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Five elements for world class infrastructure
Developing a 2050 vision is the top priority to safeguard infrastructure
By Paul Blair Chief Executive of Infrastructure NZ Paul.Blair@infrastructure.org.nz
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Through 15 years of creating positive change in infrastructure, Infrastructure NZ has identified five key elements that are fundamental to having a world class infrastructure system.
1) Vision and leadership Our country needs to collectively debate and then commit to a vision of the lifestyle (economic, social, cultural and environmental) we want Kiwis to be living in 30-plus years’ time.
2) Long term and integrated plans We need to translate our long-term vision into practical and coordinated steps to reach those goals.
3) Reliable sources of funding and adequate financing tools Infrastructure needs a reliable, long-term funding (income) stream divorced from the whims of politics. Financing tools, including the ability to raise debt or equity based on assets or revenue streams, is equally important in making sure we pay the best price for infrastructure and that all generations fairly pay their way for the infrastructure they benefit from.
4) Laws, regulations, and incentives Without the right structure and tools, even the best vision, plan, and funding will not be able to overcome poorly designed legislation, unsound regulation, or bad incentives.
Why is it considered appropriate that New Zealand Inc, represented by our central government, does NOT have a long-term, non partisan, supported vision for the welfare of our citizens yet Local Government is mandated by law to do just that
Moving into an election year, there will be promises and commitments aplenty -- more funding for this sector, greater oversight of this area, a fairer system for this group.
In the face of all these promises and ideas, it is important to lift our vision to focus on the long-term priorities for New Zealand. (Hint: it’s not as simple as more money).
A step change in vision and leadership is necessary to change the course we are on.
Urgently needed is a national vision. A vision would set the tone for any conversations around the infrastructure required to enable the vision, and it would transcend three-year political cycles.
New Zealand’s number one priority should be to develop that national vision, with that vision then informing the infrastructure, skills, innovation, labour reform and other drivers of productivity and wellbeing. From this, the implementation through planning will necessarily follow.
Local government is required by law to have a 30-year vision, and businesses routinely use vision as guideposts to inspire their people towards a common purpose. Central government has no such imperative.
A conversation on vision would force us as a nation to ask things such as how many people will be living in New Zealand in 30 years’ time and what sort of wellbeing will they enjoy? Will they be rich, but at the expense of our natural environment?
Is one of our national values fairness and equality – if so, do all cultures in New Zealand have equality of opportunities to succeed? What is the right balance of individual success -- capitalism and property rights versus the needs of
Infrastructure NZ sees several key reasons to focus on vision: to change our orientation from effects to outcomes, to streamline and coordinate our plans and to follow best practice established overseas.
Refocus on outcomes First, a vision is necessary to give our country a sees us stumble through events, impacts, and decisions that are occurring around us, wondering how on earth could things get so twisted, and then making hasty decisions and finding band-aid solutions to the problems.
Our current system is based on avoiding at all costs the negative out
society as a whole?
Currently, the conversation is focused on smaller details, not seeing the forest for the trees. We debate the amount of money spent on roads or rail, we argue about property rates and electricity bills. But we rarely discuss what we want these critical systems to do for us, in the long term. focus on outcomes. A vision would take our current system of reactive decision-making and ad-hoc policy and would reorient it to focus on the headline goals that we want for our country and the proactive policies and decisions we need to make to get there. The current business-as-usual approach comes of doing things imperfectly. Our civil service is designed to spend exactly what they are told, not to shoot for great ideas or impacts. Our planning system is designed to avoid negative impacts on anyone at any time, not to create a safe and healthy country. We have become like a person who is afraid to
leave their house because of the dangers of walking down the street or breathing the polluted air or riding in an elevator. And as a result, we are missing out on the benefits of shooting for outcomes or living life to its fullest.
We designed a Resource Management Act (RMA) which says that, theoretically, anything is permissible. Then – once we’ve permitted too many things to happen and have overallocated our rivers, polluted our land, or built houses without infrastructure to support them – then and only then do we do notice.
