Business Council's blunt message to Government: We need more roads

New Zealand Prime Minister Jacinda Ardern, former chief of staff Mike Munro and Air New Zealand CEO Christopher Luxon. Photo / File

The Prime Minister's Business Advisory Council has called on the Government to proceed with the 12 roading projects presently on hold or under review and open them to private investment.

It has also called on the Government to investigate the "responsible and sustainable" use of international expertise, capital and labour (both skilled and unskilled) for both high-priority future projects of national significance and existing infrastructure projects, and, a move by the Government into "asset recycling - selling mature assets to fund new infrastructure.

"We believe the infrastructure deficit in New Zealand needs urgent attention and our lead-in time to develop our own capability and capital will lag this urgency; it is already challenging to access qualified workers," a June 26 letter to Jacinda Ardern says.

The letter, signed by outgoing council chairman Christopher Luxon, on behalf of the 13-strong council, says it appreciates a strong rail network is in the national interest.

"However, our transport infrastructure solution is not a binary choice between rail or roads, but a comprehensive, scaled-up solution of rail and roads and coastal shipping and other modes.

"As such the 12 roading projects presently on hold or under review should proceed and be opened to private investment. These projects are investment ready, provide the beginnings of a pipeline of investable opportunities and would be an effective use of the roading capability developed in New Zealand over the last 20 years."

The council's letter argues for a totally integrated system which is agnostic to the mode of transport as each region has different needs.

It suggests the National Land Transport Fund (NLTF) rules need to be amended to allow for the raising of debt in order to fund long-term and strategic programmes of work.

"The present fund is limited to a user-pays system which prevents debt financing, long-term planning and discourages meaningful private sector investment."

The council comprises: Christopher Luxon (Air New Zealand), Peter Beck (Rocket Lab), Barbara Chapman (Genesis Chair), Jacqui Coombes (Bunnings), Anna Curzon (Xero), Andrew Grant (McKinsey & Company), Miles Hurrell (Fonterra), Bailey Mackey (Pango Production), David McLean (Westpac), Joc O'Donnell (HW Richardson), Gretta Stephens (Bluescope/NZ Steel), Rachel Taulelei (Kono) and Fraser Whineray (Mercury).

The business leaders believe New Zealand cannot simply rely on the market to deliver projects of scale that are of national significance. It recommends forming a
"New Zealand Prospectus" that can be used to both inform a national master plan and to provoke wider systems change.

"This prospectus should be partly informed by scaled-up projects which mitigate the unique and potentially highly disruptive seismic risks our country faces."

Among other suggestions in the June 26 letter:

• Establish a civil service academy for local and central government to build needed capacity in commissioning and managing projects of national significance. "The focus for capability development should result from a skills audit in the sector but is likely to include: best practice planning; investment rigour; risk; procurement; delivery; and an above average agility and execution capability given our unique seismic vulnerability.

• A philosophical shift is required in New Zealand's national approach to infrastructure concerning the use of public private partnerships. "Government needs to ask itself whether there is any great social benefit in the state owning certain assets, especially when that comes at the expense of other government priorities and responsibilities. A process of asset recycling can then take place which releases much needed public capital for new projects, while leveraging private resources to take over (in whole or in part) and revitalise mature state assets.