The promise of reformed policies will advance infrastructure projects

Where the money is going • Auckland: $500 million • Canterbury: $300 million • Otago: $260 million • Wellington: $185 million • Bay of Plenty: $170 million • Waikato: $150 million • Northland: $150 million • Manawatū/Whanganui: $140 million The construction industry stands to lose a huge amount of skilled

Political rabbits put in charge of the lettuce

A combined plea from three key infrastructure associations garners a partial response from a government accused of using shovel-ready projects for politicking ahead of the election

Details of 59 projworkers face redundancy selected 150 projects worth But four weeks later, ects were released and business confidence $2.6b that would create or only projects worth about on July 27 by the amongst construction and retain 20,000 jobs. $500m (approximately 25 government’s Infrastructure infrastructure companies It also indicated that it per cent of the total alloReference Group after infranose-dives,” the joint comwas looking to spend $464 cated) had been released. structure industry leaders munique from Infrastrucmillion housing and urban A package including $761m and opposition party MPs ture NZ, Civil Contractors development, $460 million of three waters funding had had earlier called for the NZ and the Association of on the environmental, $670 also been announced, but release of the government’s Consulting and Engineering million on community and without any timelines. full list of shovel-ready NZ said. social development and As details of a further projects. Early in July the Govern$708m on transport projdozen or so trickled out

“Increasing numbers of ment had announced it had ects. during the month News-

workers • Hawkes Bay: $130 million • Southland: $90 million • West Coast: $90 million • East Coast: $106 million • Taranaki: $85 million • Top of the South Island: $85 million

room was reportedly told by Infrastructure Minister Shane Jones that the rest would be announced in coming weeks, some by ministerial visit. "I wouldn't want to break a habit," he told the news agency Finance Minister Grant Robertson said "this is about that certainty that we constantly hear from the construction sector they want".

Civil Contractors New Zealand chief Peter Silcock says while the funding announcements were welcome, details were urgently needed, or people would lose their jobs. “There was a big difference between making announcements and providing meaningful employment opportunities through economic activity,” Silcock says.

The latest “in principle approvals subject to contract negotiations” provide support or total funding to $1.365 billion of $2.151 billion worth of projects. Investment values are also subject to change.

“The current situation is incredibly frustrating,” says Silcock. “We know the work is out there, but unless we know where, what and most importantly when projects will start, contractors are left totally in the dark. They will have no choice but to put workers off or face the risk of companies going under.” A joint letter from industry leaders was sent to ministers in mid-June stating the urgent need. Ministers responded that answers were ‘imminent’, but the actual project details are still trickling out slowly,

“Companies are running out of options,” say Infrastructure New Zealand chief Paul Blair.

“Timing is everything. Projects starting construction today had planners, designers and architects at work last year. Contractors began allocating resources, scaling up or down based on predictions of work.

“The problem now was that no one could see six to 12 months ahead, so they were taking risks retaining staff on assumptions work would appear or having to cut back hours.

“It’s very stressful, it’s increasing costs and it’s completely avoidable. The full list and timing of shovel ready projects needs to be released now with a clear commitment to project timeframes.”

Association of Consulting and Engineering Chief Executive Paul Evans said the situation was looking dire as local government cut spending on infrastructure projects.

“Unless urgent action is taken, the infrastructure and construction industries stood to lose a huge amount of skilled workers.”

Job creation

• Auckland City Mission - 200 jobs during construction and 150 once completed. • Bay of Plenty - Wharenui Road and SH30 with Rotorua Lakes District Council and NZTA - 300 jobs. • Canterbury: Coastal Pathway with Christchurch Coastal Pathway Group and Christchurch City Council - 100 jobs over a year. • East Coast: Rugby Park Grandstand with Poverty Bay Rugby Football Union - 30 jobs • Hawke’s Bay: Whakatu Inland Port with Port of Napier Ltd - 46 full-time jobs over two-years then 28 jobs once completed. • Northland: Whangarei Rejuvenation with Whangarei District Council, Whangarei Boys High School, Hihiaua Cultural Centre Trust, Northland Rugby, Bike Northland Incorporated and Ruakaka Recreation Centre - 200 jobs. • Taranaki: Thermal Drying Facility Replacement with New Plymouth District Council - 77 jobs during construction. • Top of the South: Blenheim Art Gallery and Library with Marlborough District Council - 30 direct jobs. • Southland: Invercargill Inner City Development with Invercargill City Limited - 350 jobs • Waikato: Taupo Town Centre with Taupo District Council - 92 jobs