We have placed more and more responsibilities on to local councils, particularly to oversee growth, while leaving them with inadequate and poorly designed taxes and funding tools that are ill-equipped to handle these challenges. Then, when we see them fighting growth by any means necessary, we complain about their lack of discipline or expertise.
We built a government of departments and agencies that is less focused on making meaningful change in their sector than on spending the exact amount of money they are allocated. Then, when our children go to temporary classrooms, or our hospitals are leaking, or the poor are neglected, then we take notice.
Waiting like this, until our services or people are in crisis, forces us into poor decision-making. We have tight timelines: the Minister wants an answer within six months, the electorate expect this to be fixed within three years, our native species will go extinct within decades.
Even in these times of crisis, we have a lack of imagination and look for
the quickest solutions, not the ones that are the most successful, coordinated, or robust.
The result is that we spend more than we should on a never-ending sequence of ‘quick fixes,’ which are rarely either.
A quick fix is not going to move the needle on our poor resource management system, a quick fix is not going to solve the funding challenges for local councils.
Rarely are these solutions quick either. They’re quick in that they usually throw some money at the problem and get it off the decision-maker’s desk, but it’s not rare for the issue to bubble again as people, businesses, and bureaucrats struggle to understand or implement the hastily thrown-together solution that was dreamt up.
The way to address this problem is to fundamentally reorient our thinking to focus on outcomes.
No longer will we focus on stopping anything negative from occurring, no matter the cost. Instead, our governments will have the mandate to achieve certain goals, and to come up with solutions and ideas that will get us there.
We don’t have to be
to address the current mess that is planning in New Zealand.
The number, duration, format, complexity, power, and focus of all the different plans could not be less coordinated.
The RMA, the Local Government Act, and the Land Transport Management Act, all mandate planning across multiple levels (national, regional, and/or local), some of which are subsidiary to others, some of which merely have regard to others, and some which occur in parallel without any connection.
Thus, city planners, most
reckless with our finances, but a bit of wiggle room to account for uncertainty is necessary in an uncertain world.
Fixing our plans
The second imperative is of whom work for councils with a ratepayer base of 50,000 or less, are expected to understand and operate responsibly in light of the thousands of pages of legislation, amendments, and NPSs when they develop and amend their own plans. In an effort to address some of the infrastructure challenges in this country, councils have been required to develop 30-year infrastructure plans.
While a necessary and welcome step, in the absence of a vision or goals, the plans typically reflect business-as-usual thinking rather than aspirations or innovations.
Without any committed funding to pay for projects, the best plans are ultimately wish-lists that will rely on the generosity of the government at the time. With all these plans occurring at a local level, coordinating plans across territorial authorities is a challenge.
Councils, with their limited funding tools, are as likely to see their neighbouring councils as competition as strategic allies in building a future. Meanwhile Kiwis regularly cross their council boundaries when they go to work, play sports, or visit friends and family.
Some authorities, seeing this lack of coordination, have developed regional
plans. These attempt to bridge the gaps and provide overarching guidance.
Typically, however, central government does not come to the table, or is not even invited, leaving a large gap in both the funding for major projects and in the coordination with nationally overseen infrastructure.
Each of these plans has their own ideas of success through key performance indicators or overarching goals. These goals are rarely coordinated and may well be at cross-purposes.
A national vision for our country and its infrastructure would focus these planning processes.
They would be oriented around outcomes and aspirations rather than projects and programmes.
They would have a shared vision: regional goals would flow from national goals and would inform local goals.
They would be coordinated: plans would directly influence their subsidiary plans, preventing neighbouring regions and councils from misaligning.
Learning from the best The third reason for developing a national vision is that this is what is done by the most successful nations.
Successful nations become that way because they take coordinated actions to move towards collective goals.
Every year Infrastructure NZ sends a delegation of senior infrastructure leaders from the public and private sector overseas to learn about best practice in infrastructure strategy, policy, and delivery.
Visiting nations and regions across Asia, Europe, and North America, our delegations have consistently seen that world class infrastructure depends on having a strong and unified vision.
