February 16, 2026 • 23 mins
Fixing the leaks, not just buying bigger mops.
That’s the theme of the National Infrastructure Plan released today.
It looks at 17 sectors covering central government, local authorities, and commercially regulated utilities.
The 30-year outline sets out how New Zealand can improve the way it plans, funds, maintains, and delivers infrastructure... and guess what, it turns out we don’t do it very well.
Each year we invest just over $20 billion on infrastructure, yet on a dollar-for-dollar basis we achieve less than many of our international peers.
Today on The Front Page, New Zealand Infrastructure Commission Chief Executive Geoff Cooper will take us through this mammoth report.
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Editor/Producer: Richard Martin
Producer: Jane Yee
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Episode Transcript
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Speaker 1 (00:05):
Kyoda.
Speaker 2 (00:06):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. Fixing the leaks,
not just buying bigger mops. That's the theme of the
National Infrastructure Plan released today. It looks at seventeen sectors,
(00:27):
covering central government, local authorities and commercially regulated utilities. The
thirty year outline sets out how New Zealand can improve
the way it plans, funds, maintains and delivers infrastructure and
guess what, it turns out we don't actually do it
very well. Each year we invest over twenty billion dollars
(00:49):
on infrastructure, yet on a dollar for dollar basis, we
achieve less.
Speaker 3 (00:54):
Than many of our international peers.
Speaker 2 (00:57):
Today on the front page, New Zealand Infrastructure Commission Chief
Executive Jeff Cooper will take us through this mammoth report. So, Jeff,
what is the biggest headline from this What two hundred
and twenty five page report?
Speaker 3 (01:16):
What are you telling family members at the dinner table?
Speaker 1 (01:19):
One of the key findings of this plan, the cornerstones
of the plan is for folks to understand what it
takes to keep the existing services that we rely on
from day to day what it takes to make sure
that that happens, and we will over the next thirty years,
(01:40):
ending in the order of twenty billion dollars every year,
just to keep that stuff turning over. That is the
real megaproject that New Zealand can't avoid in its over
its next sort of thirty years. And getting that right
means that when we're thinking about those tech to call
(02:00):
upgrades that we need to make to various networks, that
we're able to do that in a way that doesn't
result in big cost blowouts and assets that we're unable
to renew and replace in the future. So this is
a plan which is clear eyed about that, and also
(02:20):
I think takes these issues of resilience from the storms
and the natural hazard disasters that are going to become
more with greater intensity and more severity. We need to
start planning for that in our capital appropriations now in this.
Speaker 2 (02:41):
Report, I mean, do you think it's an eye opener
or I mean we know this right.
Speaker 3 (02:46):
We know that we've.
Speaker 2 (02:47):
Underfunded our country's infrastructure over decades. We see that every
time it rains in some parts of the country, you
can't go swimming at certain beaches when it's rained a bit.
Speaker 3 (02:59):
And that's just only that's one example. You've got people
in you know, emergency.
Speaker 2 (03:04):
Rooms citing mold, which you've got all these different things.
When is it going to be Do you think that
this is enough to give us a kick up the bart?
Speaker 1 (03:14):
Every event kind of does feel a little bit like that.
But let me put this to you. New Zealand actually
spends on a per capita basis among the top ten
percent of all advanced countries on its infrastructure, So we
don't I wouldn't characterize this as saying we have a
funding problem. To struggle is turning that cash into services.
(03:36):
You know, we're among the bottom ten percent of advanced
countries for doing that, and so there's you know, I
think people get frustrated that we don't always have the
services we want. There's two parts to that, like we
need to get better at the delivery side so that
we do turn that cash into services that people people value.
But the other thing I would sort of say here
(03:58):
is that, interestingly enough, like when you look at the infrastructure,
the quantum of infrastructure that we have for the country
that we have in many places, actually we stack up
pretty well. And that comes to a surprise to some people.
But you know, let me give you an example. We're
a country that are the size where the size of
(04:20):
Greater Sydney five five and a half million people, but
we are trying to develop an area that is twenty
one times larger, and so that is far more challenging
on a Pacific island, the bottom of the world, with
very difficult geotechnical issues and so on and so forth.