Source: Newsroom

Grant Robertson calls it the certainty the construction industry was looking for, and when it comes to announcements, Shane Jones "wouldn't want to break a habit." Photo: Mark Mitchell

August - September 2020 The promise of reformed policies will advance infrastructure projects

The politicking over priorities and funding is underway over the National Party’s $31 billion infrastructure plans but the promise of pipeline clarity and the focus of the programme as a blueprint draws praise

If elected in September, National will spend $31 billion on additional transport projects across New Zealand in the next 10 years with plans cemented for a further 10 years.

The incumbent Labour Party appears to have been caught a little flatfooted and a revised version of its three-year-old transport infrastructure plan can be expected soon.

Of the $31 billion an elected National Party would spend, $17.5 billion will be on additional transport projects in the upper North Island.

This includes $12.8 billion for Auckland and it 1.6 million population and $4.7 billion for the remainder

of the upper North Island including Northland, Waikato and the Bay of Plenty which, with Auckland , account for a bit over half of New Zealand’s population (and voters).

“National’s commitment to reforming planning and transport investment is welcome and, if supported by effective and timely delivery, could be transformational for New Zealand,” says Infrastructure New Zealand chief executive Paul Blair.

A key plank in National’s infrastructure policy is replacing the Resource Management Act (RMA) with an Environment Act and a Planning & Development Act, closely aligned to the models adopted by South Australia and Scotland.

Blair agrees. “RMA reform and transformational investment has been talked about for many years, but successive governments have been challenged to overcome barriers within each three-year cycle.

“The replacement of the RMA with separate environmental protection and strategic planning acts is necessary to pivot New Zealand away from decades of effects-based planning which has failed to support growth and productivity,” he says.

Chief executive of Civil Contractors New Zealand (CCNZ) Peter Silcock says major infrastructure projects span multiple political terms, and changes to projects on ideological grounds cause delays and escalate costs.

“These projects need consistency to efficiently get through the torturous process of planning, engineering, designing, consenting, procuring and constructing,” he says.

Blair reckons the next

National's new infrastructure package

Auckland

• Fourth Main Rail Line • East West Link • Bus Rapid Transit from Onehunga to the CBD • Northwest Bus Rapid Transit • Puhinui to Airport Rail Link • Rail from Onehunga to Auckland Airport • Electrify rail to Pōkeno in Waikato • Diesel rail shuttle to Huapai • Start second Waitematā Harbour Crossing • Upgrade Auckland’s Ferry Network • Additional funding for Auckland Local Boards • Investigate electrification of rail to Kumeu • Investigate rail between Avondale and Southdown

Upper North Island

• Expressway between Warkworth and Wellsford • Hamilton Southern Links project. • Cambridge to Piarere extension of the Waikato expressway • State Highway 29 upgrade an expressway between Piarere and the Kaimai Range • State Highway 2 upgrade between Tauranga to Katikati, including the Tauranga Northern Link • State Highway 1 upgrade between Ruakaka to Wellsford -- a tunnel under the Brynderwyn Hills) • State Highway 29 upgrade from Tauranga to the Kaimai Range - a tunnel through the range

government will need to rapidly move to reform key statutes like the RMA, Local Government Act and Land Transport Management Act, without losing momentum on projects needed to implement government direction.

Party leader Judith Collins pledged to work with local government to make existing RMA procedures more efficient, “but we will also legislate to advance projects if necessary,” she warns.

Wider resource management system reform which aligns planning and investment across central and local government is needed “to achieve the kind of economic, social, cultural and environmental outcomes everyone wants, according to Blair.

Silcock says the 20-year horizon will enable the development of a strong pipeline of work that will provide consistent employment and development opportunities for thousands of people.

Still, Collins says National is committed to progressing current projects like those in the Auckland Transport Alignment Project or underway within the upper North Island now. Except, that is, for the light rail project in Auckland, funding for which will be reallocated to upper North Island priorities.

