Finance Minister details 'five point plan' for urban growth; will look at alternatives for Auckland's East-West link, but not interested in building 'the most expensive road in the world'

Cartoon of Grant Robertson by Jacky Carpenter

By David Hargreaves

Finance Minister Grant Robertson has outlined some of the Government's thinking on Auckland's infrastructure problems, including that it will consider public-private partnerships and that it will make an investment in the 'corridor' of the proposed East-West Link but isn't interested in building "the most expensive road in the world".

Robertson detailed some of his and the Government's broad plans in a speech on Monday to the Auckland Chamber of Commerce ahead of the Thursday release of the Budget Policy Statement and the Treasury’s Half Year Economic and Fiscal Update.

He said the Government's infrastructure planning was underpinned by its "Urban Growth Agenda", which he described as a set of reforms designed to get the market more responsive to demand.

"We need competitive urban land markets to bring down the very high cost of urban land that is at the heart of our problems."

This is the five point plan:

1. Turning on the tap of infrastructure finance, for example, infrastructure bonds serviced by a targeted rate, building on the work done with Crown Infrastructure Partners;

2. Designing a more pro-growth planning system that allows the city to make room for growth instead of choking it off;

3. More robust spatial planning by central and local government;

4. Investigating a GPS-based network or transport pricing system. This will allow us to fully internalise transport costs so that roads and motorways aren’t a disguised subsidy for sprawl; and

5. Possible legislative reform to support this new approach.

"The Government is looking at alternatives for the East-West link," Robertson said.

"We will be making an investment in that corridor, but not the $2 billion option proposed by the previous Government.

"While we obviously see the need for making large investments into Auckland’s transport system, we do not believe paying $327 million per kilometre is good value for money.

"I am not interested in setting the record for building the most expensive road in the world."

Robertson reaffirmed commitment to a $15 billion, 10-year programme to build a rapid transit system in Auckland  – including light rail from the CBD to the airport and out to West Auckland.

"We are also investigating third-tracking the main trunk rail line and electrifying the rail line to Pukekohe.

"We have allowed the Auckland Council to charge an additional fuel tax to help with some of this funding. We are also investigating funding options such as infrastructure bonds, and we will be opening up use of the Land Transport Fund beyond just roading projects.

Robertson stressed that the Government could not carry out "an ambitious programme" like this, or for other infrastructure, alone.

"We want to ensure that the Crown and Maori work together effectively as we move towards the end of the Treaty settlement process. We are committed to working with Iwi to achieve our infrastructure goals.

"We also want to work with those in the private sector who are willing to be partners in building and modernising our infrastructure.

"Yes, this can include Public-Private-Partnerships (PPPs).

"We don’t believe PPPs have a place in schools and hospitals, but there is a potential for partnerships which can be used to drive productive and sustainable growth where they are appropriate."

On more general issues, Robertson said the Government was making "excellent progress" with its 100-day plan.

Next step

"The next big step is the introduction of our Families Package. This will be one of the major initiatives of this Government.

"We are committed to lifting children out of poverty at a faster rate than the previous Government, and supporting low- and middle-income families, particularly in the critical early years of their children’s lives.

"We will boost Working for Families, introduce the Best Start payment for children in the first three years of life, put in place a Winter Energy Payment for superannuitants and those receiving a main benefit, restore the Independent Earner Tax Credit the previous Government cancelled and commit to boosting the Accommodation Supplement.

"More details will be provided in the near future, but this is a substantial initiative paid for, as I said earlier, by reversing the across-the-board tax cuts, which were promised by the previous Government but have not yet begun."

A different way

Robertson outlined "a different approach" for how this Government will shape Budget 2018.

"There will not be a slew of new initiatives released in the weeks heading into that Budget. The plan is already out there. The first steps towards Budget 2018 will come this Thursday.

"This is when Treasury announces its regular Half Year Economic and Fiscal Update, or the HYEFU, where it details its latest forecasts for the economy and the Government’s fiscal track. Alongside this, we are announcing a Budget Policy Statement, setting out our economic strategy and kicking off the Budget 2018 process.

"I’ll just give an overview of how this will all play out.

Including costs

"The Government was formed early enough during the Treasury’s forecasting and HYEFU cycle – just – that we were able include officials’ work on our 100 Day Plan costs into the Half Year Update.

"So the likes of our Families Package, Fees-Free Post-Secondary Education and Training, Paid Parental Leave, the $2 billion capital injection for KiwiBuild, and our plan to restart contributions to the New Zealand Super Fund, are all included in the ‘base’ projections we’re starting from.