So you know, the plan is really trying to make
clear some of these difficulties and and you know, so
(04:43):
that people can see that as one of the reasons
why that's not always is easy.
Speaker 2 (04:48):
Yeah, I'm glad you brought up the what we actually
put in because it's you know, we invest around five
point eight percent of GDP annually on infrastructure. That's over
the past twenty years, making us, like you said, one
of the top spenders in the OECD, yet we ranked
towards the bottom right for bang for back.
Speaker 3 (05:08):
Why is that? Where is that money actually going?
Speaker 2 (05:11):
Well?
Speaker 1 (05:11):
To my earlier point, I think when you look at
New Zealand as a you know, it's land mass, it's
geography where this long, skinny country we're spread out over
a lot of land. We're trying to connect very distant
things over very difficult geography. So one part of this
is that we have folks that are operating and investing
(05:32):
our infrastructure and dealing with actually quite difficult conditions. And
I think the more we understand the difficulty of those conditions,
the more difficult they seem. So at the moment, a
lot of work is being done on things like flood mapping,
seismic risk, wind risk, for instance, and we're getting a
picture really actually Landslide risk is another one where we're
(05:57):
learning more about it and we're seeing that the difficulties
of build and delivery on New Zealand is really difficult.
So that's one part to this. Other times, I think
we sort of do this to ourselves. Right, let me
give you an example. We have somewhere in the order
of twelve hundred different land use regulation zones in New Zealand.
(06:19):
Japan has thirteen, right, So we have in many ways
quite complicated rules that make it difficult for us set
owners to deliver cost efficiently as well. And I think
that's why the plan really talks to the need for
sustained focus on things like resource management reform, making it
easier to build the services that New Zealanders need and
(06:42):
want and rely on.
Speaker 3 (06:44):
I saw this in the report.
Speaker 2 (06:45):
There are currently two hundred and seventy five billion dollars
of projects in planning and delivery across New Zealand. And
that's just over eleven thousand, nine hundred projects. Now, this
means absolutely nothing to the average key we and when
I read this, I was like, that does seem like
a lot?
Speaker 3 (07:04):
Is that a lot?
Speaker 2 (07:06):
And is that a lot of money in terms of
or is that just how many projects are happening at
any given time?
Speaker 3 (07:11):
What's kind of the average?
Speaker 1 (07:13):
Well, it is a lot, but most of those about
ninety eight percent of those projects are under one hundred million,
so they're actually small. So the real bread and butter
of infrastructure is actually really small projects. We have about
forty four that are over a billion dollars and most
of those really are not funded, don't currently have a
(07:34):
path to funding. So you know, when we kind of
look and feel like are frustrated that these projects are
not getting across the line, it's actually a very small
proportion of projects. You sort of asked this question about, well,
how should we think about two hundred and seventy five
billion dollars. It sounds like a big number. What does
that actually mean? And we sort of comment on this
(07:56):
that it is a big number. It's an enormous number
for a country of five and a half million. The
capital appropriation each budget that the central government runs, the
allowance for that, as signaled previously is three point seven billion, right,
So that's you know, not central government doesn't do all
of our infrastructure. They do about sort of forty to
(08:18):
fifty percent. But it gives you a sense of the
affordability pressures. And you know when we will often look
at these projects and say why are they why are
we continually to push things out further and further and further.
One of the reasons for that is because you know,
there are people looking at whether or not we can
(08:39):
afford the operating and maintenance costs of these of these assets.
You know, the moment you build a new bridge or
a new road or whatever it is, it comes with
a tail of expenditure that needs to be funded either
through rates, taxes or user charges, and you know, there
needs to become confidence that households can afford this and
(09:03):
some of these levels of expenditure that we see in there.
You know, we look at that and go, actually, households
are going to struggle to afford some of that, and
so we need to sort of think about sequencing and
staging of these projects to keep them affordable for every
Achiis well, it feels like.
Speaker 2 (09:20):
That should be something that should be thought about before
it's announced to the public.
Speaker 3 (09:24):
Is that right?
Speaker 1 (09:25):
Well, I mean I think that this is an essence that,
you know, one of the first things that you should
be thinking about in the business cases, whether it's a
reason why there's a financial case to a business case.
