Infrastructure Minister Shane Jones says a more centralised approach is needed to address New Zealand's infrastructure deficit

Infrastructure Minister Shane Jones says a more centralised approach is needed to address New Zealand's infrastructure deficit
Shane Jones by Jacky Carpenter.

Infrastructure Minister Shane Jones says a trip to Singapore and Hong Kong earlier this year highlighted for him how important the Government’s planned New Zealand Infrastructure Commission is to addressing an infrastructure deficit.

Jones was part of a delegation of public and private sector representatives who travelled to Singapore and Hong Kong in March. The two week trip, which was led by think tank Infrastructure New Zealand, was to investigate how the cities, regions and nations managed their economic growth and development.

Jones says the trip was an eye opening experience and the greater use of central planning and the larger role of the state were key features in all the cities and territories they visited.

He says the subsequent Infrastructure New Zealand report (National Development: Insights from Asia) makes for interesting reading, but trying to make the models of South East Asia fit a western democracy like ours won’t work.

“It would never fit the ethos of New Zealand,” he says.

Food for thought

But Jones says there are some things New Zealand could learn from. He says until the 1980s we had a more top down approach to public infrastructure and economic development. And while he’s not calling for a return to the worst excesses of Think Big, he says he thinks the country’s infrastructure deficit has been exacerbated by the market led approach we’ve followed since. Jones says much of our planning at a national level is sadly lacking.

“What I like about the Infrastructure New Zealand report is it sends a message to the politicians about bringing back more authority to the centre. We need to deal with our systemic infrastructure problems with a central agency,” Jones says.

“We didn’t develop our infrastructure in New Zealand waiting for the ghost of Adam Smith.”

And he says the government’s proposed New Zealand Infrastructure Commission - Te Waihanga - is key to that.

“The commission will be a central body that can help with a lot of that national planning,” Jones says. 

While Government ministers will still have the final say on public spending, the commission will have an independent board and the autonomy to provide robust, impartial advice on infrastructure projects.

In May Jones unveiled the Government’s Infrastructure Pipeline which was developed by Treasury and will eventually be administered by the Infrastructure Commission.

It outlines 174 major public projects with an estimated value of $6.1 billion planned by the Ministry of Education, Ministry of Health, New Zealand Transport Agency (NZTA), the New Zealand Defence Force and the Department of Corrections.

Jones says it shines a light on the big capital project the Government has in the works over the next five years and will not only give industry much needed certainty, but also help inform the Infrastructure Commission’s thinking as it develops a 30-year strategy to reverse New Zealand’s infrastructure deficit. The pipeline is currently a prototype, but it will eventually be expanded to include all central government agencies, local government, and, in time, private sector projects.

Insights from Asia

Infrastructure New Zealand’s report was released last month. It makes for sobering reading and states:

“After a decade as the “Rock Star Economy”, New Zealand remains on the same economic trajectory it has for three decades. We’re not closing the gap with successful OECD economies like Australia and we’ve been overtaken by the new, dynamic economies of Asia.

“Singapore and Hong Kong incomes have long since surpassed New Zealand’s. China is catching up fast. It’s not just economic performance. Singapore was recently voted the best place in the world to raise children. Hong Kong residents have the highest life expectancy in the world.

“How have these countries done what they’ve done? How has China moved from a low to medium income country in less than a generation? How have Singapore and Hong Kong moved up and passed slow growth wealthy nations like New Zealand?”

The report spells out the marked differences between New Zealand and Singapore, Hong Kong and China. With all three countries/territories using national strategic and spatial planning.

“Strategic spatial land use planning is nationalised. Central governments identify the economic, social and environmental priorities for national development. They translate these intangible outcomes into physical reality through a spatial plan for the country. From that plan the governments identify and sequence planning rules and projects which can be delivered. Each project must contribute to the plan. By this process, infrastructure and development become the platform for social and economic growth.”

NZ's lack of national planning

And despite the fact all three countries/territories are hardly democratic and politically can’t be compared with the western democracies we share more in common with (which is noted in the report), the report illustrates just how inefficient we are.

“New Zealand does not have a national development plan or framework. Instead, comprehensive powers relating to planning, funding and delivering national development are disaggregated and devolved.”

It says priority is given to market-led development, individual civil liberties and property rights over national outcomes.

“The government sets the legal and regulatory framework to enable a functioning market economy and keeps a tight rein on public spending. This “Devolved Cost-Based Model” has successfully contained public spending and led to one of the lowest public net debt positions in the developed world. New Zealand’s public institutions are the global benchmark and New Zealanders enjoy strong protections over their individual, community and property rights.”

