Civic leaders urged to make tough decisions
Recent reports on New Zealand’s infrastructure highlighted concerning issues – from the struggle to afford new interisland ferries to the apparent state of disrepair of state highways.
In an opinion piece published in Stuff, Gareth Kiernan (pictured above), chief forecaster and director at Infometrics, explored the challenges and proposed a shift toward strategic planning and better fiscal management to overcome infrastructure deficits.
Kiernan emphasised the need for a sharper focus on building critical infrastructure and better planning to avoid falling deeper into an infrastructure deficit hole. He urged civic leaders to prioritise this focus, as budget blowouts have become common due to rising infrastructure costs caused by materials shortages, labor shortages, and other capacity constraints.
“Announcing projects before they’re ready, or before we’ve done enough work to understand how much some options will cost, is just as harmful,” Kiernan said.
“These higher costs make the volume of investment achievable smaller than previously thought, unless we agree to spend even more money. Yet despite rates rises consistently running ahead of broader inflation, our infrastructure investments still haven’t been enough.”
He encouraged asking fundamental questions about the government's existing spending and whether it provides value. The auditor-general's scathing report on the New Zealand Upgrade and Shovel-Ready Programmes, released late last year, indicated a lack of rigor in planned infrastructure investments.
“In my view, this example is symptomatic of a lack of restraint in broader government spending over the last few years, leading to an expanding public sector without any corresponding lift in outcomes,” Kiernan said.
Limited foresight results in underinvestment
Kiernan argued that underinvestment during the mid-1980s to mid-2000s has not been adequately addressed, with the country reverting to normal investment levels instead of catching up.
“The implicit prioritisation of short-term profits over longer-term sustainability, associated with privatisation, has seen various parts of this country’s infrastructure networks in crisis at different times over the last 30 years, whether it be electricity supply in the 1990s, rail in the 2000s, or water and wastewater now,” he said.
Enhanced strategic planning required
To overcome multiple challenges, Kiernan calls for a longer-term strategic plan for infrastructure investment with better coordination between central and local government, private investors, and constructors.
He noted that the project pipeline has recently taken on a more ad hoc nature, as ideological influences from both left and right sides have compromised the decision-making process, resulting in an uncertain and uneven future work plan.
“An emphasis on better planning to maximise our resources is imperative given the limitations posed by New Zealand’s topography and low population density, as well as our middling incomes by global standards,” Kiernan said.
A call to civic leaders
In conclusion, Kiernan urged civic leaders to make tough decisions, emphasising the choice between investing in critical infrastructure or funding vanity projects and supporting private businesses.
“Do you put money into critical infrastructure that is failing around us? Or invest in vanity projects or propping up private business?” Kiernan said. “It’s hard to fathom why anyone would invest in a new home movie setup if their shower was flooding the bathroom – the same principle applies at a civic level.”
To access the complete article, click here.
To read other recent news from Infometrics, click here and here.
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