29 January 2009
Stop turning the infrastructure tap on and off is the way towards recovery
The continued indecision on Transmission Gully, recent reactions to the snarl up at the end of Auckland’s new Northern Gateway and the calls to get on with the extension to Warkworth underlines the need for good transport and infrastructure planning. It highlights the dangers of projects being promoted as a knee jerk reaction to a congestion problem on particular holiday weekends. Projects of this magnitude and expense need to be planned in a coherent and co-ordinated way.
The new National led government is currently developing a 20 year national infrastructure plan that will set a clear direction for national infrastructure including top priority projects, - this future focussed foresight is exactly what is needed.
The 20 year plan idea has been successfully used in south east Queensland. In Queensland there are 3 year funding commitments, 10 infrastructure commitments and the remaining 10 years is indicative. This has provided funding certainty for the construction sector to recruit and train the people they need and purchase the required materials and machinery. This type of plan also provides a level of certainty for the communities who may benefit from or who may be affected by these projects.
For the various industries involved, planning and certainty also relates to the level of funding. What we do not want is the continued turning of the tap off and on again. This happened in the transport sector when transport funding for new works was very low in the mid 1990s at about $200m per annum and it wasn’t until 2005 that a more realistic level of $600 m per year was reached. Turning expenditure off and on is about to be repeated with the national grid capital expenditure which was only $100m in the early 2000s, and is forecast to be $800m in 2010. Is it any wonder Transpower had to face a major skill shortage?
Similarly the proposals to boost broadband and cellular network expenditure from the current $1 billion per year to $2 billion per year have led to the telecommunications industry flagging to the new government that their capacity to deliver fibre to the home isn’t available in NZ.
An analysis of capital expenditure across the main areas of infrastructure has shown roading ramping up from 2003 and the massive expenditures planned for broadband, electricity generation and transmission escalating up from 2009/10.
Planning infrastructure also needs to be co-ordinated across these various sectors – sectors that are funded from varying sources - by central government, local government, and the private sector. This is the beauty of having an Infrastructure Minister with the role of developing the Infrastructure Plan. The role could be very effective in bringing together the common issues – infrastructure development is driven by similar growth demands, in some cases infrastructure is able to share the same routes (e.g. transmission lines down transport corridors), and government could compare the best value for money of capital investment across the sectors. Very importantly, the construction of infrastructure draws on the same pool of semiskilled people, trades people, and highly skilled people and highlights the need for sound workforce planning.
An infrastructure plan needs to avoid the risk of becoming a straight jacket – it needs to be reviewed regularly, remain flexible and be responsive to changing circumstances. Infrastructure spend is currently seen to be of value to boost the economy, and to support employment and improve productivity. In times of high growth in the economy infrastructure capital expenditure is needed to respond to increases in demand. Thus there is a good argument for a consistent level of investment in infrastructure both in good times and in bad.
So not only is planning required - governments need to get out of an annual funding mentality for infrastructure – there are compelling reasons for maintaining a reasonably consistent level of funding, with co-ordination across the sectors, so that the various industries are able to efficiently deliver on the government’s aspirations.
Commentary by:
Tim Davin BE (CIVIL), MPP, FIPENZ
Director of Public Policy
IPENZ, Institution of Professional Engineers New Zealand
Ph 04 473 2027
Mobile: 027 204 9536
For more information contact:
Julie Buchanan
Communications Manager, IPENZ, Engineers New Zealand.
Mobile: 021 479 885, PH: 04 473 2028
Prepared by Julie Buchanan, Communications Manager, IPENZ, Engineers
