Political changes threaten NZ infrastructure - Richard Harman

A recent minority report on behalf of Labour and The Greens as part of the Transport Select Committee’s report on a New Zealand Institute of Economic Research (NZIER) on the Te Tai Tokerau Northern Expressway questioned the project. Photo / Michael Cunningham

THE FACTS

• The Building Nations conference is being held on August 6 and 7 in Wellington
• Infometrics analysis shows New Zealand could save between $2 billion and $4.7b each year by reducing infrastructure uncertainty
• A Draft Infrastructure Plan lays out scenarios for New Zealand’s population reaching nearly eight million by 2050

The problem with large-scale government-procured infrastructure is that elections get in the way.

Over the past 10 years, big projects have been cancelled every time the Government has changed.

The Roads of National Significance was trimmed in 2017; the Auckland light rail was cancelled in 2023 and now, with a longer list of prospective projects than we have seen in years, who knows what might happen if the Government changes next year.

Like a dark cloud, that uncertainty hovers above the whole sector, ready to rain on investors and contractors at the switch of a few thousand votes.

It would be a fair bet that the investors and contractors have tried to hammer the consequences of this into both National and Labour.

It is time to stop playing political games with vital infrastructure.

And from what the Minister for Infrastructure, Chris Bishop and his Labour counterpart, Kieran McAnulty, say, the message is, at least partly, getting through.

But it is one thing to agree now that a bipartisan consensus on infrastructure should be developed and quite another to hold to that consensus during a tight election campaign.

Nevertheless, the will appears to be there.

Bishop says he wants to sit down with Labour early in the New Year when the Government firms up its response to the Infrastructure Commission’s National Infrastructure Plan.

“I want to move to a situation where we have a broad consensus over the policy settings,” he said.

“There will always be a bit of dispute about some of the things in the pipeline, just to be real about it, a Labour-Greens government is always going to do a bit more cycleways than a National-Act government and we would be a bit more into roads.

“That’s just the reality, but if we can get agreement on kind of 80 to 90% of what’s in the pipeline, that’s a really good thing.”

Labour is approaching this cautiously supportively.

“There are certain areas where it’s in everyone’s interests that National works with us to try and find some common ground, make some compromises, and that will give everyone certainty that when there’s a change of government, there’s going to be no fundamental changes,” McAnulty said.

“That’s where we want to get to.”

So the intent is there, but there are substantial practical problems.

The biggest is the probability that any Labour-led Government would be likely to include the Greens.

Their Transport spokesperson, Julie-Anne Genter, has already this year demonstrated that her party has not dropped its opposition to the Roads of National Significance.

A recent minority report on behalf of Labour and The Greens as part of the Transport Select Committee’s report on a New Zealand Institute of Economic Research (NZIER) on the Te Tai Tokerau Northern Expressway questioned the project.

“The unknown, but likely extremely high, cost of a new four-lane expressway must be evaluated against other investments in infrastructure and services that will benefit the people of Northland,” it said.

“No evaluation of alternatives was undertaken by NZIER, as they themselves acknowledged.

“There is an urgent need to reduce greenhouse gas emissions, and New Zealand has a limited financial budget and a limited carbon budget to invest in infrastructure that will enable the efficient movement of people and goods.”

It is that sort of objection which transcends the purely practical and economic and veers off into ideological considerations that makes the achievement of a political consensus challenging.

McAnulty is obviously conscious of this.

“I’ve been working up a relationship with Julie Anne Genter,” he said.

“Now that we share this portfolio, I’m talking to her a lot more.

“We’re starting to share a few panels together, so it makes sense to get a full understanding of where they’re at.

“I don’t think it’s an accurate description to say they’re totally against roads.

“They look very closely at the business case, and there are some questions starting to arise about the Northland Highway and whether that’s value for money.

“I think they are right in questioning that, and so have we, but ultimately, we affirm our view that if a project has started, we will honour it.”

Defining when a project has started is also a matter of controversy.

McAnulty says he means when the contracts have been signed and work is underway.

The other contentious issue is how projects will be funded.

Bishop has accused Labour of speaking with two different voices on this.

“We invited Labour to the Infrastructure and Investment Summit and they came and Barbara Edmonds wrote a foreword for the Public Private Partnership (PPP) guidance document, but then the day after the summit, Chris Hipkins sent an email out to the Labour Party database saying that National was privatising schools and hospitals,” Bishop said.

“So, they turned up and said, we’ll act in the public interest and be bipartisan, and then they basically lied and said that we were privatising hospitals.

“There needs to be a bit of good faith on either side. PPPs are just a procurement tool.”

Richard Harman

Hipkins has correctly stated Labour’s policy position. The party will not agree to an infrastructure asset being wholly owned by a private investor.

McAnulty cites private prisons as one example of what Labour opposes.

But that is not what Bishop is proposing.

The Government’s National Infrastructure Funding and Financing portal quite clearly states that ownership of any PPP asset will be retained by the Crown.

“We know that public-private partnerships aren’t akin to privatisation,” said McAnulty.

“But let’s be honest, the majority of New Zealanders don’t understand what a PPP is.

“And if we’re not careful in our language and take every opportunity to reassure them that the Labour Party will always be against privatisation, when we talk about PPPs, you can guarantee someone will make that connection and then go out and say the Labour Party is pro-privatisation.

“We’re not.”

The Infrastructure Commission is clearly conscious of the need to develop a political consensus, but also aware of the political sensitivities that must be satisfied before one can be reached.

“We have already conducted considerable public and stakeholder engagement on development of the [National Infrastructure] plan, including ongoing cross-party briefings,” Commission chairman, Raveen Jaduram, told a Select Committee last week.

“We expect this to be a useful input to helping establish greater political consensus for infrastructure,” he said.

“The delivery of the National Infrastructure Plan remains the focus for our organisation through to December 2025, and this will be followed by a Government response in mid-2026.”

And therein lies the big challenge.

Can any consensus that might exist now survive after the middle of next year, when the parties will be beginning their campaigning for what will probably be an October election.

That will be the big test of whether the need for infrastructure can beat party politics.