Projects under way or approved and specifically mentioned as being in favour with National were Penlink, Mill Road (four lanes), Papakura to Drury South road improvements, third main rail line, electrification to Pukekohe and Drury rail stations.

The party was “sceptical” about the current incarnation of the $360 million Skypath pedestrian and cycle route on the Auckland Harbour Bridge and says it has better ways for cyclists and walkers to get across the harbour.

“We are very pleased to see most existing projects being supported,” says Silcock. “That will provide short- and medium-term confidence and continuity that we desperately need.”

An expressway between Whangarei, Auckland, Hamilton and Tauranga would be completed “sometime in the 2030s and would include tunnels through the Brynderwyn and Kaimai mountains,” says Collins. “Motorists would be charged a “small toll” to use the roads.”

National claims it would fund the projects over many years by tolling some of the new roads, but admits the headline catching Brynderwyn and Kaimai tunnel projects are not included in current budgets.

Collins sidesteps the issue by referring to tolls and the fact that the projects fall outside the current policy parameters, being set for more than 10 years in the future. Opposition pundits reckon it is a $6 billion hole whenever it occurs.

“These are great projects that people want to work on. They will transform communities not just by creating transport connections but also through

employment and skills development,” says Silcock

“We now have the opportunity to get away from the boom bust cycle and provide consistent long-term career opportunities for a range of people including apprentices, machine operators and engineers,” he claims.

Collins says the National Party would improve and extend Auckland’s commuter rail system to the north Waikato town of Pōkeno from 2024. “That will then allow the possibility of proper commuter rail to Hamilton to be considered.”

Funding for its additional investment, National says, will come from increasing the capacity of the NZ Transport Agency (NZTA) to fund projects, restoring state highway funding within the National Land Transport Fund and allocating funding from the Covid-19 Response & Recovery Fund, unallocated New Zealand Upgrade Programme funding and future capital allowances.

“The intergenerational approach will let the NZTA borrow significantly more on its own balance sheet,

2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 Total

NZTA Borrowing

$1,000m $1,000m $1,000m $1,000m $1,000m $1,000m $1,000m $1,000m $1,000m $1,000m

$10,000m

using the $4 billion annual revenue from fuel tax and road user charges, to service the debt,” the party says.

“National’s plan is close to being fully funded, at least in the current meaning of the term where debt is free and counts as fully funding something,” says Infrastructure NZ Policy Director Hamish Glenn.

The plan allows NZTA to borrow $1 billion per year for 10 ten years to fund new investment in transport infrastructure, which the party says “allows us to properly develop a pipeline of projects around the country and invest ahead of time rather than after an investment is needed,” says Collins.

“Not only would this borrowing lift NZTA’s spending capability, it would also mean that future generations pay fairly for the benefits they get from today’s investments,” says Blair.

“A comprehensive project pipeline is a critical first deliverable for the next government to ensure industry is ready and capable to meet future work demands,” he says.

Finance Minister Grant Robertson says the reallocation would require the cancellation of projects as the $6.2b in the National Land Transport Fund and $3.9b in the NZ Upgrade Programme was already allocated to the multi-year capital allowance.

“They are cutting Auckland’s transport funding

but not identifying which projects will go. The axe is hanging over projects like Skypath that Aucklanders want and that will create jobs in the next year, in order to fund projects that are over a decade away,” he says.

Mike Bishara is the publisher of AsiaPacific Infrastructure

National's new transport funding Covid-19 Response & Recovery Fund NLTF Reallocation Unallocated NZ Upgrade Programme Capital Allowance $1,750m $395m 0 0 $1,750m $595m 0 0 $1,750m $644m 0 0 $1,750m $617m 0 0 0 $639m $1,300m 0 0 $656m $1,300m 0 0 $657m $1,300m 0 0 $674m 0 $1,400m 0 $685m 0 $1,400m 0 $701m 0 $1,500m

$7,000m $6,263m $3,900m $4,300m Total

$3,145m $3,345m $3,394m $3,367m $2,939m $2,956m $2,957m $3,074m $3,085m $3,201m $31,463m