In Scotland, the Scottish government relies on its National Planning Framework, which sets out the four key goals, which are to be 1) a successful sustainable place, 2) a low carbon place, 3) a natural, resilient place, and 4) a connected place.
From this flow all other plans that focus on Scotland’s largest cities and its 14 national development priorities, as well as its Infrastructure Investment Plan. Local plans in Scotland must also be consistent with this Framework. By having a proactive vision, plans in Scotland are more coherent and are consulted on early in the process, preventing late or unforeseen surprises that halt progress.
In Denmark, the national government leads the planning process, setting out the future vision for the country. This vision is consulted on and debated publicly and in Parliament, often resulting in broad nationwide and political consensus about what forward progress should look like. The effect of this proactive vision-setting and planning process is that later approvals and construction is much more likely to progress to plan.
In Singapore, the Ministry of National Development sets out the country’s vision and priorities in collaboration with other key government agencies. These goals then inform the planning around key transportation corridors, housing develops, and other land uses.
Early collaboration and clear goals mean that each agency knows its role in making the vision a reality
and can trust that everyone is on the same page in working towards their goals.
It also enables the government to take proactive action to enable its vision through aligning transportation and land use, reclaiming land where necessary, and coordinating current and near-term development to enable future plans.
As time goes on, these countries continue to leave us behind. We spend more on housing than any other OECD country, yet we also have some of the highest rates of homelessness. Our labour productivity is not only flat, it has declined in comparison to the OECD average.
Our overseas delegations have repeatedly shown us that New Zealand needs vision to bring about collective success.
We don’t have a clear vision for what we want to look like in 2050 or beyond. We have vague ideas about being sustainable, being productive, having healthy waters, or building warm and dry homes, but often these targets are little more than political promises without consensus or connection to local plans or Finally, through lack of coordination, agencies and departments within the same tier of government struggle to work together to align their efforts.
Coordination between local and central government is at best a mixed bag, and successful collaboration with local communities and
even other promises. Consensus, in either Parliament or the public discourse, around major projects and policies is rare, and any positive action we take is often impeded by groups who were not consulted or who do not share the unilateral goals of those in power. businesses is rare.
Establishing a national vision is key to addressing these challenges and setting us up for success in the future.
Building a vision
The government and us, as its people, should develop a collective vision for New Zealand.
This vision would set out the handful of broad and aspirational goals that we, as Kiwis, have for our country. These would set the priority areas and naturally lead to shorter-term, more specific, and more measurable targets
It is rewarding therefore to see that the New Zealand Infrastructure Commission, Te Waihanga, is due to develop its first 30-year infrastructure plan by the end of 2021.
In the absence of a national vision, this national infrastructure plan may have to be developed around versions (perhaps high, medium and no growth) of the status quo – hardly aspirational.
We fully support the Commission’s strategy work, however infrastructure is just one tool to help New Zealand achieve its long term vision, it shouldn’t
lead the vision or make up for the lack of one.
The first challenge for this vision will be for government and us, as stakeholders, to support the vision. If this does not happen, it will become just another plan adding to the noise of plans, strategies, and documents. The Commission’s independence should give it the mana to make the ambitious statements that this country needs to hear, but only time will tell if they have succeeded to rise above the din of current promises, plans, and imperatives.
However, the next and bigger challenge will be moving from vision to implementation. We may love the vision and support its outcomes, but what action will we take to make it reality?
From goals to reality
As identified earlier, there are five key features to develop world class infrastructure. The first is vision. The second is planning.
Planning follows naturally from vision – it operationalises the goals and breaks
A clear vision for the future is not that difficult to get underway
A national vision and a plan to get us there is paramount for New Zealand’s future health, happiness, and prosperity.
Infrastructure NZ calls for the central government to provide a new, long term grant (funded from centrally collected taxes) to new regional bodies that represent a collaboration of existing local authorities.
This would be a Regional Growth Partnership – a common tool used overseas (Australia has 13 city or regional growth partnerships similar to what we propose).
We do not propose amalgamation of existing local bodies. Instead of taxes being shared 90/10, perhaps a new ratio might look like 85/15, in return for the concessions and alignment tools outlined below.
