Roads, pipes, houses, hospitals: our infrastructure challenges are overwhelming in their size and scale. Will the government’s new approach make any difference, asks Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.
A challenge of massive proportions
Early on Sunday afternoon water was finally turned back on in the Lower Hutt suburb of Maungaraki . Residents’ taps had been dry for 17 hours due to a burst water pipe. With no showers to take or tea and coffee to drink, some of them likely turned to the latest Sunday Star-Times to pass the time. Its cover story: the abysmal state of New Zealand’s infrastructure. Urgent billion-dollar investment is needed in sectors including land transport, energy generation, house building, tourism infrastructure and of course, our failing freshwater, stormwater and wastewater systems – the latter all the harder to solve now that Three Waters is no more. The problems are particularly acute in seismically-challenged Wellington, which is facing water shortages this summer and the prospect of spending $1b a year to fix the pipes. Yesterday’s SST twisted the knife further with another story headlined ‘Sorry Wellington: things could get worse and they probably will’, about how the threatened public sector purge will affect the capital’s economy.
Regions have reasons to be cheerful
The regions are suffering too, but for them the future seems a little brighter. National has signalled that many of its infrastructure efforts will be focused outside of the main cities, starting with the $1.2b Regional Infrastructure Fund (RIF) agreed to in its coalition deal with NZ First. For all intents and purposes it’s a rebranded Provincial Growth Fund, but new infrastructure minister Chris Bishop says that unlike its predecessor – which he relentlessly attacked while in opposition – the RIF won’t be a “slush fund” for NZ First’s pet projects. In BusinessDesk (paywalled), parliamentarian-turned-consultant David Cunliffe and two of his partners write that the change of government represents “a new period of opportunity for NZ’s regions”. Helped along by the new infrastructure agency the government is promising to establish, the provinces can look forward to faster delivery and more accountability from central government, they write.
Third-party funding a potential lifeline for hospital builds
It all sounds good, but it’s still not clear where all the investment is going to come from. The government has signalled that it will be looking for third-party funding to make up the shortfall, with the National-Act coalition deal committing the government to investigate “build and lease-back arrangements” for new hospitals. Health minister Shane Reti tells RNZ he’s looking at the major hospital infrastructure builds currently underway, “and what funding commitments have been made to date.” Te Whatu Ora’s latest annual report found that 18% of major projects were rated “red”, the worst category, and “may require a change in scope or funding to proceed”. Engineering consultant David Norman has a good overview of how third-party infrastructure funding works, and its pros and cons. “What we do know is this: we simply cannot continue to let our infrastructure shortfall go untreated the way we have for decades,” Norman writes. “That would be terminal.
Mega ferry project set to cost mega bucks
Back in Wellington, work is progressing on the port infrastructure to serve the two new hybrid “mega ferries” scheduled to arrive in 2026. The iReX (Inter-island Resilience Connection) ferries are designed specifically for the strait and will increase total Interislander passenger capacity by 50%, truck capacity by 40% and rail capacity by almost 300%. It’s going to cost, however – far more than $1.45b, the latest publicly available cost estimate for both the ferries and portside infrastructure. Finance minister Nicola Willis is so concerned about the situation that she met with KiwiRail to discuss the budget blow out before even being sworn in, reports Thomas Coughlan at the Herald. “The financial situation of this project is extremely troubling,” she said.