Prime Minister-elect Christopher Luxon (right) and deputy National Party leader Nicola Willis. Photo / George Heard
OPINION
As soon as the ministers of the National-Act-(maybe)-New Zealand First Government settle into their Beehive offices, they’ll embark on a PR exercise to convince the public it made the right choice at the election.
Every government naturally accumulates some skeletons in its closets - you would too if you were in government for six or nine years. It’s the perk of an incoming administration to air those skeletons, giving it a tailwind as ministers get their feet under the desk.
The outgoing Labour administration commissioned research into the infrastructure deficit of our health system, arguing hospitals had been left to decay after “nine long years of neglect”.
The Prime Minister’s chief science advisor looked into the moral panic over methamphetamine contamination in rental properties, which had led to wrongful evictions of people from social housing, including Housing New Zealand housing (HNZ) This was something National had abetted, having presided over an onerously low contamination standard, and a “zero-tolerance” approach from HNZ.
Then there was the review of vehicle testing standards by Waka Kotahi NZ Transport Agency, which found it had not been adequately enforcing its regulatory function, particularly the way it enforced Warrant of Fitness (WoF) standards. The agency saw WoF-issuing garages as customers that it served rather than businesses that it regulated. The death of one man, who had been driving a vehicle that should not have passed a WoF, was linked to this approach.
The National-led Government before that used Treasury forecasts to argue they had inherited a “decade of deficits” thanks to the previous Labour-led Government.
The incoming National-led Government will no doubt try and do the same. Here are three obvious places they’re likely to start.
iRex
No, iRex isn’t a laptop for dinosaurs, it’s the name given to the Government’s project to replace the ailing Interislander ferries.
The project is a massively complicated undertaking, with two new ferries actually being the easiest part of the process. The new ferries will be built in South Korea and are due to arrive in 2025 and 2026.
Where things get complicated is that the ferries require new portside infrastructure to operate. This needs to be built in both Wellington and Picton. The casual observer will note that there appears to be little construction under way currently, and 2025, the year it would need to be ready for the first new ferry, is just round the corner.
The project was last estimated to cost $1.45 billion, including the $551 million cost of the ferries themselves, but the talk around Wellington is that this has blown out considerably.
Treasury’s Pre-Election Economic and Fiscal Update (Prefu) added the project to its “fiscal risks” list and warned that “estimates for the landside costs have increased significantly since initial funding”.
The Labour Government has been quiet about just what these cost estimates could be, Prime Minister Chis Hipkins saying there were “active conversations” about the cost pressures.
When asked about rumours of cost increases, Hipkins replied with a smile: “Your sources are quite good.”
Expect the incoming transport or state-owned enterprises minister (the ferries are owned by KiwiRail) to make a song and dance about the cost increases under Labour’s watch.
National and its partner(s) will have no choice but to fund the increase or risk them becoming the setting of sometime-Wellingtonian James Cameron’s next blockbuster. But National will be sure to make Labour pay politically for any increased cost it is forced to fund.
NZ Upgrade
Labour unveiled the NZ Upgrade project in January 2020, when it was trailing National in the polls. The $12b scheme funded hospital and school upgrades, but the lion’s share of the funding (just under half) went to funding politically important roads.
Labour must now be regretting it. Not only did the Upgrade programme not matter a jot to the outcome of the 2020 election, but it soon became a victim of Covid-induced infrastructure cost inflation, and allegations Labour had badly mismanaged the projects.
By 2021, the cost of the roads in the scheme had nearly doubled, requiring the Government to axe some plans and tip in an additional $1.9b.
But just two years later, the projects are once again under pressure. Budget documents showed concerns about the funding of the projects, and another project warned that one road, the Ōtaki to North of Levin highway, which has already nearly doubled in cost since 2020, may need to be pared back considerably in order to be delivered within budget.
National loves these roads. In fact, the reason Labour greenlit them to begin with is that National’s then-transport spokesman Jami-Lee Ross ran a very effective campaign for them back in 2018. The new Government won’t want them dumped, but it will want someone to blame for how much they cost - and opening the books on the roads could provide a helpful distraction for the party’s own transport package, which has been criticised for undercosting. Waka Kotahi’s early cost estimates for National’s transport package will be needed before the next transport budget kicks in on July 1 next year.
Expect plenty of political finger-pointing over whose blowouts are the worst in the meantime.
Kainga ora
Kāinga Ora, an agency that didn’t exist when Labour came to office, has been one of its success stories, being at the centre of the 13,000 additional public housing places Labour delivered since taking office.
It’s done this by taking on a lot of debt, however.
The paper warned that Kāinga Ora’s debt would peak at $28.9b in 2033 before it began to be repaid, and that the new debt will not be repaid by 2081, when $8.9b will still be outstanding.
Since then, Kāinga Ora has had a funding injection in the 2023 Budget and has changed the way it issued debt to save money. It will now issue debt through Treasury’s New Zealand Debt Management, rather than on its own.
Nevertheless, questions swirl about its sustainability and National is keen to open the books and let in a little sunlight.
Of course, any findings of poor financial management would help to create a political pretext for taking Kāinga Ora’s foot off the accelerator when it comes to public housing construction. National has matched Labour’s building pledge to 2025 but could not commit to funding beyond that, which would mean the public housing build programme grinding to a halt unless a solution were found.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.