It is hard to fathom the magnitude of the Government’s infrastructure announcement.
I’m not referring to the $12b spend – that’s just a drop in the bucket in relation to our infrastructure woes. The real magnitude of this announcement was the complete U-turn on transport policy and the headlong dive into pork-barrelling politics.
Labour is now building the very same uneconomic roads it criticised National for building. In doing so, it has cast aside any pretence of focussing on the infrastructure the country actually needs.
Infrastructure is too important and lasts too long to be used as an election bribe.
Let’s Do… Something
The Government clearly got caught on the hop. With growing calls for increased investment, particularly in the face of a slowing economy and record low interest rates, it had to spend some money, and fast. So it announced the spending package.
People asked: why did you wait so long to invest in infrastructure? Labour claimed to be dealing to social issues like child poverty first. This package shows that was a lie.
This infrastructure package was not planned and is certainly not transformational. It is based solely on what was ready to go. Instead of doing the groundwork for new projects, the Government wasted two years and ended up largely pinching projects from the last lot.
Show Your Working
Infrastructure projects are expensive, have a huge impact on our country, and last a long time. They will determine how we travel, where we live, and how high our carbon emissions are for decades to come. They should receive serious consideration. Sadly, the complete lack of business cases suggests this package was hastily thrown together in a political panic.
How were the projects chosen? Based on what criteria?
Without business cases, we can only conclude this was entirely a political decision, made on the basis of what would get votes.
Exhibit A: Northland – an area targeted by coalition partner New Zealand First – got the highest investment per capita.
Exhibit B: Most of the money will be spent on transport projects rather than water infrastructure. Water infrastructure is just as important and even more run down than transport, judging by the burst pipes and cases of poisoning around the country. Water and sewerage infrastructure is also a major barrier to getting more houses built – just look at the Auckland Central Interceptor. But water is underground, so for voters it is “out of sight, out of mind” compared to transport. Besides, water is the job of local government, so the politicians in the Beehive wouldn’t be able to take credit for funding it.
The trouble is, this sort of announcement is exactly what Labour and the Greens said they wouldn’t do.
What Labour and the Greens Promised
In 2017, both Labour and the Greens campaigned on restoring transparency in transport spending. This pledge was introduced by the last Labour Government with the idea that the roads with the best business cases would get funded. The last National Government by-passed this approach with its Roads of National Significance. Many of these projects had poor benefit-cost ratios, meaning they cost more money than they saved.
By funding National’s projects, Labour has effectively cast aside its principles and shrugged: “if you can’t beat em, join em.”
Labour and the Greens also promised transformation and to take action on climate change. Such ideas are largely absent from this “business-as-usual” package.
What Needs to Happen?
In the short term, the Government could easily have come up with a better package by asking local authorities to submit the best ideas for their region. But working constructively with local government is an anathema for both Labour and National.
Longer term, we need a proper infrastructure plan with long term funding attached. The size of that funding depends on where we see our population heading so that we can plan our growth as a nation. In other words, we need a population strategy, which TOP thinks should be determined through a citizen’s assembly.
How should the infrastructure budget be spent? Ultimately, infrastructure spending needs to be made independent and transparent. The old benefit-cost ratios used for transport are narrow and out of date, but better than nothing as a starting point. We need to build on them and find ways of comparing all our infrastructure priorities.
As a country we need to set out what we want from our infrastructure in economic, social, and environmental terms. For example:
- We could use the old benefit-cost ratio as the start of the economic measure.
- For the social aspect, we could estimate the impact of projects on people’s housing and travel costs.
- For the environment, we could start by looking at carbon emissions.
Having a single metric makes projects easier to compare, but it’s difficult to do. Having several metrics leaves politicians with some trade-offs to argue over. But at least they would be forced to have a debate based on the evidence, which seems to be completely absent from both Labour and National’s approach to transport.