Opinion: New Zealand’s increasing infrastructure investment deficit has been a problem that governments have shied away from for years. Recent events – the Prime Minister’s plane breaking down (again), and the Aratere’s new steering gear failing after less than a week – make it clear this can no longer continue.
Unfortunately, in such situations all the Government can do immediately is set up inquiries and promise to invest much more heavily in upgrading infrastructure in the future. There are, after all, no instant answers. Nevertheless, although it has not been in office long enough to have caused any of the current problems, the Government will still be held responsible for them.
Already, there have been attempts to link the Aratere’s grounding to the Government’s decision late last year not to provide additional funding for what was then becoming Kiwirail’s increasingly grandiose IRex ferry replacement proposal. That is simply political cant. Even if IRex had been allowed to proceed, financially untrammelled as Kiwirail seemed to want, it still would have been 2026 before any new ferries were in service.
But those absurd linkages do not get the Government off the hook. The problems facing the ferries, the RNZAF, and Transpower’s generation systems, need to be dealt with now. And the Government must hope nothing else goes wrong in the meantime. An early decision on replacement interisland ferries, as seems foreshadowed by an independent advisory report due to go before ministers, may buy the Government some limited credibility that it is taking the infrastructure issue seriously, even though it will be some years before new ships arrive.
But because the very nature of infrastructure issues is long-term, the Government’s more immediate problem is a mounting public expectation there should be practical solutions, especially regarding the interisland ferries, ideally before this year’s summer holiday period. The Minister of Finance’s announcement in this year’s Budget, of “a record level of capital investment to deliver the infrastructure on which New Zealand’s growth depends” cuts little ice in these circumstances. Investing $68 billion in infrastructure over the next five years, including Kiwirail, roads, and regional development will count for very little the next time there is an incident with the ferries, or Transpower’s generation system fails, or one of the RNZAF’s Boeing 757s breaks down.
As far as the public is concerned, the events of the last couple of weeks confirm that the country is at an infrastructural breaking point. And the expectation is the Government will act decisively to fix things. As people expect action now, the Government’s increasing dilemma will be how to address that expectation in the short-term, while making the necessary investments over the longer term.
There is a huge problem to overcome. New Zealand has a long, post-war history of doing infrastructure development on the cheap, always cutting corners. Coupled with the long-term nature of infrastructural development, which means that is often years before politicians can point to a tangible outcome, the general tendency of successive governments has been to focus always scarce resources on what have been perceived to be more pressing problems at the time. Keeping infrastructure up to date has therefore always been left until tomorrow.
Even when the opportunity was there to invest heavily in infrastructure, it has been passed over in favour of more instant political gratification. The last Labour-led government borrowed a massive $53b to get the country back on its feet after the pandemic, but hardly any of that funding was spent on improving infrastructure. There were no funds allocated to upgrade the battered public health system or to build new hospitals. The matter of new interisland ferries was not resolved then, with the ever-burgeoning costs of Kiwirail’s plans being left for the current government to sort out. Nor was there any significant funding to make the national roading system more resilient, build new roads, or upgrade ageing school buildings.
Instead, Labour squandered this once-in-a-generation opportunity on its own short-term plans, and vanity projects. Now that funding has expired with nothing to show for it, other than the interest bills for future generations on the debt incurred. Meanwhile, infrastructure has continued to deteriorate, to near third world levels in some instances.
The one positive outcome of recent events has been to place a fresh spotlight on the urgent need to upgrade this country’s ageing transport and other infrastructure. As ministers travel the world parroting the line the Prime Minister is so fond of that “New Zealand is open for business again” there is the opportunity to turn that statement into something more meaningful by seeking the investment, capability and relevant experience of other countries in upgrading our decrepit national infrastructure. We should be actively facilitating opportunities for more foreign investment and technological input in our infrastructural development. We can learn from our often resource-poor Asian neighbours who have made a virtue of upgrading and modernising infrastructure, almost against the odds.
A critical part of being “open for business” will be our capacity to attract foreign visitors. A key aspect of this will be the assurance that tourists, along with our own people, can get around the country safely and reliably because services work and are available. New Zealand will not remain an attractive destination for visitors if the word goes out that though the scenery is great, the infrastructure is not fit for purpose.
The Government’s immediate problem is persuading people it can deal with the current situation, alongside the bigger concerns. It therefore needs both a big-picture plan and specific short-term goals towards achieving that. However, because the Government is already perceived in so many other areas to be more focused on short-term checklists that will be a challenge.
Resolving our infrastructure crisis has become critical. The Government’s priority must now be developing both the short- and long-term plans to do so.
Many thanks, Peter, for a measured article that calls out both the major parties.
A further major issue, implicit but still deserving mention, is that we are in an era of unfolding climate crisis. That demands “both the short- and long-term plans” that you rightly highlight must include serious reviews of our approach to many aspects of infrastructure.
Without that, the short-term focus you flag the present government as being known for becomes both a fiscal and operational liability as we spend big dollars on projects that only suit historical models. Energy , transport, and construction are just three of the sectors where future systems need to be VERY different to past ones.
Part, perhaps most, of the $20 billion assigned to upgrading military hardware clearly needs to be allocated to New Zealand’s genuine infrastructure needs.
Dunne is simply flatly wrong with his throwaway comment that “New Zealand has a long, post-war history of doing infrastructure development on the cheap, always cutting corners”. On the contrary, until the elimination of the Ministry of Works by a Government in which Dunne was a backbench member, the widespread complaint from right-wingers was that infrastructure was being built to too high a standard and in too great quantities. The fact that the electricity system still functions at all is due largely to installation of a Rolls-Royce national grid and fleet of generating stations during the postwar era. Major infrastructure projects such as the Wellington and Auckland motorways, the Terrace Tunnel, and three-waters systems around the country were delivered to high standards by the MoW. Short-term cheapest-option thinking came in with the Fourth Labour Government and its National-United successor. If he wants to moan about the consequences Dunne should start with a look in the mirror.
