The Prime Minister's Business Advisory Council has warned Jacinda Ardern that New Zealand is at an "infrastructure crisis point".
The warning came in a June 26 letter to Ardern — released to this columnist — where the council said New Zealand lacks a "national masterplan" to tangibly map out "our immediate, medium and long-term infrastructure future in an integrated way".
The Business Advisory Council, chaired by Air New Zealand chief executive Christopher Luxon, has presented a damning indictment of New Zealand's infrastructure regime saying there is "no overarching vision or leadership in New Zealand for infrastructure development".
"This means there is no nation-building narrative upon which to build a strategic direction," it says — although it excuses the Ardern Government of any culpability for the mess which it says is intergenerational.
Apart from a national masterplan — which is heavily redolent of the Singapore Government approach to infrastructure development favoured by some council members — it wants to see funding and financing mechanisms that would allow for long-term, debt-funded or investable opportunities. It notes the incentives between central and local government are misaligned and New Zealand is poor at execution and delivery.
"The public sector does not have the capability to manage a programme of projects of national significance and the private sector operates in a boom-bust cycle," the letter warns.
The council met with Ardern at Rocket Lab's Auckland premises last Friday ahead of her departure on holiday to the Cook Islands. Finance Minister Grant Robertson, Small Business Minister Stuart Nash and Associate Economic Development Minister Damien O'Connor were also present to discuss the council's recommendations on an array of subjects including small business and infrastructure.
It was the Business Advisory Council's (BAC) second formal meeting with Ardern this year, and, the inaugural chairman Luxon's last.
The Air New Zealand chief executive will stand down from the role of day-to-day leadership of Air New Zealand at its annual shareholders' meeting on September 25.
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At that meeting current board member Dame Therese Walsh will succeed Tony Carter who retires as Air NZ chairman and Luxon will move into an advisory role to support the incoming chair and CEO.
Luxon's declared intent to pursue a post-Air NZ career in either another CEO gig, leading a not-for-profit or in politics, inevitably raised questions about whether it was appropriate for him to stay as council chair until September 25 — particularly as he has declared a party preference for National. But Ardern professed she was not concerned about his continuing in the role until he left Air NZ.
She is expected to appoint a new chair ahead of the council's next meeting with her in either October or November and Luxon has committed to help with the transition.
The NZX announcement that Luxon was stepping down as Air NZ CEO came on June 20, just hours after he hosted a BAC discussion with Auckland business leaders on the council's work. At the breakfast meeting he gave no hint that he was going to step down that evening.
At the breakfast he made the point that infrastructure was not just about business productivity but also social wellbeing and exhorted the audience to look at Infrastructure New Zealand's top 10 priorities (see table).
The council's letter says that Infrastructure, in its broadest sense, underpins wellbeing.
"The success of regions relies upon their effective connectivity to urban centres; linking the city fringe with the centre can reduce income inequality; mature, unclogged and functioning cities (especially Auckland) are our critical engines of growth; swimmable beaches rely on major storm water and sewerage projects; energy certainty is a basic building block for investment; larger bridges can enable higher loadings, fewer truck movements and lower emissions; broadband connectivity empowers business to occur anywhere, any time; and a connected vision for infrastructure enables wealth to flow into and around the country, building an equality of opportunity for all Kiwis."
"Unfortunately, the system that sits beneath effective and sustainable infrastructure development in our country is fundamentally broken."
The June 26 letter, signed by the outgoing Business Advisory Council chairman on behalf of the 13-strong council, raised a number of recommendations.
Significant among them that New Zealand should establish a Ministry of Cities, Urban Development and Population which could encourage locally developed, long-term and tangible strategies and execution through the administration of "City Deals". This would include allowing local authorities to capture part of the value created through their own successful strategies and initiatives.
This is a hot topic in infrastructure circles and will be on the agenda at Infrastructure New Zealand's Regional Development Symposium in Rotorua next month.
The council has also suggested a Prime Ministerial Taskforce or Commission of Inquiry should be established to undertake a comprehensive, evidenced based and first principles review of NZ's planning laws and local government system including the Resource Management Act, Local Government Act and Land Transport Act.
Top 10 priorities:
1. Reform NZ's antiquated planning laws, local government structures and funding.
2. Develop aligned national planning and development framework.
3. Independent NZ Infrastructure Commission
4. Deliver national long-term investment pipeline
5. National review of resilience of NZ's strategic networks.
6. Accelerate Housing and Urban Development Authority.
7. Scale development of housing and infrastructure to meet growth
8. Private investment in infrastructure/release capital through asset recycling
9. Road pricing to optimise traffic flow and raise revenue.
10. Price water service delivery.
Source: Infrastructure New Zealand