Infrastructure

The good, bad, and ‘shovel ready’

A call for 'shovel ready' projects has thrown up 1800 projects, many of which were already on council books. Are they still worthwhile priorities in a post-Covid world?

It was predictable. Put out a call for anyone to nominate 'shovel ready' infrastructure projects that cost more than $10m and get a list of projects cash-strapped councils would rather not pay for themselves.

Crown Infrastructure Partners chairman Mark Binns said 1800 projects, collectively worth tens of billions of dollars, were submitted in response to a Government call for 'shovel ready' projects worthy of Government funding. Applications for the fund closed last Tuesday.

They're all vying for a pot of money that has no official dollar figure attached to it yet.

"There's going to be far more projects than there is going to be money," Binns said. 

He heads the Infrastructure Industry Reference Group (IIRG) that will pass on a list of project options to the Cabinet in the first half of May. 

A wide range of organisations had submitted projects, including some from small regional trusts and councils.

"It's about providing jobs for Kiwis and making sure we support the construction industry which the Government sees as being strategic, going forward," Binns said.

IIRG would also provide advice to the Government on legislative changes for an "emergency powers package" that would allow projects on the list to be pushed through quicker, he said.

'Business as usual' for councils

Lobby group Greater Auckland's Matt Lowrie said Auckland Council's list of 73 projects included a mix of good and bad, but overall didn't represent a transformational shift that the times seemed to call for.

"In Auckland, it seems to be 'let's just put up the list we were already working on and just see how we can do that sooner'," he said.

"Which is not really in the spirit of how it should be. This is a once in a generation opportunity to change how we think about our city."

Infometrics economist Brad Olsen said many councils had decided to "throw a lot of mud at the wall and hope some of it sticks" when it came to picking projects for the application process.

Auckland Council's application included a call for 103 electric minibuses to 'uber' people to and from public transport stations. Urban geographer Ben Ross said other projects on the supercity's list were "projects dusted off the bottom shelf".

Meanwhile, Wellington City Council's shorter lineup of 10 projects was a mix of the capital's most painful local body shouting sessions. It included a convention centre  for which a business case has looked shakier with every delay, and a cycleway in Island Bay that many would rather not talk about for a while. 

If such lists have a hint of desperation about them it's because things really are that bad. Especially for high-growth councils that were already near their debt caps before Covid-19 reached our shores.

"There's nothing more shovel ready than something that's already going,"

Council debt is capped at 250 percent of revenue. So as the rates take shrinks, councils have to borrow less even though interest rates are low.

Tauranga City Council has predicted its revenues will decline by 26 percent in the wake of Covid-19. TCC can't borrow to bridge that gap because it would breach its debt cap. Infrastructure NZ CEO Paul Blair said the lower rates take meant Tauranga could only borrow 50 percent of the amount it could have before Covid-19 hit. 

Shovels halfway in the ground

For Binns the "shovel-ready" criterion is a hard and fast rule.

"Will they be shovel ready inside 12 months? If they won't. That's it. All over," Binns said.

Blair said the "shovel ready" requirement meant a lot of projects chosen would likely already be underway.

"There's nothing more shovel ready than something that's already going," Blair said.

Auckland's list included projects like the City Rail Link where spades first went in the ground three years ago. Lowrie said the cycleway projects on Auckland's wish-list were originally going to be delivered in 2018.

If projects can't kick-off within 12 months they'll be instantly ruled out. Photo: Lynn Grieveson

Christchurch-based land use commentator Brendon Harre said the 'shovel ready' approach had hamstrung Christchurch in terms of the projects it could put forward. Christchurch City Council's $818m list included a stadium which the Government has already agreed to part-fund.

"We don’t have these shovel-ready projects because City Council and ECan have been focusing on earthquake recovery, not on these future proofing transport projects and things."

Lowrie said the shovel-ready aspect had also given the whole process a 'backwards-looking' quality.

"What you don't build is just as important as what you do build," Lowrie said.

"If we're continuing to build a whole bunch of projects that were designed in an era that doesn't exist anymore we're not actually helping ourselves. We're putting ourselves back," he said.

The 20 minute city 'gold standard'

Hamilton has taken a different tack to other high-growth councils. 

The city has teamed with iwi and three other councils to pitch a redesign of Hamilton as a central part of a "sub-regional" jobs stimulus and economic recovery package of 23 individual projects covering transport, housing and water improvements.

"The investment should be designed to stimulate local economies more generally rather than create jobs for those particular projects."

University of Waikato Professor Iain White led much of the thinking behind the $500m "20 minute city" concept that headlines the proposal.

The aim of it was to create a city where most facilities and activities, including employment, were available within 20 minutes walking distance of one's home. 

White said post-Covid infrastructure projects shouldn't just be about invisible infrastructure like pipes and reservoirs. Once the dust of Covid-19 settled, it would be important to have visible infrastructure that restored consumer confidence. 

"The investment should be designed to stimulate local economies more generally rather than create jobs for those particular projects," White said.

He drew inspiration from Victoria on the River, a development in the city's CBD where a former carpark was redesigned to create an open-air public auditorium-style space overlooking the Waikato River. 

"That was very visible, but cheap, new infrastructure for the city that actually had an outsized impact on peoples perception. Even though it was a fraction of the cost of a new reservoir," White said.

"There's a need to get the kinds of infrastructure that can generate local economies as well as the kinds of infrastructure that are overdue just to service the population's needs," he said. 

Think regionally

Ross said Hamilton represented the "gold standard" of the proposals he'd seen because of its more strategic approach that also delivered regional benefits.

Infrastructure NZ's Blair said it reinforced his call for the Government to more directly fund regional and spatial plans like the first urban growth partnership for the "H2A" - Hamilton to Auckland - corridor.

"There's never a better time. Clearly there's been work done to talk about a 20-minute city. And you have to presume the Crown's been there with it. So why not fund it?" Blair said.

Binns said projects from councils and others would have to demonstrate a public benefit on a national or regional level. There would be "regional equity" in the projects that were chosen, which would have to do more than just generate jobs.

"All the money can't go into one area," Binns said. 

He said IIRG would weed out those projects that had a low public benefit or weren't shovel ready, then do a more detailed analysis on what remained. 

"We're not making a recommendation on which projects should proceed and which not. We're just giving them the options," Binns said.

"Some councils are being very focused...some maybe have been a little bit more scattergun," he said.

"We'll obviously still look at them all."

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