Billions of dollars of Budget investment in road, rail, housing and more is the best way to stimulate an economic recovery, infrastructure leaders urge Finance Minister Grant Robertson.
Just in the past week, New Zealand construction workers’ social media feeds have been deluged with recruitment ads.
Kaefer Integrated Services wants scaffolders to work in Australian pits like Karara iron ore mine. Veritas is recruiting electricians. Lendlease Building is advertising for foremen for Sydney’s Victoria Cross integrated station development. AECOM, which has a $75 million contract to design Melbourne’s Metro Tunnel Project, wants engineers and quantity surveyors.
New Zealand’s construction sector is struggling to train and recruit workers – and with the announcement of AU$15 billion extra infrastructure funding in last week’s Australian Federal Budget, Kiwi companies fear losing the tradies they have so painstakingly developed.
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Australia’s Government bills its 10-year, $110 billion infrastructure programme as supporting jobs, driving growth and helping to build Australia’s way back from the Covid-19 pandemic. Big-ticket spending includes $2bn to support delivery of the Melbourne intermodal rail terminal, $2.6bn for the Darlington-to-Anzac Highway in South Australia, and $2bn for the Great Western Highway upgrade from Katoomba to Lithgow in New South Wales.
Similarly, New Zealand infrastructure leaders warn that Minister of Finance Grant Robertson must follow through on last year’s stimulus promises by committing to shaky infrastructure projects like the cycleway across Waitematā Harbour, and the 24km Ōtaki-to-north-Levin highway. These projects are part of the roading Upgrade Programme, announced with fanfare but which ministers indicate they may now struggle to fund.
Some infrastructure leaders are worried about delays to a Government announcement expressing its support and preference for new cycle bridge across Waitematā Harbour, running side-by-side with the existing Auckland Harbour Bridge. They say it has been stalled and hope the Budget will offer reassurance.
Some like Auckland Chamber of Commerce chief executive Michael Barnett and Barney Irving, from the Auckland business council, are calling on the Government to go further, by committing to an estimated $2 billion spend required to provide new bus and traffic capacity across the harbour next to the cycle path.
Graham Burke, from the Construction Industry Council, said government investment was the only way to avoid a boom-and-bust cycle, in which all the workers leave when big private sector projects are completed. Counter-cyclical infrastructure spending from government departments, like roading authority Waka Kotahi and housing agency Kainga Ora, could provide certainty to the industry.
The Infrastructure Commission Te Waihanga has just published a consultation paper, asking New Zealanders what the country’s priorities should be across transport, housing, health, education and more, over the next 30 years. It warns of the big challenges of population growth and climate change.
Te Waihanga chief executive Ross Copland said it would watch this week’s Budget with much interest, particularly given how focused New Zealanders were on infrastructure and the challenges the country faced.
He said more than 23,000 Kiwis had already taken the time to share their thoughts and concerns with the commission through its Aotearoa 2050 survey – a response that highlighted how passionate and fired-up people were.
“Infrastructure investment was a significant feature of the last Budget as the Government looked to cushion the economy from the impacts of Covid-19 by stimulating employment in the construction industry,” Copland said.
“But we didn’t see the immediacy of these investments flowing through to construction activity that some might have expected, so it will be interesting to see how this year’s Budget accounts for that lag between funding announcements and construction kicking off.”
The construction sector had been much more buoyant in 2020 than people had expected, led by very strong activity in the residential and some civil markets, and pre-Budget announcements like the $3.8 billion Housing Acceleration Fund in March. These had been factored into the overall mix of infrastructure investment the Commission expected to see.
“There continues to be a large infrastructure deficit to provide housing for our growing population, to reduce congestion, to replace end-of-life assets and to respond to climate change, just to name a few of the issues we face,” he said.
“Te Waihanga’s infrastructure pipeline illustrates the multi-billion dollar scale of investments that will be needed to address the latent demand created by historic under-investment right across infrastructure, from water, to transport and healthcare.
“These sectors all have billions of dollars of planned investment leaving the Government with some tough choices about how to prioritise its increasingly scarce capital after a very expensive pandemic response.
“We will be interested to see if the Government looks to address shrinking funding in sectors like transport, where traditional sources of revenue contracted sharply during 2020 (and are yet to fully recover), to help pay for these investments, or if pathways for private capital are developed to keep the investment pipeline on track.”
Te Waihanga identifies the scale of the infrastructure challenge New Zealand is facing in a new consultation document on the country’s 30-year infrastructure strategy. You can read it and make a submission here.