Caution is not our saviour

Photo: Dominion Post

Ineffective urban transport needs bold new thinking, not the tail wagging the dog.

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OPINION: It's a start – that's the best that can be said about the government's first report under its National Infrastructure Plan.

Still, it's useful. It gives a comprehensive view of infrastructure investment under way and planned in the near-term; it identifies chronic weaknesses in how we plan, design and deliver infrastructure; and it touches fleetingly on the far bigger, longer-term infrastructure challenges of what to build and how to pay for it.

But the report reveals the government's infrastructure strategy is the tail wagging the dog. Current and planned spending addresses only short-term and conventional needs. It runs the grave risk of locking us into ineffective urban forms and transport, inefficient natural resource and land use, non-renewable energy sources and dependence on high-volume, low-value commodities.

The strategy sees infrastructure spending as an economic activity in its own right, albeit one that can help grow the wider economy. This reflects the traditional and limited thinking so far in Treasury and government. They are failing to grapple with the central issue: clever infrastructure investment can powerfully reshape economies and communities.

For examples you need look no further than the website of Treasury's National Infrastructure Unit (www.infrastructure.govt.nz/externallinks) to see the ambitions of some other governments. The boldest is Ireland's National Development Plan 2007-2013. The 184 billion ($360b) strategy ensures spending on infrastructure is an investment in economic and social transformation.

In contrast, this first New Zealand report is based on the assumption our economy will keep growing at its trend rate of 2-3% a year. Even that would expand it 60% in 20 years, requiring a hefty spend on infrastructure.

The report acknowledges, though, that the government's goal of catching up with Australia would require growth of around 4.5% a year, thereby doubling the size of the economy and requiring an even bigger infrastructure spend.

It also says growth based on physical commodities would require more road, rail and port capacity than, for example, growth based on weightless exports such as software and services. In contrast, the latter would require even bigger broadband capacity than now envisaged. Similarly, it says the right "shaping infrastructure" can help produce "the most desired patterns of household and firm locations" in our cities and towns. But it says to do so in our biggest urban centre would require the region "to reach clear conclusions about how it wants Auckland to grow", and then working with central government to deliver it.

As for paying for all this, the report says the private sector will have an opportunity to invest in infrastructure through the likes of public private partnerships for projects in which it can demonstrate clear advantages in innovation and efficiency over government investment. The government is dipping its toe in the water with prisons and schools, but is taking a very cautious, long-term approach to wider private sector investment.

Finance and Infrastructure Minister Bill English says work is under way on these issues and subsequent reports will reflect that.

Likewise, a number of business leaders working closely with the government on infrastructure are moderately hopeful. They say some ministers are starting to tune into the issues and the NIU is starting to develop the right skills, sophistication and focus under its new head, Richard Forgan. The team of some 20 people had been leaderless for most of its first year until Forgan arrived from PricewaterhouseCoopers last November.

Dealing with infrastructure in such a deep, holistic way is an enormous challenge. Consider Auckland. Up to now the region has grown rapidly and haphazardly, resulting in an unattractive and inefficient use of land and a population density a lot lower than that of Los Angeles.

This in turn has made the provision of roads, public transport, utilities and other infrastructure more expensive than in a higher-density city. And we compounded the problem by investing piecemeal and late.

But we're on to the issues now, the government says. It promises its redesign of local government will enable the new Auckland Council to develop a spatial plan to determine which activities will grow where and how. Then the council and community boards will work with the council-controlled organisations and central government on the likes of transport, water and development of the economy and waterfront.

The opportunity to make the region more attractive, productive, efficient and sustainable is huge. If, as projected, its population reaches two million by 2031, we'll need to increase the number of homes by 40% and refurbish, rebuild or reconfigure many existing buildings and neighbourhoods.

We could do that in the low-density way we have in the past, such as paving over more of the flat fertile horticultural land on the urban limits. But that would only compound the inefficiency of infrastructure. Or we could rethink the way we live and work in cities. Whether our politicians and we are bold enough to do so remains to be seen. Our resistance is curiously self-harming. After all, we're one of the most urbanised populations in the world yet our rural roots make us myopic and romantic about our quarter acres. Why shouldn't we pioneer new forms of urban living close to bush and beach that is right for us and an attractive model for other places abroad?

The same themes apply to economic activity. More commodities will keep us poor, while wiser use of our resources will make us wealthier. Here, too, the government offers one glimmer of hope. It is coming close to elevating water to a resource of national importance. Through the Land and Water Forum and other policy processes it is seeking new ways to better value, allocate and use water. But, as with urban form and transport, it will have to take some bold steps to succeed. It would have to ensure all water use is measured and charged appropriately and is sustainable environmentally.

Elsewhere, though, the government is failing to make the connection between infrastructure investment and economic transformation. The closest it gets is a promise to trickle $1.5b into projects to get broadband into remoter corners of the country in coming years.

Likewise, it is far too hesitant on new ways to get innovation and investment into the provision of infrastructure and the services they deliver. It might go soon for a PPP prison or school.

And on transport it believes it can put off the hard decisions on road charges, demand management and PPPs. It hopes it won't need private sector money until after the completion in Auckland of electrification of trains and SH20 at Waterview in five years.

But it's wrong. The NZ Council for Infrastructure Development reckons the government already has a $1.3b funding shortfall on its Roads of National Significance even before it's finished costing them.

All this is evidence of the government's ambivalence about the role astute investment, ambitious planning and effective markets play in lifting infrastructure to a powerful tool of economic and social transformation.

Maybe it will work on all those. If it does, the second annual infrastructure report will start turning rhetoric into reality.

Or maybe the government's political caution and expedience will prevail. If it does, all we'll get is the rhetoric and more of the same old infrastructure.

- © Fairfax NZ News