Infrastructure Minister Grant Robertson and former Infrastructure Minister Shane Jones, who passed legislation creating the Infrastructure Commission. Photo / Mark Mitchell
In a landmark report, the Infrastructure Commission has recommended measuring emissions from infrastructure building and use, pricing water, pricing congestion, allowing more borrowing from fewer sources and even, surprisingly, looking at whether we need to build all that infrastructure anyway.
New Zealand has a huge infrastructure deficit between what we need and what we have, and Auckland is in the eye of the storm.
Two-thirds of New Zealand's population growth in the next 30 years is going to occur on 3 per cent of the country's land area. Half the total growth will be in Auckland. This could create huge problems, and make existing issues worse.
But you already knew that: sitting in traffic, waiting too long at a bus stop, watching sewage leak into the streets, sitting in an overcrowded hospital, sending your child to a cold school. New Zealand doesn't have the infrastructure it needs now, let alone what it will need in the future.
There have been many figures floated on how much it would cost to plug the gap. On Monday, the Government's Infrastructure Commission floated another number: spending 9.6 per cent of GDP each year over the next 30 years, or about $31 billion a year.
That's more or less impossible; it would require doubling the current infrastructure spend, and funnelling one in every $10 of our GDP into building new infrastructure.
Both the Infrastructure Commission and Infrastructure Minister Grant Robertson have their doubts that New Zealand even has the capacity to build that much, even if the Government could afford it. Dropping billions of dollars into infrastructure projects that cannot be delivered will just fuel inflation.
That's why the Commission and the Government both said today that New Zealand cannot build itself out of an infrastructure hole. In Robertson's words, this "means we need to get more from the infrastructure we do build, reducing costs and prioritising for the greatest impact".
The Commission recommended repurposing existing infrastructure to ease the pressure on always building something new. It went so far as to recommend the Government considers repurposing existing infrastructure first, before it decided to build anything new.
Infrastructure has been a problem for decades. We tend to build too little, and what we build is not always suited to our needs. In the last term of government, Infrastructure Minister Shane Jones established the Infrastructure Commission, which was supported by parties from across the house.
The Commission works similarly to New Zealand's zero carbon legislation. Every five years, the Commission is required to put together an infrastructure strategy setting out what New Zealand needs and how it might get there. This is tabled in Parliament. Within six months of this, the Government is required to set out its response to those recommendations.
The idea is that instead of constantly thinking in the short term, governments and political parties from across the spectrum take a more long-term view (one that exists outside the political cycle) of what New Zealand needs, and how to build the workforce, skills, supply chains, and funding mechanisms to build it.
The report released today is the first part of the strategy, and Robertson will be required to release a response to it by September.
The Commission's strategy made 68 recommendations in five key areas: enabling a net-zero carbon emissions Aotearoa; helping towns and regions to flourish; building attractive and inclusive cities; strengthening resilience to shocks and stresses, and moving to a circular economy.
The recommendations are meaty - one even asks for one of Labour's 2020 election manifesto commitment to be reviewed. The Commission said the Government's renewable electricity goal (which is to get to 100 per cent of New Zealand's electricity generated from renewables by 2030) should be altered to talk about renewable energy.
Such a goal would be considerably more difficult. While most of New Zealand's electricity comes from renewable sources, we use fossil fuel energy to power much industry, heating, to say nothing of the energy from fossil fuels that powers the transport system.
The Commission had other, even more powerful, recommendations on the zero-carbon economy, which would likely make it very difficult for the Government to build new roads.
It said the Government should require that "infrastructure policies and strategic plans take into account, where feasible, their implications for locking in carbon emissions".
This would likely mean that were the Government to want to build a road, it would have to analyse how that road would "lock in" emissions from more driving, making it incredibly difficult to make the case for building that road.
The Commission said business cases should have to include "whole-of-life carbon emissions, including embodied, enabled and operational emissions".
The cumulative effect of these recommendations suggests it could be almost impossible to get many of our current infrastructure projects built (even Auckland's planned light rail line has massive construction emissions).
This is, in some cases, the point: the Commission said the Government should do an analysis of "non-built" solutions to any infrastructure problems, which would look at whether to repurpose existing infrastructure instead.
This is already playing out in cities like Wellington, where the city's long-awaited Let's Get Wellington Moving project is considering the merits of building new infrastructure alongside the city's century-old Mt Victoria Tunnel, or whether it would be better to repurpose what already exists.
The controversy around this one project is probably a good indication of what the Government can expect, should it act on these recommendations.
Not building infrastructure was not the only controversial proposal. The Commission also recommended "immediately" removing legislative barriers to implementing congestion pricing, and look to charge people for the water they use. This would fund the cost of running those road and water systems, while also encouraging people to use them more effectively.
Encouraging people to drive less and use less water means existing infrastructure can go further.
Robertson said the Government will table its response to the report in September. Unlike stacks of reports delivered to the House, which weigh upon the table like a miniature Manhattan of paper skyscrapers, the Infrastructure Commission's recommendations are weighty.
Many recommendations are already on the Government's radar. It has already done work on congestion charging and has a work programme under way to look at the future of transport revenue. It is also looking at the way Three Waters reform will be funded.
The Government is also carrying out a local government review, which will look at how local government funds its operations, including infrastructure building.
Other changes will require work from scratch. Robertson said the report would be farmed out to responsible ministers for them to tackle what the Government wants to take on.
A small sample of some of the more substantive recommendations is worth reading. The Commission recommended New Zealand's fragmented infrastructure capital funding pools should be consolidated into one to enable greater transparency.
It recommended improving the ability of local governments to borrow and debt-fund infrastructure, potentially freeing them from restrictive debt covenants.
It recommended improving openness to venture capital, potentially forcing the Government to overcome its aversion to private capital in public projects.
It also advised altering the social discount rate to factor in the needs of future generations in relation to present demands. This would probably mean projects would be looked on more favourably by Treasury when put up for evaluation.