"These policies have been costed using Treasury’s normal process ahead of Budget announcements. Because of where the election fell, and the ambition of our 100 Day Plan, we were able to incorporate them into the accounts and the Budget process in December, rather than waiting for May to roll around.

"That’s not to say we’ll have nothing to talk about at Budget 2018, or 2019. A second document on Thursday will be our Budget Policy Statement. This will set out the operating and capital allowances we have set for the next few Budgets.

"These allowances provide the room for the rest of this Government’s policy agenda beyond the 100 Day Plan. Detailed work has already begun on these policies as we head towards Budget 2018. They are now being put through the Budget process to get final costings and design as officials work towards May.

"I will leave the detailed announcements for Thursday but, suffice to say, I am confident we can meet our Budget Responsibility Rules while advancing our comprehensive programme." 

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30 Comments

" infrastructure bonds". That's all you need, Grant! The rest will be a clamour for free "Government' money. (eg: 'those in the private sector who are willing to be partners'). Keep infrastructure solely in Government hands....

Agree, unless it can be contained ie paid for privately away from the public purse So in the US they have a sort of municipal bond raised to pay for new infrastructure to pay for services to new homes. So if someone wants to build say 5000 homes and build all the roads, plant and pipes needed and they then charge the new house owner "rates" I am all for investigating if that can work. I think it will be a screw up myself but so many developers and "right wingers" whine about council development costs that this is a way to give them what they want hopefully free of risk.

This could actually be a good way to flatten out one off costs for government and get stuff done.

I'm usually pretty skeptical about PPPs but am heartened to see this qualifier - "We don’t believe PPPs have a place in schools and hospitals...", to which I would also add prisons. Roads can at least be tolled on a per use basis and can support economic development. We should also include rail.

Downstream the key thing will be ensuring any infrastructure is maintained properly by the private operator over 25 years.

I suggest research on the lack of success of PPPs. Certainly you can toll roads, however when you look at how cheap the Govn can borrow at v what the private entities can borrow at plus their profit margins plus costs to collect the tolls it makes no sense. It negatively impacts GDP ie its a tax given to investors in spades sucking more money out of the economy than needs be, its plain stupid IMHO.

What this smacks of is yet more "smoke and mirrors" ie Labour finds itself in a position having gained power that it is in a fiscal straight jacket and a promises straight jacket that are mutually exclusive and if it fails on either it will be torn apart by the voter.

All we have here for 3 years really is "National lite" so I expect lots of noise but little progress and probably a lot of waste.

Labour finds itself in a position having gained power that it is in a fiscal straight jacket and a promises straight jacket that are mutually exclusive and if it fails on either it will be torn apart by the voter.

The NZ govt is not in a "fiscal straitjacket". It is not constrained by spending nor does it have to "live within its means". Unfortunately, the general public are still trained to think this isn't so.

Even those to whom it is granted to create money from thin air don't live in a world without consequences.

Here Here Steve totally agree with you

Have you seen what PPP Toll roads have done! Not only are they a license to print money ( who sets the fees? It isn't the Government! - just like airport parking charges) and then there are the lawsuits against any future Government roads that threaten to take traffic away from the PPP ones... Keep roads in Government hands as well!

Agree, if you look at the big picture tolls are a tax that impact GDP we just dont need it. However what we do need to do is get real on taxation, no one wants to pay [more] tax but everyone wants more services.

So what you are saying is that you don't want to pay the market price for roading, you want it to be subsidised?

no, he's saying the tax cost < toll cost. How tax is allocated to individuals is a different matter

So if the government can make bread for less than the market price, should they? What about houses? Chocolate?

Infrastructure is not Bread. It's what allows bread; chocolate; houses etc to be made. Arguably all infrastructure should be 'subsidised' as the social cost of allowing a society to develop. It will be, after all, available to many generations after the ones that commission it and the costs of the initial 'subsidy' spread across all of them and so should be kept in common hands.

Surely a PPP does allow the cost to be spread over time, compared to the government of the day bearing the full cost.
The real problem with PPPs is that no one wants to pay the real cost of their journey, they are used to the government socialising the cost.

My suspicion with PPP's is that like bank bailouts - they socialises the losses; privatizes the profits!

eg: "It is a PPP toll road that went bankrupt as the demand for the road was little more than half that forecast. In December 2013, the road was taken over by.... Queensland State Government, but has since been privatised and is now owned by Transurban. The road was acquired .... for A$618 million (US$472 million), but cost A$3.2 billion (US$2.4 billion) to build. Around 1000 investors who bought shares in the project engaged in a class action lawsuit against the demand/revenue forecasting consultants - AECOM - and the original Rivercity Motorway company. The Sydney Morning Herald reports that they have won a settlement gaining a payout of A$121 million (US$92 million). etc etc"

http://roadpricing.blogspot.co.nz/2016/08/australian-toll-road-lawsuit-s...