The new regional body would have the local mayors, iwi representatives and the regional heads of key government bodies like NZTA, DHB, Kainga Ora, Ministry of Education and others at the governance table.
A spatial plan for the region would incorporate local, regional and central government plans for schools, hospitals, commercial zones, transport, water and housing, knitting together local, regional and national priorities for the first time.
The new long term grant would be linked to the economic success of the region, providing the funding for new infrastructure (and other growth enhancing investments e.g. skills, innovation), the majority of which would flow back to central government in the form of GST, personal and corporate tax proceeds.
A critical element in this new partnership is that the regional entity would enter into a central government rating tool called the Investor Confidence Rating (‘ICR’).
The ICR is currently used to give central government departments a rating of A, B, C or D, reflecting how good they are at spending public money, measuring procurement, asset management and investment practises.
NZTA is currently rated a ‘C’ on this measure and is given delegated authority to spend in line with this rating (a lower delegation than ‘A’ or ‘B’ rated entities).
If, for example, a new Bay of Plenty Regional Growth Partnership was able to secure a ‘C’ rating it allows that entity to demonstrate it spends public money as well as NZTA, and that it is spending it on initiatives in the jointly agreed spatial plan.
Infrastructure NZ believes a rating tool like the ICR is critical to enable trust, competence and transparency – the critical requirements for any partnership, let alone for the fraught relationship that has historically existing between central and local government.
them into a series of clearer and measurable targets that we can concretely work towards.
And planning, as discussed, is one of our biggest weaknesses. Reforming the planning system entirely is the first and most crucial step to ensuring our vision is implemented.
Reform begins with resource management reform that reorients our planning from an effects-based system to an outcomes-focused system.
Outcomes would be established at a national level, through a nationally developed strategic plan for New Zealand’s future. This plan could itself be the Infrastructure Commission’s 30-year plan, or a similar process that develops national priorities that stakeholders agree to.
Key planning would occur at a regional level, giving an appropriate balance to both local democracy and ownership as well as cross-regional coordination and efficiencies. Regional plans, including their own outcomes and targets, would be subsidiary to the national plan. Regional plans would set out the key infrastructure, developments, and other land uses needed to reach regional goals.
Regional plans would provide for local councils to oversee the local implementation of these plans within the confines of the regional plan that they helped build and agreed to. Infrastructure and other matters that operate at a national scale (e.g., the rail network, the environment) would continue be planned at a national level.
The third principle of world class infrastructure, appropriate funding and financing, would be essential to success for these reforms.
Currently local government in New Zealand oversees nearly 40 percent of the country’s infrastructure (largely local roads and water services), a similar proportion to central government. (The balance of roughly 20 percent is held privately).
However, local government revenues are onetenth that of central government. Is it any wonder our local councils struggle to accommodate existing, let alone growing, populations? A successful planning system would need to fix this funding constraint. Central government’s revenues are aligned to economic growth and success. Local government is hampered by laws which only allow them to recover their costs and are then spread over its rating base. A common misconception is that if house prices rise, or businesses and individuals earn more money, that this generates more money for local government.
In reality, councils only get more revenue when they levy more rates and they only levy more rates when they receive the support of their constituents to spend more money.
This financial model means local government, despite good intentions, doesn’t reap any benefits from economic growth and it struggles if its population declines because the same cost base has to be stretched over less ratepayers.
Our financial model sets up local and central government to clash – economic growth benefits central government and causes the local government extra costs (to install the pipes and roads we need to support urban growth).
Infrastructure NZ calls for the government funding model in New Zealand to change. Full details on the rationale and implementation for these reforms can be found in Infrastructure NZ’s recent report Building Regions: A vision for local government, planning law and funding reform. Infrastructure New Zealand is the peak industry body for the infrastructure sector that promotes best practice in national infrastructure development through research, advocacy and public and private sector collaboration. Local government oversees nearly 40 percent of the country’s infrastructure, a similar proportion to central government. However, local government revenues are one tenth that of central government Our financial model sets up local and central government to clash – economic growth benefits central government and causes the local government extra costs
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