And to your point, yeah, I think that, you know,
I think the from over in Australia, you know the
what was it, the sort of third of projects that
(09:45):
were announced before their business cases accountant for sort of
two thirds of all of the cost overruns, right, So yeah, like,
if you want to look at good ROI doing good
due diligence in the business case phase, there's probab no
better bang for back, but asking the question of what
does this mean for the household should be central. And
(10:09):
I know that you know this recently came up for
Aucklanders on the City rail link. You know that that's
going to require operational and maintenance and depreciation funding which
needs to has been funded out of higher rates. So
this is these are not hypotheticals. This is visceral. This
this will hit the balance sheet and we need to
think very carefully about those those sorts of things.
Speaker 4 (10:37):
Most it's actually really important you've got a government that
actually responds very well in those moments to actually meet
those people with their needs that are very immediate. And
then actually we have a very good recovery and as
you can see, we're building back a much more resilient
infrastructure network well as as we've talked before in recent weeks.
You know, just look at what we're doing and rebuilding
the Hawks Bay Expressway. It's building back to be twice
a strong prospective flood to resilience. We're building back road
(11:00):
networks across the country. You think about State Highway twenty five.
The building resilience into everything this government does. We've put
a lot of money into over successive budgets. That's how
we roll.
Speaker 3 (11:10):
Now you mentioned this before, but i'll mention it again.
Speaker 2 (11:13):
Over two thirds of the total value of the projects,
those eleven thousand, odd, one hundred and ninety three billion
out of two hundred and seventy five billion, do not
yet have full funding commitments. Are we going to realistically
have to scale back on those promises and make some
really hard and fasting like a real priorities list as
(11:34):
to what we do, you know, say something like sorry,
the oldmate promised you this, but we're going to have
to cut it.
Speaker 3 (11:41):
We can't actually afford it.
Speaker 1 (11:43):
The plan really speaks to how can we fit this
all in to a capital budget that we can afford
since we're so you know, we're so far away from that.
And the answer to that is that we're probably going
to need all of these projects over over a long
period of time. But the question is really around sequencing, staging,
(12:03):
and phasing of these projects. And you know, yeah, like
we should be thinking about doing low cost interventions first.
Maybe we can get the safety improvements from significant investments
in whatever the road is by doing some other lower
cost things that allow us to you know, to keep
up on our hospital rebuilts, which frankly we're a long
(12:25):
way behind not so yeah, those are those are the realities.
But look, I would say that, you know, in truth,
truth be told, we sort of already know that, right,
Like I think New Zealanders know this where we're looking
at an enormous pipeline of projects, and on the other hand,
(12:46):
we're having conversations every day about cost of living. Productivity
levels are not going up, we are having to rebuild
assets because of natural disasters, and you know, you just
look at the Hawk's Bay, the MNA, We're two and
so on. These are real costs that are hitting us
right now. And so we say, you know, I don't
(13:08):
think this should come as a surprise, but you know,
for ASIAT owners and for investors around the country, what
we're sort of saying in the plan is let's optimize
around what we can afford rather than continually planning for
things we can't afford. And you know, getting frustrated at that.
Speaker 2 (13:28):
Yeah, So basically, all of these projects, like you said,
are needed, but there aren't really any massive kind of
vanity projects that we can chop or something, you know,
like we've just gone ahead and we've thought ahead too much.
Speaker 5 (13:41):
Maybe I think they're all legitimate needs out and one
of the key questions that we need to ask though,
is are there enough people to justify the enormous capital
upgrade in many places?
Speaker 1 (13:53):
And so you know, there might be certainly some people
that need the project right now, but for ASIAT owners,
they're thinking about, well, what is the right number such
that we have enough people using it so that we
can maintain, renew and replace this asset in a financially
sustainable way into the future, so that our cities and
regions are financially strong rather than in the position we're
(14:16):
currently in, which is, you know, financially very weak and
laden with a lot of debt.
Speaker 2 (14:22):
So that's only about thirty percent of the total value
of the pipeline relates to maintenance and renewals.
Speaker 3 (14:29):
How much should it actually be do you think.
