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Infrastructure system at a turning point

Infrastructure system at a turning point - Featured Image - LG Mag Jan 2018

The old ways of planning, funding and delivering core services are no longer working and something has got to give. Stephen Selwood, chief executive, Infrastructure New Zealand.

The need for change is evident not only in Auckland, where infrastructure deficiencies have contributed to a housing crisis, but around New Zealand. Hospitals, schools, water services, roads and rail across the country are all under immense pressure. Business as usual is not an option.
To appreciate how out of step New Zealand’s infrastructure delivery system is with national demands, one only has to look back on 2017. What are the major infrastructure milestones of the year?
There’s one that stands out. The opening of Auckland’s long-awaited Waterview Connection has been a revelation. It has delivered very large reliability, resilience and travel time savings across the region.
But what’s next? The Central Rail Link is not due to open until 2023, assuming all goes well. Light rail to the airport is still more aspiration than reality. The East West link has been cancelled, road pricing is still some way off while Auckland faces a $6 billion-plus transport funding gap over the next 10 years.
Meanwhile the population is expected to grow between 300,000 to 400,000 over the same period.
Across the rest of the country there has been some good progress in Canterbury. The Russley Road upgrade is now open and the justice precinct complete. The convention centre and metro sports facility are now underway.
This is excellent, but it’s also six and a half years since the February earthquake and a decade on from the announcement of the Russley Road upgrade as a Road of National Significance.
The one area where we did see rapid activity this year was in response to the Kaikoura earthquake. A fantastic effort across our key transport agencies and the local community helped keep the upper South Island afloat long enough for accelerated works to reopen the rail line. A massive programme was underway to reopen SH1 for last Christmas.
However, the fact is this was only possible under emergency. In a normal state of affairs, rebuilding SH1 and the rail line in a coastal area of national significance would be practically impossible.
Looking forward, it’s difficult to see how we can address the infrastructure backlog and meet resilience and growth challenges without a paradigm shift in how we plan, govern and fund infrastructure.
Here are Infrastructure New Zealand’s recommendations to government on the top 10 actions that are critical to achieving this step change.
1)  Establish an independent NZ Infrastructure Commission
Could one of the causes of failing infrastructure stem from that fact that no one body is responsible for it? Treasury, the Ministry of Business Innovation and Employment, the Office of the Auditor-General and a vast array of departments, agencies and organisations across central and local government, and the private sector look after parts of it, but nobody has oversight as to whether the system is working as a whole. We need a New Zealand Infrastructure Commission (NZIC) to monitor, report and act, where directed by government, to address New Zealand’s long-term infrastructure needs.
2) Direct the NZIC to lead a national review of resilience of New Zealand’s strategic networks
Flooding, power and energy supply disruption, long-term road closures, contaminated water and the apparent frequency of ‘one in 100-year events’ are all symptoms that our nationally and regionally significant networks are not as resilient as they should be. The NZIC should be charged with undertaking a national review and leading ongoing industry oversight of the resilience of our infrastructure system.
3) Instruct the NZIC to establish a procurement centre of excellence to lead best practice in capital project delivery
A dedicated procurement centre of excellence, working in partnership with public agencies, is needed to lift procurement. Avoiding cost blow-outs, identifying efficiencies, and improving project coordination and delivery would all be major benefits.
4) Identify and commit to a long-term investment pipeline and invest in industry training and capacity building
While 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. 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.
5) Enable scale development of housing and infrastructure
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 land owners, or buying them out if needed, would create an opportunity to create value and fund supporting infrastructure. This could be a model for other growth centres.
6) Accelerate legislation to enable Urban Development Authorities (UDAs) to aggregate land and capture value to pay for the infrastructure
UDAs provide the opportunity to aggregate land through partnership or purchase, where needed. NZ Super, ACC, iwi and other domestic and international funds are all 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
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 sooner 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 struggling to maintain their water infrastructure networks. 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.
10) Reform New Zealand’s antiquated planning laws and local government structures and funding
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 are 78 councils, all of them with inadequate resources and funding needed do their job properly. A first-principles, evidence-based review of our planning laws and the purpose, structure and funding of local government in New Zealand is fundamental to meeting existing challenges and releasing the potential of the regions for the future.

This article was first published in the Perspectives 2018 issue of NZ Local Government Magazine.

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