Well said. It is well past time somebody called out these apologists for the mess that they have created; but who try to pass the blame on to anybody but themselves. Infrastructure problems started with the introduction of “NEO-Liberal” economics of the mid 1980’s and the idea that privatisation does it better than public works. History has shown that to be grandiosely wrong and now we are about to pay the price with another blind “Neo-liberal” regime without the ability to see past the tip of their own propaganda.
Foreign investment in our infrastructure? So that dividends are all sent overseas? Attracting foreign expertise to develop our infrastructure? Because we can’t do it ourselves? Our infrastructure is crumbling because so much of New Zealand is already overseas owned. Profits are vacuumed from our economy, whats left is vacuumed overseas as interest on loans, and New Zealand is left with little other than dried milk powder exports to eek out a living on. No Peter, foreign control and plunder of New Zealand’s resources is not what’s needed, what’s needed is less imports, more productivity, and less political managers with their snouts in the troughs of their ‘sell New Zealand by the pound’ agendas.
Peter Dunne’s comment that the Arataki stranding would have occurred anyway as then
earliest the new ships could have occurred is 2 or 3 years away is correct to a point (about as correct as saying that the past Labour government is responsible for the shortage of natural gas at present). The main problem however is not that the new ships might be available in 2026, but this coalition government has resulted in that future date being extended well beyond the 2026 date by at least 3 years (and counting). The only thing that Labour can be blamed for is its inability to order the new ships early enough so they are available now when they are needed.
I wonder if Peter Dunn could be more specific to advise us which projects of the previous Labour government were ‘vanity projects’, and what percentage of the overall capital expenditure these represented.
No doubt the New Zealand nation could borrow capital funds in over-seas markets, or agree to Public-private partnerships, but the end point is the same: more liability.
I would like to see “less repeal”: “more appeal”.
There is one correct statement here: “Because infrastructure is long term…” but most of the rest misses the point entirely. Geoff has a great comment. NZ needs to invest in infrastructure of all sorts, and that means the government: it won’t come from the private sector. And it does not just mean planes and ships, but also all of the proper infrastructure to deal with water, and especially floods, and all aspects of climate change planning. Look at Gisborne and the east coast again! Cyclone Gabrielle exposed the lack of proper infrastructure in so many ways. But it does NOT mean that the current tax payers have to bear all of the burden. On the contrary, borrowing is entirely appropriate because it is the future generations who will benefit. The obsession with a balanced budget just means no investment for the future!
Kevin Trenberth
Instead of ‘advising’ the Govt in this article, about how to deal with political fall out of our atrocious past and present infrastructure decisions, planning and delivery ( ‘cos they ‘ain’t listening to the evidence anyway) how about some real analysis of how to make better long term decisions – such as whole systems thinking that enables multi stakeholder value generation – that might be useful to readers. Honestly this article is a bit of waste of space waffle by a past date commentator
Perhaps there is an underlying cause of our infrastructure failures. Since the neo-liberal revolution of the 1980’s we have had 40 years of emphasis on the ‘now’ – lower taxes to benefit primarily the better-off and the property owners and encourage consumption – the casualties have been the poor, those who don’t own their own home and the future.
Nothing less than a new economic revolution will address the issues of infrastructural failure and the mounting costs of climate change.
It’s like the ‘bustastrophy’ Wellington. It’s not that we can’t do it right; it’s that we choose not to. Geoff has captured it. It was the politics of the implications of the recognition that human excesses were killing the planet (60s-70s) and that only fundamental change would prepare us for the future that panicked us into denial and the rise of the neo-liberal (thanks, Kevin). The current mayor of Wellington has run aground by not recognizing the depth, determination, and repressed desperation of the neo-liberal in the senior council staff.
My first job was with the Ministry of Works and Development. Back then New Zealand was so committed to maintaining, developing and future proofing of our infrastructure an entire government department was responsible for it. The MWD employed our best engineers in collaboration not competition, gave thousands of us jobs, and turned apprentices into the tradies of the future. We literally served our local communities, we knew where the needs were and we had a personal stake in the outcomes. The MWD wasn’t perfect, large bureaucracies, private or public, have problems, but it didn’t deserve the opprobrium heaped on it when the 1984 government Dunne was a member of took a wrecking ball to it. I don’t believe we’d be facing our current infrastructure crisis if we still had a world-leading state owned contracting/consulting organisation concerned with the longevity of our public works and protected from political opportunism and short-termism. It’s time for those complicit in our current problems to stop re-writing history. At the time the MWD has destroyed critics predicted the very problems we’re facing now. So a small correction: we have a post-1984 history of doing infrastructure development on the cheap, always cutting corners. These problems aren’t going to be solved by migrant labour and overseas contractors while our best young people strike out overseas. The climate disaster has arrived, we need to them here helping us prepare for the future. A modern version of the MWD would be a start.
In all this discussion there’s one missing point, and it’s important. It’s this: no matter who owns the infrastructure, it’s the Government’s responsibility to make sure it’s in place, and healthy.
Look what happened to NZ Rail, and why. The government of the time sold it off to overseas ownership. Twice. Each time the same story. The time cycle of infrastructure is long – far longer than our 3-year political cycle. So the new rail owners ran rail for an immediate profit while letting the infrastructure run down. They bailed out, and the government had to pick up the pieces, expensively, fund the infrastructure renewal and start again. Each time. And that’s the nature of infrastructure. Its renewal/replacement cycle is long term, and in that way incompatible with immediate profits. Simple.
And that incompatibility means we are ripe for the picking. Again.