Infrastructure Minister Shane Jones says Reserve Bank Governor Adrian Orr's dramatic decision to drop the OCR to 1 per cent ought to stimulate economic activity.
"I was very surprised how frank he was. He was the one who raised the spectre of zero interest rates in New Zealand — that did take me by surprise," says Jones. "It's got me thinking as a Minister of Infrastructure, if there's a need for the Crown to have to help do the heavy lifting, then what is it?"
Jones says there are are challenges in front of Government when it comes to stepping up the infrastructure pace. "Just talking in the context of the recent Adrian Orr decision — even if we do increase our appetite for more infrastructure projects and expenditure — we've inherited a system that has calcified.
"We have placed so many red-tape barriers in front of us as a society that it's hardly credible to describe infrastructure spend as a short-term positive filler to the economy. Because to get the money circulating in infrastructure, you've got to jump through so many red-coloured hoops. So that's a problem and it's something I'm desperate for the Infrastructure Commission to look at."
Jones reveals that representing NZ First, he has written to Associate Finance Minister David Parker asking for retired Appeal Court judge Tony Randerson's review team to look at some critical issues with the Resource Management Act. "We need a more efficient and robust way of enabling ports to avoid nimbyism and for these big infrastructure assets to in short order secure their long term statutory consents. I think that the Infrastructure Commission can look at that."
"I've personally already written asking that Judge Randerson look at a way that these huge infrastructure service providers or entities have a specific process in the law. I think those big sorts of entities, their consent should be dealt with at Central Government.
What Jones is referring to is a National Policy Statement.
"There should be a designated group including the consents associated with our big power interests.
The notion that our under-resourced, under-capitalised territorial and regional councils can deal with these sorts of applications in an expeditious fashion, I don't believe that's the case."
Jones says his comments are coming from two directions. "The statement of expectation from the coalition partner and the lessons which I've learned as Infrastructure Minister which need to be embedded."
NZ Transport Agency
Jones singled out NZTA chair Sir Brian Roche for particular praise: "We're very, very happy with Brian Roche. He's got a nuanced understanding of how you run, or chair an independent organisation like transport. It's been a dog's breakfast. There's a lot of confidence in Brian Roche and Alan Bollard. So that's about as good as you're going to get in New Zealand.
"With those two working together, regularly communicating, there's no reason why we can't see the 30-year roading infrastructure pipeline accommodated accompanied by a 10-year capital plan."
Penlink and Mill Road projects to get gohead?
The Penlink and Mill Road projects in Auckland are considered "shovel ready". They were a hangover from the National Government. Transport Minister Phil Twyford has asked NZTA for options to roll out the projects.
"Mr Twyford has asked the transport people to collaborate ... but let me just focus on Penlink," says Jones."What are the options for Penlink to happen and what funding choices would we need to make?
I'm told Penlink can be stood up with an infusion of private capital and it may be that different Chinese interests working with Kiwi firms represents a solution to a problem."
Officials have been invited by Jones and Twyford to put options for funding any project deficits in front of the politicians.
"Sir Brian Roche grew six inches when we advised him: bring back solutions and let us say 'Yes' or 'No'," says Jones. "It requires us to change our current thinking. I guess a frustration in Infrastructure is there's thousands of reasons why we're not doing things, but it's very rare you find an opportunity to actually do something. In my view the whole system needs to be inverted so we have more of the latter."
While the Mills Road project sits in Twyford's portfolio, Jones say the Transport Minister has shared with him that there's going to be enormous population around Drury in the not to distant future. He says now is the time to look at Mill Road, perhaps as a mix of private and public funding. He says Twyford is bringing back those options.
Jones believes a future Government should create a Cabinet Infrastructure Committee given infrastructure's importance. "What is Infrastructure? It is Waterview, the Watercare infrastructure, it is the Dunedin hospital, it is the multi-use arena in Christchurch. It is also the performance of NZTA. It's the $1.5 billion that KiwiRail are rolling out over the next 2 years.
"So, when you add that level of economic activity, before you start counting local government and private sector, it's a damn good idea for senior ministers to create an infrastructure committee.
Obviously it can't happen this time because you've probably got too many committees as it is.
"And to expedite infrastructure in New Zealand, you can't leave it to the bureaucracy. They are often struggling to divine what politically are our priorities or if they do, they don't know how to implement them and you can't leave it solely to the private sector because they're getting frustrated they're not getting a clear steer."
Infrastructure spending at 2019 budget
• $1.7b to fix hospitals over the next two years
• Allocated the monies for the new Dunedin Hospital — with work to commence this term
• 10 year $1.2b capital investment in schools — the first time that they have had funding certainty
• $1b in KiwiRail
• Providing $405m for Auckland City Rail Link
• $283m for transitional housing supply
• $885m in Provincial Growth Fund capital funding
• $50m in new funding to create the new Infrastructure Commission
• The total capital spending of this government over the forecast period is $41.1b — a significant increase on the $30.6b from the previous government in their last budget. We can do this while delivering on our Budget Responsibility Rules, reducing debt, and managing the books.
Source: Minister of Finance's Office.