Speaker 1 (14:31):
Well, when we're looking at all of the assets we own,
and so anytime you buy a new asset, you go
away and buy a car. Every year there's wear and
tear on that car, and it creates a sort of
idea of like what a useful, useful life of an
asset might be, but orders of magnitude. If you've got
(14:53):
sort of annual depreciation rates of two to three percent,
it means that you're replacing your assets every thirty, forty
fifty years. It's a slightly slippery idea, but the sort
of general nature of it is you know, I think
this makes a lot of sense if you're trying to
maintain a house or a car or anything. And so
when you do the math on this, for all of
(15:14):
the assets that we own and the way that we
see those assets wearing and tearing out over time, we
would expect that number to be in the order of
sixty percent.
Speaker 5 (15:25):
Right.
Speaker 1 (15:25):
For some assets, it's going to be and in some
places it's going to be higher. You can imagine places
that say, don't have significant population growth, those ones might
actually have a higher number on the totality for replacement.
And for places that are experiencing a lot of growth
so they're building out their networks for new people that
(15:46):
are coming into the city, you might expect that number
to be a bit lower. But on the whole, that's
what you would expect to see it to be across
the portfolio. We know we know that is not the case.
And the thing about that is that if we're not
renewing and maintaining and renewing our assets in an optimized way,
(16:07):
what we're actually doing is lowering service levels and kicking
costs to future generations. And the sticking point is this, Right,
if you don't keep on top of these things, the
cost to get on top of them in the future
is going to be higher.
Speaker 5 (16:24):
Right.
Speaker 1 (16:24):
If you don't sort of paint the weather boards on
your house repeatedly, eventually you're going to have to replace them,
and the difference between painting a weather board and replacing
one is significant.
Speaker 5 (16:35):
Right.
Speaker 1 (16:36):
So if we kick the can down the road on
this mundane maintenance thing, which doesn't hit the headlines very often,
what it's ultimately going to mean is less infrastructure services
over the long term, and that's going to you know,
that's going to be hurtful to our economy, but also
all of the social infrastructure that we need as well.
Speaker 6 (17:03):
Can't build everything all at once, but we need to
get the balance right, so we do need to be
investing and the stuff that's boring that people can't see.
One of the reasons as a country we've underinvested in
water infrastructure is pipes below the ground are not front
of mind for most people until they stop working, and
then suddenly everyone's like, why hasn't this pipe been maintained?
(17:23):
But maintenance also draws a lot of complaints. So if
you're sitting around a council table, you know that when
you rip up pipes. People complain about that because it
causes a lot of disruption, and so we've got to
tackle some of the boring stuff that can actually be
a bit annoying. Maintaining pipes is very annoying for people.
But it has to happen.
Speaker 1 (17:43):
Is it all?
Speaker 2 (17:44):
Because you know, governments of any day, any color, any stripes,
they just love unveiling a huge project. You know, it's
that cutting ribbon moment. It's promising these big promises and
these kind of announcements that are you know, much more
sex see them talking about how we're going to handle
your excrement or something.
Speaker 1 (18:03):
Hey, no, there's no doubt that's true. Right But the
moment that we take our services taken away from you,
you start to really understand the value of the existing
asset base. And I think there's, you know, arguably no
greater example of this right now than the wastewater treatment
issues that we're experiencing in Wellington right now. Right that
(18:24):
was an asset that you know a lot of people
probably wasn't front of their mind, hadn't even thought about it,
like what is this wastewater treatment plant? And these are
services that we came to rely on and they were
taken away, and you know that's that's hit heart. So,
you know, these issues of making sure that our assets
continue to function. Let me say that some of our
(18:47):
most important infrastructure is the stuff that's already around us.
It carries the highest cost benefit ratio. It creates the
most value. That's why it's there and why it was
an invested in. So anytime we make an investment, you know,
it's an obligation to keep that up. And I think
the plan argues that we need legislative tools to make
(19:10):
sure that this is occurring.
Speaker 2 (19:12):
And so how can we make sure that this is occurring?
I suppose it would be pretty important to get cross
parties support on this.
Speaker 1 (19:20):
I think that's right, and I for you know, I
would sort of make the case that for many kinds
of infrastructure, commercial infrastructure, this happens as a matter of
course really because if they don't maintain their assets, and
I'm thinking about transmission lines, distribution lines, airports, if they
don't maintain their assets, they will see their revenues to climb.
