Shovel Ready: Don’t Lose Sight of the Longer term for NZ

May, 2020

By: Alan McDonald

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While the EMA was one of many organisations submitting a list of shovel-ready projects to the Infrastructure Industry Reference Group (IIRG), we also believe it’s important not to lose sight of strategic goals in favour of the short-term boost.

Covid Recovery Ministers Shane Jones and Phil Twyford are rightly focusing on infrastructure projects, as big employers and creators of social and economic benefits, to help lead New Zealand’s economic rebuild from the devastating effects of Covid 19.

Many of the ready-to-go projects are well-known road and rail projects, mainly in the EMA’s upper North Island region, and some of those can be further expanded into larger scale projects: building a fourth main rail line through Auckland city alongside the existing plan for a third main is one such project, while completing a four-lane highway between Katikati and Tauranga instead of the planned 14 kilometre section is another.

The fourth main is also an example of the longer-term strategy that needs to overlay selection of the shovel-ready projects that the IIRG will consider. To that end, the National Infrastructure Commission chairman Dr Allan Bollard will be a key voice at the table in the decision making process.

A fourth main potentially takes more freight traffic off Auckland’s congested road network, reduces emissions and lays the infrastructure platform that would enable a potential express rail service between the city and Puhinui station, if not all the way to the airport!

Four-laning the highway that currently connects Auckland to Whangarei and creating a new dry-dock facility in Whangarei are decisions that could underpin long-term growth in Northland. Hamilton has also pushed a range of shovel-ready projects – including a new $150 million Waikato River crossing – that will underpin and future-proof growth in the city and through the region.

Longer-term goals around decarbonising the economy and reducing emissions could bring forward alternative energy projects, while creating a comprehensive nationwide charging infrastructure could significantly speed up electrification of our freight, public and private transport vehicle fleets.

There’s merit in the Green Party suggestion to upgrade and invest in National Park infrastructure – although a billion dollars does seem excessive when there is so much need for other infrastructure in other sectors including health and education – and significant investment in pest eradication in our forests would create opportunities to redeploy workers from the tourism sector. Arguably pest-free forests create significant future tourism infrastructure when that sector recovers.

The Government had already announced significantly upgraded school and hospital maintenance and new-build programmes and they could also be brought forward. Bundling some of those school upgrades in smaller regions may be a way to help smaller regional building and construction firms enter into recovery mode.

Minister Jones has also raised the idea of repurposing the Regional Growth Fund to assist smaller regional councils with funding to ensure maintenance and upgrade projects proceed. Councils in the regions are often the biggest users of smaller, regionally-based contractors and continuing those council programmes will have a critical role to play in maintaining and recovering local economies.

How some of these major projects are funded presents a real conundrum as many have a significant council component to their funding.

Councils across the country are considering rate freezes, reductions and deferments and therefore deferring their spending at a time when that spending may be critical to the recovery of local and national economies. Council own roughly 40% of the country’s infrastructure.

That suggests Government will need to open up access to alternative funding streams for councils and councils may have to look at alternatives such as asset recycling and greater involvement of private sector funders in their infrastructure.

Another key infrastructure sector that desperately needs national investment for the short and long term is the country’s water infrastructure. On its own, that is a project that could soak up all the funding Government is considering for the infrastructure sector.

In the short-term the shovel-ready projects approved by Government will provide significant employment and short-term economic boosts, but good quality, well-planned infrastructure more importantly provides significant social wellbeing benefits alongside the economic and business benefits.

That is what we can’t lose sight of in pushing ahead and accelerating just some parts of a much needed national infrastructure upgrade.

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