planning their capital investments, saying Government agencies showed “poor adherence to planning expectations” with many rushing the early stages of planning.
Just 36% of investments allowed more than six months between an Indicative Business Case and Detailed Business Case (DBC) approval.
“This indicates that most investments have insufficient time planned for work to be undertaken between business case stages, meaning we may be asked to make decisions with insufficient evidence or assurance,” Treasury said.
Only 66% of investments sought detailed business case approval before seeking budget funding and just 31% of investments reported planning to seek implementation business case approval within one year of receiving funding, which Treasury said was an indication that “budget funding may be sought too early in the planning process to support moving to delivery soon after”.
These problems show little sign of abating. There are $1.9b worth of proposals in the report that will not have a detailed business case in time for Budget 2025 decisions, compared to $4.5b worth of proposals that will have a detailed business case.
Investments are usually presented in terms of their capital costs - put simply, the cost of building something. However, Treasury warned that the biggest constraint on the investment portfolio was not capital spending, but operating spending - the ongoing cost which is required to support capital spending.
“Approximately every $3 of capital expenditure on infrastructure requires $1 of operating expenditure to support the capital expenditure,” Treasury said.
“The primary fiscal constraint on committing to investment will be the operating expenditure required to deliver capital investments,” Treasury said, saying that a “deliberate capital strategy will be an important part of Budget 2025 design”.
Bishop vented his concern that there were “significant issues with the quality and completeness of data reported”.
He said agencies were expected to “meet Cabinet’s reporting expectations”.
“Good data is critical for robust decision-making,” he said.
“We also expect agencies to lift their game in terms of long-term planning to enable proper sequencing of investment decisions and effective prioritisation, particularly in light of market capacity and the constrained fiscal environment.
Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
