Ending the Infrastructure Deficit

ACT would take the politics out of infrastructure and get central and local government working together through long-term infrastructure partnerships.

City and Regional Infrastructure Partnerships

New Zealand needs investment in high-quality infrastructure to boost jobs, wages and growth, and to accommodate our growing population. However, the current arrangements for delivering infrastructure are inadequate and the issue has become highly politicised.

At the heart of the problem is a separation between planning, which is done at a local level, and infrastructure funding, where central government has the overwhelming majority of revenue. In short, central government can afford, but can’t plan, infrastructure, and local government can plan, but has little revenue.

The problem is widely recognised, and initiatives such as the Auckland Transport Alignment Project are a response to the problem. However, politicisation remains a problem, and progress, such as with the Auckland light rail project, remains slow.

The results can be seen in low productivity and wage growth and poor outcomes and high-profile failures in housing and transport. New Zealanders need greater certainty and consistency around infrastructure investment. We can and must do better.

ACT has a bold and innovative plan for funding and delivering infrastructure in New Zealand. We will ensure a long-term, cross-partisan commitment to delivering the investment our country needs.

The current situation

A number of issues are preventing us from achieving better outcomes in infrastructure.

There’s too little coordination between central and local government. 90 percent of tax revenue is collected by central government, but it is reluctant to fund local government. Meanwhile, local government has the knowledge and the responsibility for planning. Short election cycles mean government agencies can’t plan and invest with a long term focus. Local government can plan, but without funding it has little certainty about whether its plans can be delivered.

Infrastructure has become too politicised. Governments have chosen where to build roads, bridges, and railway lines, based on political advantage rather than economic need. Furthermore, changes of government every three years bring uncertainty and the risk that decisions will be reversed.

Finally, there’s a conflict of interest in infrastructure decision-making. Central government is both judge and jury. It delivers infrastructure and it monitors its own performance. That results in a lack of accountability and oversight which has contributed to high-profile failures and poor outcomes in transport and housing. Issues which should be acknowledged and addressed are instead politicised and problems go unsolved.

City and Regional Infrastructure Partnerships

ACT has a bold, innovative idea for getting better outcomes from our infrastructure spending. We would allow central and regional governments to establish 30-year infrastructure partnerships.

Infrastructure partnerships would devolve revenue and responsibility for delivering infrastructure to regional governments and the private sector, while strengthening accountability and oversight from central government.

Regional governments and the private sector would be responsible for delivering infrastructure on the ground, while central government would step back from its current role, have oversight, and hold regional governments accountable for the outcomes.

Central and regional governments will develop long-term regional infrastructure plans together. Before funding is provided, Treasury will analyse the plans to make sure the benefits outweigh the costs and that New Zealanders are getting the best possible outcomes for taxpayer money.

This will ensure that the politics is taken out of infrastructure and that decision-making is much more rigorous. Rather than using infrastructure as a vote-buying exercise, decisions will made based on economic need, getting the biggest bang for our infrastructure buck.

In exchange for receiving infrastructure funding, regional governments will be required to meet high standards. Central government would monitor outcomes and future funding would be tied to performance against expectations.

Under this new arrangement, the current conflict of interest – where central government delivers infrastructure and holds itself to account – will be resolved.

Central government would also be responsible for monitoring and benchmarking regional government performance and providing this information to the public. Innovative regional councils would promote better outcomes and compete for new residents and rates, private investment and economic development.

What would a “regional government” look like?

Central government would form partnerships with the existing councils in ten regions. No new layer of government would be formed, but the councils in each region would be signatories to a regional partnership with central government.

The regions might be:

1. Northland
2. Auckland
3. Waikato
4. Bay of Plenty
5. Western North (Taranaki, Whanganui, Manawatu)
6. Eastern North (East Coast, Hawkes Bay, Wairarapa)
7. Wellington
8. Tasman
9. Upper South
10. Lower South.

Councils and their residents would be able to decide which region to join. For example, Rodney might decide to be part of Auckland or Northland.

Funding

Regional infrastructure plans would be funded from a variety of sources, with the mix chosen to suit the project:

  • Central government funding in return for achieving agreed policy goals
  • Central government sharing GST revenue from new housing developments with councils
  • Local revenue (rates, targeted rates, user fees and development charges)
  • Transport charges (such as road user charges and tolls)
  • Public-private partnerships.

From the point of view of central government, partnerships with the regions will become the one stop shop for infrastructure development. Rather than channeling money through a transport agency, the Provincial Growth Fund and a regional development fund, all central government funds would be channelled through the partnerships.

Where we’ll get to

ACT’s commitment is to take the politics out of infrastructure, align the incentives of funders in central government and planners in local government, and make sure New Zealand infrastructure gets built in the long term with certainty.

Solving our long-term infrastructure deficit means we will be able to open up new land for the next generation to build homes connected with opportunities in employment and education. Over time, taking those opportunities will solve one of New Zealand’s fundamental problems: low productivity.

We can and must do better with infrastructure. ACT has a plan to ensure that, with central and local government working together, we’ll build the infrastructure New Zealand needs.


Freedom to Move

Congestion is not only a major frustration, but also a handbrake on economic growth.

Auckland is ranked among the most congested cities in the world, with drivers wasting 172 hours in traffic each year. Congestion costs our economy more than $1.25 billion a year, while also contributing to higher levels of pollution and road crashes.

ACT believes New Zealand must follow international best practice and replace ineffective and unfair fuel taxes with road pricing, like that used in Singapore. The demand for road space outstrips supply.

Instead of rationing road space by queuing, road pricing would encourage commuters to find other travel times, routes and transport modes. At the busiest times, those who take public transport would save the most.

Road pricing harnesses the power of markets and requires drivers to pay the full costs of their road use. It is a fair, efficient, and environment-friendly solution to congestion. New Zealand could manage demand on the roading network, down to the minute. Authorities could also see where new roads would be most valuable and cost-effective.

 

ENDING THE INFRASTRUCTURE DEFICIT

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