The New Zealand Infrastructure Commission, Te Waihanga, has just launched a six-week “Aotearoa 2050” campaign to get New Zealanders to think about what they want their country to look like in 2050. Sounds deadly dull. A glass of wine on the beach, the latest episode of RuPaul’s Drag Race, or complete Te Waihanga’s survey about infrastructure priorities? Do the survey (you can access it here). It might just be the most important thing you do for your grandchildren this year.
In May 1985, then British Prime Minister Margaret Thatcher gave a speech to the Conservative Women’s Conference.
“You might have heard a lot lately about ‘infrastructure’—the new ‘in’ word,” Thatcher told delegates. “Some of you might even ask exactly what it is. You and I come by road or rail. But economists travel on infrastructure.”
New Zealanders have got their dose of infrastructure over the past few months. Geysers in the streets of Wellington, lead in the water in Otago, some of the most gridlocked cities in the Asia-Pacific, hospitals struggling with asbestos and earthquake risk, homes increasingly unaffordable all over the country.
Failures of infrastructure.
But there have also been successes. By and large, our electricity network works so well we often forget that it didn’t used to. Auckland’s CBD was without power for five weeks in 1998 when several past-their-use-by-date cables failed. Power and lines companies scrambled to upgrade the network but there were spasmodic failures in Auckland and Northland over the next decade.
Broadband and telecommunications have also been stand-out infrastructure performers over the past few years. The Commerce Commission’s annual telco sector report, released this month, notes $15.7 billion of investment over the past 10 years, including $2 billion since 2009 in rolling out fast broadband.
New Zealand ranks third out of 170 countries for our mobile network and services, according to a global industry study; we rank twelfth in the OECD for broadband download speeds.
When Covid-19 locked us out of our workplaces, shops, schools and social networks, the mobile and fibre networks were a lifeline. These days, many of us find it just as easy from a technological point of view to work from home – or from “elsewhere” – as to be in the office.
One of Te Waihanga chief executive Ross Copland’s favourite definitions of infrastructure is “that which is unseen until it is unavailable”.
“You know, as soon as the power goes off, as soon as you can’t drink your fresh water out of the tap, as soon as you’re stuck in traffic, as soon as there’s a major earthquake and you lose services, you start to think a lot more about this stuff,” he says.
“We want to be able to swim at the beach and not be worried every time it rains that septic waste is flowing out into the harbour. We want to be able to get home to read to our kids at night and not be stuck in traffic.”
Copland is head of the body tasked by the Government with “lifting infrastructure planning and delivery to a more strategic level and, by doing so, improving New Zealanders’ long-term economic performance and social, cultural and environmental wellbeing”.
Just a small task.
This week the commission launches ‘Aotearoa 2050’ – an online survey for everyone in New Zealand to think about what they want the country to look like for their children and grandchildren. The survey will be live for six weeks and is one of the first steps on the commission’s process of developing a 30-year infrastructure strategy, to be tabled in Parliament in early 2022.
The aim of this stage of the project is to find out from New Zealanders what their concerns are around infrastructure, where failure hits them hardest, what their priorities are, and what legacy they want to leave for their kids and grandkids, Copland says.
“There is so much that could be done that we could easily spend New Zealand’s GDP in any particular area of infrastructure, lifting its performance,” Copland says. “So we want to make recommendations back to Government about the things that are most important, what people want to do first and the order of events.
“Are New Zealanders more worried about resilience and climate change effects, for example? Or are they more worried about the short term issue of how do I get to work on time when my motorway is so congested?”
The Aotearoa 2050 survey
It starts with a questionnaire, open to all New Zealanders and available here. The questions are a mix of sections asking people to rate certain statements: “It takes too long to get around our cities – very important, important or not important”, for example.
Then there are ideas floated for comment: “We could enable people to live closer to their work… by doing things like fitting more people into our cities by developing taller buildings that multiple people could live in, freeing up new land to build upon and by making it faster and easier to build new houses – definitely, maybe, no”.
And there are questions about priorities: Should we prioritise the planet, people or jobs when it comes to decisions about ensuring we have safe and reliable drinking water for example.
As well as transport and water the questionnaire covers electricity, schools and hospitals, and technology; another section looks at resilience, growth, security and climate change.
Te Waihanga’s general manager of strategy Geoff Cooper says the demands on New Zealand’s infrastructure have increased significantly with strong overall population growth, the shift from rural to urban areas, an aging demographic, and the fall in the number of people per household. There have also been big changes in technology – in everything from telecommunications to water, electricity and even roading – and there is a growing understanding of the potential impacts of climate change on our infrastructure, particularly close to the coast.
