Aussies leading the way in infrastructure support

New Zealand should take a leaf out of Australia's book when it comes to infrastructure development, according to Business New Zealand chief executive Phil O'Reilly.

Speaking at the first day of the New Zealand Contractors' Federation conference in Christchurch yesterday, Mr O'Reilly said the Council for Infrastructure Development had calculated the ideal level of investment in the country's infrastructure at 5 per cent of gross domestic product (GDP), around $6 billion.

"It points out that any fiscally responsible government can only inject around 2 per cent of GDP per year, so the need for the private sector to work collaboratively with the government is clear."

But in some cases the private sector had been discouraged or even blocked from such investment, such as over road tolling, he said.

A series of bad decisions over 20 years had also stymied proper investment in New Zealand's electricity infrastructure.

"The chickens came home to roost in the big winter drought of 2001 that led to extremely high spot prices for businesses. It was a real problem for many small businesses that couldn't afford either the hedging or the spot prices and in some cases had to shut down production lines, losing orders and profitability."

The difference in attitude to infrastructure investment on either side of the Tasman was marked, Mr O'Reilly said.

New South Wales' new Premier Morris Iemma had already announced he was going to abolish property vendor tax and promote infrastructure development to ensure the state remained Australia's economic powerhouse.

A specialist unit would be established to co-ordinate major projects, set milestones and ensure they were met.

"What a fantastic attitude," he said.

Earlier, Commerce and Transport Minister Pete Hodgson told the conference the Labour Government had overseen a 10-fold increase in spending on major roading projects in Auckland.

"The day we came into office, the major works under way or recently completed had a value totalling $130m. Today, using exactly the same criterion, the figure is a little over $1300m."

Money could only be spent once, Mr Hodgson said.

"As we approach the election, please keep that thought to the forefront. If it's going back in tax cuts then it isn't going into land transport.

"We invest in our future, in infrastucture, health and education, or we have tax cuts. It is one or the other."

- nzpa