With $116 billion on the books to be spent by central and local government on capital projects over the next decade, procurement and delivery capability needs to be best in class. It isn't. Unfair risk allocation, waste of limited resources, high maintenance and operating costs and poor outcomes are all evidence that we can do much better. Just a 5 per cent improvement in capital investment over ten years would add another $5b in added value. This is the least that a dedicated procurement centre of excellence, working in partnership with public agencies, should be required to achieve.
4. Identify and commit to a long-term investment pipeline and invest in industry training and capacity building
Though immigration will need to fill yawning capacity gaps in the short term, industry and government must prioritise investment in training, technology and capability across the construction sector. Industry is currently geared to respond to short term boom bust investment cycles laying people on and off to match demand. A long-term project pipeline and smart procurement practices would incentivise the industry to invest in the people, skills and technology needed to lift productivity. Boosting funding in industry training organisations and tertiary institutions is key to the government unlocking a skills development partnership with the construction sector.
5. Enable scale development of housing and infrastructure
The current plan for Auckland is to increase density through urban infill and allow concurrent sprawl north, west and south. But the evidence shows this plan is not keeping pace with demand, cannot be funded, is unpopular with existing residents and will make congestion worse. Focusing the Kiwibuild programme to the south of Auckland in the form of a satellite "innovation city" connected by rapid rail to Manukau, Southdown, Penrose, Newmarket and the city would make better use of limited resources. Rezoning land and partnering with existing landowners, or buying them out if needed, would create an opportunity to create value and fund supporting infrastructure. Scale development would enable economies to be achieved through prefabrication and catalyse private investment. Master planning would ensure integrated development, require innovative design and provide the opportunity to build a liveable city for not just 50,000 but 500,000 into the future.
6. Accelerate legislation to enable Urban Development Authorities to aggregate land and capture value to pay for the infrastructure
Urban Development Authorities provide the opportunity to aggregate land through partnership or purchase, where needed. NZ Super, ACC, iwi and other domestic and international funds are looking to invest but the opportunities are extremely limited. Well-functioning UDAs could unlock this potential and facilitate master-planning and urban development at scale.
7. Provide opportunities for private investment in infrastructure and release capital through asset recycling
Taxpayers should not have to fund the bulk of the investment. Taxes are best used to address market failure, seed fund development and incentivise the market to deliver. Public private partnerships and partial or full sale of existing assets can enable private sector capability to be brought to bear and release public capital to be recycled into desperately needed water and transport infrastructure.
8. Introduce road pricing and roll out water pricing nationwide
It doesn't make sense to continuously invest in new infrastructure when we don't optimise how we use existing infrastructure. Councils who charge for water have successfully reduced water consumption by up to 30 per cent. That means they not only conserve water, but they can defer investment in infrastructure needed to support unnecessary demand. Similarly, road pricing could dramatically increase efficiency of our road networks, raise funds for new investment and incentivise public transport use and walking and cycling. The quicker we ask users rather than taxpayers to pay, the smarter our investment decisions will be and the better use we will make of our existing infrastructure.
9. Corporatise water service delivery
The evidence shows that councils across the country, especially in rural areas, are really struggling to maintain their water infrastructure networks. The Office of the Auditor General has identified a deficit of up to $7b in renewals of existing plant. On top, councils are having to improve water quality, meet rising consumer demands, invest in technology and deal with the challenges of climate change, all on an ageing and often shrinking ratepayer funding base. Corporatisation of water services would enable significant efficiencies through economies of scale, staff specialisation, standardisation and, if introduced with volumetric charging, a direct link between revenue and investment. Most importantly it would enable councils to focus on the needs of their communities rather than funding gaps, water treatment plants and pipes in the ground.
10. Reform NZ's antiquated planning laws and local government structures and funding
For a country of just four and a half million people it's hard to understand why our planning laws and governance system is so fragmented and complex. The Resource Management Act, the Local Government Act, and the Land Transport Management Act provide the legal framework for infrastructure planning, funding and delivery but between them represent 1358 pages of conflicting processes and complexity. Administering this system is 78 regions and councils, all of them with inadequate resources and funding needed to do their job properly. The most important action of the incoming Government would be to establish a commission of inquiry to lead a first-principles, evidence based review of our planning laws and the purpose, structure and funding of local government in New Zealand.