But it also highlights the model’s limitations.

“The absence of a national plan means there is no mechanism to identify national priorities and translate these priorities into tangible projects or land use rules. Implementation is poor and integration of public services at the point of delivery is weak. Priority projects are tied to solving known problems, rather than enabling a national strategy. Planning horizons are short term. Urban planning is bottom up with little national guidance.

“Managing costs or “cutting the cloth to suit the purse” is prioritised over creating value or lifting productive capacity. Under this approach New Zealand has seen severe infrastructure underinvestment. New Zealand’s cities have become the most congested for their size in the world. Water services in many locations fail to meet acceptable health or environmental standards. Public housing deficiency has left thousands of New Zealanders living on streets, in cars and in garages.”

Seventeen recommendations

The report concludes with a list of 17 recommendations. They include shifting the focus of central Government from services to outcomes. This would see central Government creating a statutory plan, complete with national outcomes, objectives and priorities. But it wouldn’t deal with the plan's implementation. The national plan would instead be delivered at a subnational, regional level.

The report recommends central Government taking on the role of monitoring and supporting the roll out of the plan, while the regions would in turn receive a portion of the tax take (GST, income and corporate tax) “to incentivise and support investment in national priorities, and levy property taxes and user charges to fund infrastructure and other spatial activities”.

While the top down economic development in Singapore, Hong Kong and mainland China might seem like a world away from 21st century New Zealand, as we become more economically linked to South East Asia such approaches may be closer to home than we realise.

In the meantime Jones will no doubt have his work cut out getting the New Zealand Infrastructure Commission up and running. A report on the legislation creating the commission is due to come back to Parliament’s Finance and Expenditure Committee next month.

Infrastructure New Zealand is a public policy think tank and its board contains members from both the public and private sector, with representatives from EY, Fulton Hogan, Auckland Council, City Rail Link, Fletcher Construction and Macquarie Capital (NZ). Infrastructure New Zealand states: “We wanted to understand how the top-down approach employed in each system works in practice, what the strengths and weaknesses are and whether successful components of the “Asian approach” can be applied in New Zealand.”

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He's partly onto it, but like everyone he misses what it is that supports 'the economy'.

Liebig's Law of Minimum is the problem he faces - this is precisely why fragmented activities stall (despite the free-marketeers blithering on). The first shortage/bottleneck is the holder-back of the whole. So Governmental-level planning has a better chance of bigger growth.

The problem is that we are beyond sustainable in out resource draw-down, so no even this level of consumption is maintainable. The problem isn't growth at this late stage in proceeding, it's triage; what we have to let go. I'll identify 3 - fishing as practiced (unsustainable draw-down). dairying as practiced (unsustainable draw-down) and tourism as practiced (unsustainable draw-down).

So Jones has slightly bigger problems. So does Singapore. And Hong Kong. The size of their ecological footprints are many times larger than these land-curtailed examples, a fact which is overlooked (as it was when Japan was cited in years gone by). Their biggest 'minimum' is feeding themselves long-term.

All that said, we need an Infrastructure Commission - to oversee the triage process.

PDK, the problem is people don't want to hear that the future could be smaller than the past.

https://economics21.org/inconvenient-realities-new-energy-economy

it is fairly obvious what types of infrastructure investments the government should be making right now - hospitals, schools, public transport, houses, water quality, etc. there just doesn’t seem to be any commitment to do it which is weird considering that is why they were voted in. Too much pissing around with PPPs and regional funds and trying to get the private sector to build everything and tinkering here and there. Has the government actually started building anything in their 2 years? I doubt they would be this slow in those Asian countries.
Even weirder is that it would spark some growth and potentially save us from recession.

Hongkong and Singapore's population per km2 is 7000 and NZ's is around 18.

Wrong place to go and borrow experiences.

I think, Xingmowang, you are being obtuse. There’s still a lot to learn from Singapore, or at least to be informed by, regardless of population density. This is in the area of policymaking of infrastructure, funding of it, planning it, developing it and maintaining it, and also in how they constantly reassess efficiencies to see where they can do better. And also, how they work in with the private sector for mutual benefit. One particular aspect I admire is their planning of public hospitals, such as in getting a balance of research-emphasis v straight-service oriented hospitals and targeting locations, transport accessibility, and support infrastructure such as accommodation for healthcare staff etc.

Probably, the first thing NZ can learn from Singapore is how to form a party serve all its citizens not only a part of it, and have merit based systems for choosing politicians, leaders, public servants, teachers etc.