Gummonn, watercare has barely just designated a path for future pipes which are already in desperate need and are halting supply of more homes. Start buying the land Grant, dont need a partner to tell you that. Land owners not the problem. Public works everything in the way of infrastruture, even that new mcmansion in greenhithe if you have to!

Public and private partnership sounds like public and foreign investment partnership in this case.

Q: how to be civil when dealing with civil contractors?.
Thats the rub. Its a mine field, look at the problems NZTA have is controlling (even seeing accurate reporting) of its projects.

With these projects who knows what the productivities are, when the contractors gear could be anywhere, and job costing is "jam it in overheards and indirects, do it".
Its that claims mentality, and the gaming of it, that see layer upon layer of cost and expense fiddles mask project control.

PPP and off balance sheet wheezes are not the way, its not the funding! The buck stops at govt. To understand project risk, intelligence needs be inhouse. In govt agency, otherwise its all in for contractors and consultants. The cost to us being the cost, design and design / build quality and time!.

Its not just the ice cream thats melting!

https://i.stuff.co.nz/national/99732207/highway-meltdown-the-bitumen-is-...

But Aidan McClure, who lives in Melbourne, Australia, said he could not understand why roads in New Zealand were melting.

"In Australia, it never happens - not even when temperatures are in the mid-40s. Surely it's a matter of construction method?"

Porter said chip seal was commonly used in New Zealand because it was less expensive than other surfaces.

Auckland Council can hardly borrow as they are up to their ears in debt, PPP would be the way to go. We're too bureaucratic and nothing will come of this so there's no point talking.

4. Investigating a GPS-based network or transport pricing system. This will allow us to fully internalise transport costs so that roads and motorways aren’t a disguised subsidy for sprawl.

Wait a second, what the heck is this? Sounds like a GPS tracker fitted to every licensed vehicle. I want to hear more about this first.

(DP)

This will inevitably happen as electric vehicles replace the internal combustion vehicle. Government's fuel taxes and road user charges will diminish and a new system will be needed to pay for roads. GPS trackers will be able to measure distance, time of day, particular road use, congestion.... they may even be calibrated to axle weight -GPS trackers are natural partner for EV's -a government that wants to get ahead of the technology curve would be wise to investigate this option carefully. Issues will arise -like how to protect privacy -but given the importance of road funding I reckon solutions will be found.

I do not have any faith that solutions will be found before it is implemented. I looked into it and apparently the Netherlands was going to do it in 2010, however they scrapped it due it being too unpopular. If they had figured out solutions beforehand they might not have had to scrap it.

Consider that every time you exceed the speed limit, every red light you go through, and every illegal park you make could be recorded and result in a fine. The police will probably have warrantless access to every movement you vehicle has made over at least the last year too. This irks me and I don't think I'm alone.

Thats too negative! Gotta get funding for good design and quality building somehow. Building infrastructure should have long term plans so we dont have this stop/start nature of getting things done. If we do a bit each year then gradually things will get done, and we dont need huge chunks of money, but we need to do stuff consistently each year...ie Loooooong term planning.

nothing like a huge belly laugh to make Mondays easier

i like PPP -- but .... i seem to recall that every possible variation of this was vehemently opposed by this government at every turn -

gotta laugh !

Isn't that what The Opposition is supposed to do? That's how Westminster politics works.

No. Under the Westminster system an Opposition is supposed to keep a government honest.

To systematically be against everything as a matter of principle is a weakness of the Westminster system, in that it allows this to happen. But the blame really lies with those ideologically so narrow minded as to think it is a good idea to exploit this weakness for their own selfish ends.

I guess we could suppress all opposition like the communists do. Not sure I want to live in such a place though.

There are loads of perfectly calm and uncontested agreements in Westminster. It's only on certain issues and PM's questions that they all act like a troop of baboons flinging poo about willy nilly.

  1. Wait till 14 Dec when the Budget comes out.
  2. Then wait until March, when the exact extent of Tertiary Free-for-all-comers has settled and the full cost (first estimate was half a billion give or take) can be quantified.
  3. Then wait for the May Budget which will attempt to Square the Circle (Black Holes,are, on reliable evidence, Circular....) of 1) and 2) plus the inevitable Events as reality intrudes between now and then....