“These things have changed quite dramatically and have been exacerbated over the last couple of decades,” Cooper says. And because infrastructure lasts for such a long time, the decisions we make about infrastructure shape our lives.
“Whether it’s the pipes in the ground, or the roads that we put down, or indeed the parks that we plan before our cities go around them, we make these decisions and we shape the infrastructure around us and then the infrastructure ends up shaping us right the other way around in terms of how we go about living our lives and probably more importantly, where we go about living our lives.”
“An uncoordinated, short-sighted or reactive approach to planning and the building of infrastructure can have dramatic consequences.”
– Geoff Cooper
“And because infrastructure shapes population settlement patterns, where we decide to live and work and play, these things are really really important.”
Cooper says an uncoordinated, short-sighted or reactive approach to planning and the building of infrastructure can have dramatic consequences – for example with decisions to develop houses in coastal subdivisions which might be under threat from climate change-related sea level rise in the future.
“It lends itself to many questions: Do we have the right pricing structures? Are we listening to the insurance markets and what they are telling us? How is that feeding into our planning systems? What is the interaction between the planning we do at the local government level, and the infrastructure which is being built sometimes at that local government level, but also at a central government level or privately?
It’s a fail
“These are hugely important decisions which last for long periods of time. And it’s clear we haven’t really got these interactions down pat, we aren’t really doing these things very well.”
New Zealand was ranked 46th out of 141 countries in the 2019 World Economic Forum’s global competitiveness report.
Similarly, the G20 international group rates New Zealand’s overall infrastructure performance to be below the high income country average and behind comparative countries, including Singapore, Denmark, Australia and Ireland.
An infrastructure deficit
In September last year, the Association of Consulting and Engineering NZ published a report commissioned from economic consultancy company Sense Partners.
The report “Infrastructure for the long haul: a need for transparency and durability” estimated New Zealand’s infrastructure deficit could be as high as $75 billion – or 25 percent of GDP. Local government is “tapped out”, the authors said, with high debt and overstretched resources.
“For fast-growing localities, the cost of keeping up with infrastructure is outstripping the social licence to increase rates and borrowing.”
Meanwhile, the peaks and troughs of the infrastructure investment cycle, particularly the loss of skilled workers in engineering and construction firms has led to a capacity shortage and pushed prices up.
“We estimate the excess infrastructure cost inflation over the past decade has cost the country $2.7 billion.”
The report says under-investment in infrastructure is easy to see in traffic congestion and housing inaffordability in our major cities – in particularly Auckland, Hamilton, Tauranga, Wellington, Queenstown. It’s clear in water woes all around the country – the campylobacter outbreak in Havelock North in August 2016 which made 5000 people sick and killed at least three, lead contamination in Waikouaiti and Karitāne, in the Otago region, geysers in Wellington, sewage spills into waterways, closing beaches and making rivers unswimmable.
New Zealand isn’t the only country underinvesting in its infrastructure, the Sense Partners report says “but when we compare our inland (road and rail) infrastructure investment as a share of the economy over the past decade, we significantly lag Australia and come out in the lower half of the OECD range.
“When we take a longer perspective, we find New Zealand appears to be consistently in the lower quartile of investment.
Ross Copland says there are numerous examples of critical infrastructure projects being delayed for years. Dunedin’s new hospital, for example, is tracking well behind the initial programme; Auckland’s northern busway took more than 20 years to build from inception to opening day in 2008.
“In the meantime, the city of Brisbane built a 27-kilometre rapid transit bus network, with three interconnecting busways which was completed in 2011 and carried 70 million passengers that same year,” Copland says.
Big infrastructure projects can be transformative, Copland says.
“Take the Auckland Harbour Bridge. Until the creation of that link, there was almost no population on the North Shore. Within 20 years, the numbers are staggering in terms of the land use change permited in Auckland.
“Infrastructure is a huge enabler of growth. It’s an enabler of well being, if you think about a port and what the port provides to the ability of the agricultural sector to develop its trade and its enterprise. If you think about our airport facilities, and what that means to our tourism economy. I mean, every time we make an investment in infrastructure, we see a huge knock-on effect into the supply chain that that piece of infrastructure supplies.”
The direct road link to Auckland, plus two water mains it carries, triggered massive development of the North Shore.
The role of Te Waihanga
Thirty-year or 10-year infrastructure plans aren’t new, Copland says. Treasury and local councils have been doing them for more than a decade. But translating plans into action has sometimes been tricky when they’ve been reliant on often cash-strapped central or local governments.
