Infrastructure

Jones tees off on local government

Infrastructure Minister Shane Jones has turned his sights on local government, saying councils are part of the reason infrastructure projects take so long to get off the ground.

Speaking to Parliament's economic development committee on Thursday, the self-proclaimed "Champion of the Regions" had little love for councils around the country, saying: “I’d like to see a lot less of local government."

 Infrastructure spending is low in New Zealand, with the amount of new capital spending for each 1000 additional people falling from $142 million in 2011/12 to just $37m in 2016/17, according to an ANZ report. 

New Zealand’s low productivity has been blamed on the fact that capital spending is so low. The Government has promised to address this by spending $42 billion on new capital projects over the next five years. 

Economists like Cameron Bagrie and Infometrics’ Brad Olsen have said that one of the problems with government infrastructure is a lack of quality projects on which money can be spent.

The Government is in the midst of establishing an infrastructure commission, which will create a pipeline of quality projects for government capital investment looking out over the next 30 years.

Jones said that one of the issues identified with the bill that would set up the commission was the concerns of local councils. 

“What I’ve been advised is that the long-term capital plans provide a long-term plan for the types of projects we’re talking about. The councils have not spoken particularly coherently about this issue."

Councils had indicated they could frustrate the commission's work by not sharing crucial information about their own infrastructure work.

Those in local government have long complained of “unfunded mandates”, which occur when the central government orders councils to perform an additional role without giving them the revenue-raising tools to pay for it.

Local Government New Zealand’s (LGNZ) submission on the infrastructure commission legislation suggested it be aligned with the 78 council’s long-term plans, allowing the national pipeline to inform one another. The council plans are published every five years, and look out over the next decade. 

LGNZ also raised concerns about a lack of certainty regarding how the new commission would relate to other agencies that spent large amounts of capital, such as NZTA and the Ministry of Housing and Urban Development. 

Under questioning from National MP Judith Collins, Jones expressed confidence the plans were reliable but made his views about council recalcitrance clear.

“What I’ve been advised is that the long-term capital plans provide a long-term plan for the types of projects we’re talking about. The councils have not spoken particularly coherently about this issue,” Jones said. 

Foreign capital to be welcomed 

Jones said that when the 30-year infrastructure pipeline was published by the commission, he would welcome foreign investment in infrastructure projects. 

He said that while the Government would not allow any public-private partnerships in prisons, education, and health, he was not opposed to foreign investment in other ventures. 

Collins asked whether he would follow the precedent set by Transmission Gully, a public-private partnership road built north of Wellington. 

“I’m colourblind about it, so long as you obey the law,” Jones replied.

One of the significant omissions from the commission’s legislation is any independent power to agree to infrastructure proposals by itself.

While Jones told the committee he hoped “the infrastructure commission will strip up the partisanship that divides us as politicians”, it is politicians who will ultimately decide on whether projects go ahead or not. 

This is distinct from other funding organisations like NZTA, which are set up at arm’s length from politicians to avoid situations where ministers funnel money into projects in their own electorates.

But while the commission will recommend a pipeline of projects, what gets funded will ultimately fall into the purview of ministers.

“I know as no politician or minister who will want to surrender their electoral mandate to that body,” Jones said. 

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