Wherewillitend - try reading Catton's 'Overshoot'. Then Wright's 'Short History of Progress', then search for Albert Bartlett population growth.

Doesn't matter how densely you pack people as far as accommodation space goes, somewhere in the world there needs to be a certain amount of land to feed and clothe them, plus provide all the non renewables they will use.

Absurd.

The infrastructure commission is simply going to be another layer of bureaucracy any PPP's simply pull forward expenditure we cant really afford and are often set up as SPVs & not shown as debt on the main books.

We have people living in garages, rents going through the roof, house prices (land) values going through the roof and we cant build enough roads/PT/rail to keep up and at the same time the roading system is appallingly unsafe. Neither will we meet our GHG reduction targets.

It all comes down to excess demand from an immigration rate that is too high. We have one of the highest rates per capita.

1) Target gdp/capita growth, not gdp growth
2) Manage the immigration rate to meet 1)
3) Open the immigration market to all jobs, but perspective employers have to bid for immigrants (then there is market price against which to compare training existing staff or getting talent within NZ) up to the quota needed to meet 1). Pass strong legislation to ensure employers can directly claw back the immigration fee.

As for dealing with the infrastructure deficit, much of it relates to roading. Congestion tolls solve the issue overnight. They cap demand and provide a revenue source.

When are we going to get a real government in NZ that will address the real causes and put in solutions that address them???

The current government left out of the scope:
a) capital gains on the family home in the tax review
b) rating central government land and buildings as a way of funding local government - PC commission
c) amalgamating local government authorities to address those that are too small and uneconomic

Why does NZ keep shooting itself in the foot???

Good sense all the way except I've doubts about your small local gov being uneconomic - certainly merging the 7 Auckland councils has not seen savings of staff or bureaucracy. Small is beautiful.
Why is your approach to immigration not accepted as obvious? More surgeons and fewer bakers, more computer analysts and fewer chefs, more accountants and fewer bus drivers. All that plus a new revenue source for govt. Best of all it eradicates the exploitation of foreigners that is a blight on our reputation and just plain downright wrong.

Too many of our politicians over a long period have been long on talk but short of action.
Great orators but thats it.

Allot to learn from Singapore, has anyone here actually been there and seen how it works?
So we need to import super cheap labour from a good close source, pay them very little and send them back to where they came each day or when there term is done.

Yes, I live and work in Singapore, been in here a fair few years. Another poster sneers and calls it a dictatorship. well Lee Kuan Yew has been dead four years, true his son is Prime Minister now but he has proved his own merit in the job. Anyway he has signalled he wants to step down and a successor has been arrowed, Heng Swee Keat, no relative of the Lees. Trues, Singapore ranks low in the World Press Freedom Index, but I have worked in media in Britain and Australia, and the fourth estate there is very cosy with the establishment. The thing is, a lot of Singaporean’s are quite conservative and like how the Govt runs things.That is because it does so efficiently. Also, it understands the long game and how its citizens often also see several generations ahead. eg When housing got out of reach of first home buyers, it introduced stamp duty etc to rein in the frenzy. Prices actually dropped and some people lost equity but the move had the buy-in from everyone as they could see the benefits to keeping a cohesive society, getting their kids into housing etc.I am not saying NZ should blindly follow, of course there are faults, but definitely there are things to cherrypick like infrastructure planning, housing market management, foreign worker controls.

Interesting to hear your perspective, I have worked there a number of times for short periods but has been over 15 years ago now.
I would have assumed you have been outside the business district and seen the cheap imported labour from all surrounding populous countries.
At the time I went, they were paying 50c a day for hard labour with no rights at all.

Just wanna clarify to my2c, it’s more like $25 a day for construction and shipyard workers who are on fixed-term contracts. Mightn’t sound a lot to a Westerner, but that adds up to a couple of hundred a month and can be a substantial amount compared to earnings in the worker’s own home country. If most of it is saved over a year or 2 of the contract, it means the worker can go home, build a new house, pay for kids’education.The pay includes one stat day off a week, sickness leave etc. I agree they could have more rights but there are civic groups that advocate for them. These are the lowest paid workers, after that there are tiers of work permits and employment passes tied to required monthly pay levels. Once your employment contact ceases, you must leave. It is linked to the idea that a foreigner is welcome if they can contribute economically, but that becoming a citizen or PR to benefit more fully from life in Singapore carries enormous value and a commitment to its people and the nation. And so requires vetting, rigorous in requirements. In the end, even my status as a long term foreigner working here, boils down to being cheap imported labour of some sort - ie, cheap compared to what they would have to pay someone for a more prestigious country than NZ. As such, my time here is always uncertain. Such is life in the global workforce anywhere these days, whether construction labourer or white collar professional.