“The Commission has the advantage of being able to sit in the helicopter above the system and help coordinate all the players when it makes recommendations,” he says. “What’s important is being structured as an autonomous Crown Entity, which allows us to provide objective and bipartisan infrastructure advice on what’s best for New Zealand.
“By stepping outside core Government, Te Waihanga has a much greater degree of independence and freedom of thought.”
But will the Government listen? There have been plenty of examples of government-commissioned reports quietly confined to a Minister’s bottom drawer.
Copland says Te Waihanga’s founding legislation is structured to avoid that.
“The responsible Minister – in this case, Infrastructure Minister Grant Robertson, is required to present our recommendations in Parliament and formally respond to them,” he says. “He’s not required to adopt them, but there would likely be some discussion about why recommendations we make through the 30-year strategy were rejected or deferred.”
How do we afford it?
How about funding? If we haven’t been able to afford to build the infrastructure we need in the past, why is that going to be any different in the future?
Geoff Cooper says part of the role of Te Waihanga is to think about priorities and timeframes for different projects, but also to present the case for allocating money for infrastructure.
‘Just in time’ infrastructure planning, as Wellingtonians are finding out with their water problems, doesn’t always produce the best, or the cheapest outcomes, Cooper says.
And judicious infrastructure spending can produce big economic gains.
The “Infrastructure for the long haul” report calculates every $1 million of infrastructure spending supports seven jobs.
That doesn’t sound a lot until you think of that $75 billion infrastructure deficit.
The report also calculates every $100 million of public capital created increases economic output by $10 million a year – permanently.
The case for not building infrastructure
But Cooper says it’s not all about spending on new pipes and roads and hospital buildings.
“It’s tempting to go to a bottom line of how much more funding we need. But before you get there, there’s a question about whether we are making the most of our existing infrastructure.
“We think there is some low hanging fruit there, in terms of managing our existing assets better.”
This might be in terms of demand management – installing water meters for people previously on limitless water contracts, for example. That invariably cuts people’s water usage.
Or it could be encouraging builders to put water tanks and solar panels onto homes in new developments, to take some of the load from existing water and electricity infrastructure.
Or it could be promoting more inner-city living, or flexible working hours, so we aren’t all using the same roads at the same time. We could even have less of a need for roads in the first place.
“We can probably use demand management tools a lot better, so that we don’t need these big expensive infrastructure solutions in the first place.”
“What we’ve learnt from Covid-19 is that telecommunications infrastructure can actually be a pretty good substitute for transport infrastructure,” Cooper says. If key roads are virtually unusable at peak times, let’s encourage people to leave their cars at home, to move around outside peak hours, to work from home or to live closer to work.
The Government might consider a congestion charge, for example, or more bus lanes, so buses were quicker than cars, he says. They could boost public transport, or incentives for ride sharing, or free up land in the inner city suburbs so people can live within walking or cycling distance of work. Or all of the above.
“We can probably use demand management tools a lot better, so that we don’t need these big expensive infrastructure solutions in the first place,” Cooper says.
“We don’t think of the infrastructure deficit as a single monetary figure that we need to go cap in hand and ask for money to fix. It’s about closing that deficit through a range of tools, some of which require additional funding and some don’t.”
Having a say
The wide range of possible options is one reason Te Waihanga wants as many New Zealanders as possible to have their say on priorities by answering the ‘Aotearoa 2050’ online survey.
The commission has launched a media and social media campaign it expects to reach up to two million people over the next six weeks, encouraging them to spend 5-10 minutes taking the Aotearoa 2050 questionnaire.
Once Te Waihanga has all the survey results in, it will turn them into a more traditional consultation document to be released in early May, Cooper says.
“This document will contain more focused questions around what we see as some of the big issues and choices we’re facing.”
That’s another six weeks, and then in September, a draft report will go to the Infrastructure Minister for feedback before being finalised.
Cooper, who has worked for the US Treasury and Federal Reserve, as well as being chief economist for Auckland Council and PwC, is excited by his new(ish) job.
He may be an economist, but he sees his job as far more than “infrastructure”.
“What we are talking about is about building a better future, one that is resilient to stresses and shocks, that can accommodate future population, that means we have liveable, accessible, sustainable cities that are affordable for our kids and grandkids to live in.
“It’s about building tighter connections within New Zealand and also internationally that will foster trading flows, financial flows, people flows and a more productive economy.”
This is the fourth in a series of articles as part of a content partnership between Newsroom and Te Waihanga