It’s almost biblical. In the first week of advance voting, authorities were dealing with a gigantic 13m-deep sinkhole that had opened up in Auckland’s Parnell the previous week. It had collapsed a sewer pipe, and the wastewater is being pumped into the Waitematā Harbour at the rate of hundreds of litres of raw sewage every second. This is happening simultaneously to a cryptosporidium outbreak in Queenstown. More than 60 people have been infected by the parasite, and residents are boiling their water. The cause may never be known – but it’s likely to be animal waste contaminating the drinking water. And in Golden Bay, a broken sewage pipe has been leaking into an estuary for the past six weeks.
New Zealand has an infrastructure deficit. For the past 50 years, we’ve failed to maintain the power, telecommunications, pipes, roads and public-transport systems required to support a developed nation with a modern economy. In a July report, Te Waihanga, the NZ Infrastructure Commission estimated we’d need to spend $31 billion a year over the next 30 years just to meet the current shortfall – a number that would require a combination of large tax increases, huge cuts to other government services and massive borrowing. It’ll cost even more to decarbonise, accommodate population growth and respond to extreme weather events and other climate emergencies.
This deficit is the consequence of decades of deliberate underinvestment across central and local governments: a cross-party, multigenerational failure that’s left the nation with pot-holed, congested roads, dire public transport, contaminated drinking water and frequent widespread sewage leaks. Both the major parties have noted that voters dying from gastrointestinal outbreaks are bad for their favourability ratings, so they now have infrastructure policies (neither of which come close to addressing the scale of the problem).
One of Labour’s key projects this term was Water Services Reform – the policy formerly known as Three Waters. This takes all the different water services operated by different councils and territorial bodies and amalgamates them into mega-entities (at first, there were four; now there are 10) that can raise enough debt to properly manage and finance the stewardship of water resources.
This was controversial for several reasons: Local Government Minister Nanaia Mahuta assured councils the arrangement would be opt-in, but when it was unveiled, the scheme was mandatory. The cost has been staggering, with enormous sums paid out to consultants and contractors, partly financed out of the Covid Response Fund. Mahuta breached a long-standing constitutional convention when she attempted to entrench her own legislation, requiring a super majority to overturn it. The government reversed the entrenchment in the face of mass outrage from the nation’s constitutional lawyers.
But most of the controversy was around co-governance. The new mega-entities would be governed by regional representative groups: half local councils and half tangata whenua. This has long been a standard model for resource-management arrangements negotiated under treaty settlements by both National and Labour governments. But National argued that delivering a public service as valuable and vital as water without proper democratic accountability was a dangerous precedent. There has been intense, even poisonous debate about this, much of it driven by the Groundswell NZ movement and the evangelical anti-co-governance activist Julian Batchelor. But Nanaia Mahuta, Jacinda Ardern or Chris Hipkins have never been inclined to explain the co-governance model to the nation. A Taxpayers’ Union-Curia Poll in March 2023 found 60% of respondents opposed Three Waters – and 34% or respondents simply had no idea what co-governance meant.
This is the primary divide between the major parties on infrastructure: Labour would proceed with water services reform and the co-governance approach. National would scrap it all. It would return water infrastructure to local councils, but introduce new water regulation standards and a body to enforce them. And National would allow councils to form Regional Council Controlled Organisations, which are non-mandatory versions of the Three Waters mega-entities, so they could raise the debt to repair and build new infrastructure. National would also create a National Infrastructure Agency – this is in addition to the currently existing Infrastructure Commission – to oversee that gigantic multi-billion-dollar a year pipeline for the next 30 years.
Winners:
It’s hard to say, because we still haven’t seen the Three Waters entities in action. But one of the reasons council performance is so poor is a lack of accountability. It’s hard to imagine that the less-accountable co-governed entities would solve that. Or that returning control to the councils will improve anything.
Losers:
People who like drinking water that isn’t contaminated with sewage, and swimming in rivers and seas that haven’t been flooded with effluent.
We have a long-standing housing crisis to go alongside our infrastructure crisis. By some metrics, we have the least-affordable houses in the world. Labour’s signature policy going into government back in 2017 was KiwiBuild: a pledge to build 100,000 homes. It was a high-profile failure, and this has clouded the government’s more modest achievements in this area. It has built 12,000 “public homes” (a mixture of state homes and state-funded community provider homes). It has extended the Bright Line test, which charges capital gains on the sale of property if it’s not a primary residence. It has banned no-cause evictions for tenancies and removed interest-rate deductions for landlords. It has also limited rent increases to once a year. Labour has introduced a ban on foreign buyers of New Zealand property, as well as the Healthy Home Standards, setting minimum standards for ventilation, heating and insulation in rental properties.
And the government introduced the Medium Density Residential Standard, or MDRS – a bi-partisan commitment between the two major parties to partially deregulate the housing market, compelling councils to allow the construction of three-storey townhouses in residential areas.
Winners:
Labour’s primary housing policy is to keep building public houses: another 6000 in its third term. The primary winners are people on the state-housing wait-list – although increasing the total stock of houses also puts downward pressure on house prices.
Losers:
It’s hard to say landlords are losers, exactly: they still keep making tax-free capital gains on their properties. But compared with the extraordinary generosity they’ll get from a National-Act government, they are relatively hard done by under Labour.
When Christopher Luxon took over as National’s leader, he pulled out of the MDRS accord. Councils will be able to opt out and continue to restrict new housing builds in residential areas. National would also – infamously – remove the foreign buyers’ ban on residential property purchases of over $2 million, which it would then tax at the rate of 15% stamp duty in the (unlikely) hope that this would fund its income tax cuts.
National would remove interest deductibility for landlords and reduce the bright-line test back down to two years. It has also pledged to keep building state houses, albeit not at the frantic rate to which Labour has committed. And it would reintroduce no-cause evictions.
If elected, National would compel councils to zone land for 30 years of development. Because of its MDRS policy, that would mostly mean new developments rather than the lower-cost inner-city densification every urban planner in the nation recommends. National would also “reduce red tape” for developers building greenfields infrastructure and redirect Waka Kotahi NZ Transport Agency’s funding to build roads to service the new developments.
Winners:
A recent investigation by RNZ into the industry affiliation of political donors found that the property sector was the most generous with its money, most of which went to National and Act. Coincidentally(?), that sector would be massive beneficiaries of a National government.
Losers:
People who don’t already own homes. National is optimistic that the market would be able to deliver more housing and solve the housing crisis – and it might have been right. But the easiest and cheapest way to solve the crisis – the market optimal way, as the economists say – is to increase density in current residential areas. Councils are famously reluctant to do this because their voter and rate base are existing owners. When given the choice between free markets and extending the property franchise or entrenching the wealth of existing property owners, National chose the latter.