Singapore is virtually a dictatorship and Hong Kong is run by the totalitarian CCP.

And they say "Centralised infrastructure planning is the way to go". Shocker.

And Shane Jones thinks it's great. All that power Shane...

How do you plan to build infrastructure when the prime objective of all previous governments over the past 35 years has been to sell as much of it to the private sector as is possible? I'm sorry, but until you point blank admit that pursuit of neolibralism has been a complete catastrophe and pursue a new, fairer economic and political paradigm...nothing can change.

Complete catastrophe is Zimbawe or Venezuela. Happy to accept well less than optimum and heading in the wrong direction.

Both those countries were used as 'acreage' by the West, Rhodesian farms and Venezuelan oil.

The fact that the incumbents argue for their own short-term improvement, doesn't change that fact. Follow the money, follow the repression. The bigger problem is working out how to create a living arrangement which can work long-term.

Your last sentence is OK. The 2nd last debateable - looking for repression today you think of Horn of Africa, Yemen, Xinjiang, Burma. It is the 1st that I find strange: Zimbawe was a food exporter and Venezuela an oil exporter and to an extent their population benefitted from the income from those exports. They had sovereign goverments just like NZ has (which is not to say they were uptopian paragons of economic equality). If they were completely owned by the West ('acreage') and all their govt choices were controlled by the west then why did they change from exporters that the west would like to hellish places with no exports and therefore with no economic value to the west?

Fair comment. The wild card is corruption, sometimes at the behest of the West (Iran under the Shah, Nigeria/Shell/Ken Saro-wiwa) and sometimes internally-risen ticket-scalpers. Then there's the self-justifying situation where the West embargoes, then points to the struggling country, hollering 'communism fails' or whatever.

Although it doesn't look like it to either the West or to the wannabe-westers, life at a lower level has less distance to fall. I'd rather live in Tonga than Auckland, post-event.

I'd agree that neo-liberalism does seem to be more tolerant of corruption than good old-fashioned liberalism (which is my own belief). Could also have something to do with the death of religion.

It wasn't the native populations that benefited

Well if we're going to play by the same rules as our neighbors it might be best to adopt similar safe guards such as not allowing foreign companies to completely buyout NZ business and land as an example.
Did you know that if a foreign business wants to set up and access the Chinese market, the foreign company can only have a 49% share of the company, they have to take a 51% joint venture partner and they have to hand over their technology to that joint venture partner to gain market access.
Here's a quick BBC video on the subject: The 'danger' of a US-China trade war
https://www.bbc.com/news/av/world-asia-china-45036579/why-the-us-china-t...

Should have let CBL and Feltex start up in China.

Another good conversation peeps, although showcasing the wide divides in the thinking in our society today. The right have gone right & the left have gone left & the gap in the middle is now so huge, it is probably beyond bridging I would suggest. We are now reaping the downside of democracy where there are so many voices & so much noise, that no one hears what's being said, or if they do, all they want to disagree with it, because that's all they know how to do - we know best! Until a better system & some better leadership is installed - & for me that's totally re-writing the constitution - then we will continue to fail & fall as a nation. This is serous stuff folks. I've been watching our families fail & fall for the last 40 years & now it's everywhere. The ability to create & sustain long term healthy relationships is missing. This is a functional societal fundamental. Our society has been ripped down the middle on a national, regional, local community & family level. It has been so sad to watch over the last 40 years that it often brings me to tears. Where is the love?

The right have gone right & the left have gone left & the gap in the middle is now so huge, it is probably beyond bridging I would suggest.

That describes a lot of the discourse well, but NZ has the opposite issue when it comes to policy. Two very, very similar flavours of social democracy, even on occasion adopting each others' policies.

"Where is the love?"

Well, one place it ain't about to come from is a 9-5 state-salaried social worker. This sad fact explains most of Oranga Tamariki's fails: the kids are cases, not people.

How NZ builds isn't probably as important as that we build.
Like recommendation some of the"tax take" goes into regional hands. Has to make sense.

au contraire. How we build - and indeed if we build - is much, much more important.

We need to be past the old idea that human-kind is somehow above nature. We are at the stage where we cannot replicate the collection of infrastructure we currently have - yet there are still those who would push on blindly.