Get politics out of infrastructure investment: Jones

Friday 17th August 2018

An independent infrastructure agency the government hopes to have operating late next year may help take the politics out of development decisions, Infrastructure Minister Shane Jones says.

The new body will provide expert advice, planning and strategy, and help support the delivery of major infrastructure projects across the country, Jones said in notes for a speech at the Building Nations symposium in Auckland today.

It will be a one-stop shop for investors, linking people to procurement entities and informing them about regulatory and market settings. It will act as a “golden thread” between the various pieces of work this government is undertaking, he said.

Jones said Treasury has been tasked with providing options on the best governance structures for the new entity and he expects to report back to Cabinet on those early next year.

But he said he saw value in the independence demonstrated by infrastructure bodies in Australia he visited earlier this year.

“Thinking bigger than electoral cycles and having an independent voice offering a qualitative opinion on infrastructure to central government genuinely has its merits,” his notes said.

“In some ways, we need to take the politics out of infrastructure but we have to strike a balance between the powers that ministers rightfully acquire when elected, the clout this new agency will need to have to effect tangible change, and the needs of industry.”

Jones was the fifth minister to speak at the two-day conference where the need to accelerate investment was a key theme. All spoke of the need for new innovative funding models and improved planning across local and central government.

Crown investment in infrastructure has surged during the past decade. As well as funding much of the Canterbury rebuild, the government has upped spending on roading and irrigation and partnered with the private sector to roll-out ultra-fast broadband around the country.

Finance Minister Grant Robertson reminded delegates today that the coalition government has committed $42 billion of net capital spending during the next five years, $10 billion more than the previous government.

The government also already has a national infrastructure unit within Treasury, assisted by private sector members on a National Infrastructure Advisory Board.

In 2015 the unit produced an 86-page 30-year infrastructure plan – its third since 2011. It specifically highlighted the challenge when much of the nation’s assets base – from schools, to power networks and water systems - were reaching the end of their lives at the same time.

Parts of the water system were more than 100 years old and the data of some councils on those assets was poor, the report noted. The average age of school buildings then was 42 years. Some regions were also being squeezed by strong population growth while others may need to spread the cost of asset upgrades across a declining rating base.

In his notes, Jones dismissed the 2015 report as a “glossy plan” with lots of pictures of ports and cranes. Leaving that aside, he said he was sure everyone at the conference understood that there are systemic failings in the way infrastructure is developed in New Zealand.

He questioned how immediate, medium-term and long-term projects were prioritised, and he said labour force training and planning was poor.

There was little innovation, not enough collaboration with the private sector, and a lack of visibility of the potential pipeline and scale of work available.

“Our overriding focus is on building new assets rather than the outcomes we’re trying to achieve and our ability to deliver on them.”

Robertson told delegates the Crown’s annual capital allowance structure encourages an overly short-term view and he has Treasury working on ways to provide multi-year allocations.

He said he was also keen to continue marshalling capital from the private sector. He cited the success of Crown Infrastructure Partners – the ultra-fast broadband developer repurposed to fund housing infrastructure - and said more special purpose vehicles would be developed.

Local Government Minister Nanaia Mahuta said the funding challenges for the sector were stark, given estimates that upgrading drinking water supply nationally may cost at least $500 million; meeting the national policy statement on freshwater management could require more than $2 billion of spending on waste water systems.

She told delegates yesterday that keeping water assets in public ownership is a “bottom line” for the government, but that that should not prevent services being structured in such a way as to help finance them.

(BusinessDesk)

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