(19:41):
So when your revenue comes from the asset, you have
a very powerful incentive to make sure the assets well
maintained and functioning right.
Speaker 2 (19:49):
Well, people living their lives aren't enough of an incentive.
Speaker 1 (19:53):
While it's not so in your face, I think right,
because if you're seeing your service level decline for your
asset and it's hitting your revenue line, you know the
next day, it's very visceral. Right, So the focus on
that is just as an observation, I would find that
(20:15):
when that is the case, the focus on that is
a lot sharper. In local government, we see that they're
kind of in the ballpark. They're not that their renewal
rates are lower than what you would hope them to
be sort of I would say seventy to eighty eighty
five percent, but have been below one hundred percent for
quite some time. In central government, which is about forty
(20:39):
percent there or thereabouts of infrastructure that we rely on,
we don't always know the condition of it. There's not requirements,
you know, it's not standardized, and so we don't always
have a great picture at all. So the plan is
really calling this out and is trying to provide some
options and recommendations to really tighten tighten things up in
(21:04):
that area.
Speaker 2 (21:04):
And just lastly, page thirty one of the two hundred
and twenty five pages. I'm going to keep bringing that
up because I've had to read through them and everyone
has to know. But I saw that there's this poll, right,
So should we increase spending to improve infrastructure in New Zealand,
even if that means higher taxes.
Speaker 3 (21:26):
Or costs for consumers? That was a question.
Speaker 2 (21:29):
Twenty eight percent strongly disagree, tend to disagree, thirty two
neither here nor there, forty percent strongly agree and tend
to agree. Now, that is actually a lot more people
who either don't mind or strongly agree with that statement
than I perhaps would have thought.
Speaker 1 (21:47):
I think New Zealanders see the value of infrastructure, and
we make this point right at the outset. New Zealand
is among the highest spenders on infrastructure, and so we're
prepared to put money into it. There's no question about that,
I think. But I would make this comment. I think
New Zealanders want to see the value as well, and
so that is the sort of proposition to investors and
(22:09):
asset owners is show me the high quality projects that
are able to be done in a cost efficient way, right,
because the blowouts, at the end of the day, they
do have big implications. Right, if we're building hospitals at
two to three billion dollars, we're going to really struggle
to get the hospital infrastructure we need for an aging population.
So I think that's that's a it's an open door
(22:33):
to ask owners, but we need to do the basics
well and we need to have the good disciplines to
show that there's value in it.
Speaker 3 (22:39):
Thanks for joining us, Jeff, all.
Speaker 1 (22:41):
Right, Thanks Chelsea.
Speaker 2 (22:45):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage.
Speaker 3 (22:52):
At enzidhrald dot co dot nz.
Speaker 2 (22:55):
The Front Page is hosted and produced by me Chelsea Daniels,
Caine Dicky, our studio operator Richard Martin, our producer and editor,
and our executive producer.
Speaker 3 (23:05):
Is Jane Ye.
Speaker 2 (23:07):
Follow the Front Page on the iHeart app or wherever
you get your podcasts, and join us next time for
another look beyond the headlines.
Kyoda.
Speaker 2 (00:06):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. Fixing the leaks,
not just buying bigger mops. That's the theme of the
National Infrastructure Plan released today. It looks at seventeen sectors,
(00:27):
covering central government, local authorities and commercially regulated utilities. The
thirty year outline sets out how New Zealand can improve
the way it plans, funds, maintains and delivers infrastructure and
guess what, it turns out we don't actually do it
very well. Each year we invest over twenty billion dollars
(00:49):
on infrastructure, yet on a dollar for dollar basis, we
achieve less.
Speaker 3 (00:54):
Than many of our international peers.
Speaker 2 (00:57):
Today on the front page, New Zealand Infrastructure Commission Chief
Executive Jeff Cooper will take us through this mammoth report. So, Jeff,
what is the biggest headline from this What two hundred
and twenty five page report?
Speaker 3 (01:16):
What are you telling family members at the dinner table?
Speaker 1 (01:19):
One of the key findings of this plan, the cornerstones
of the plan is for folks to understand what it
takes to keep the existing services that we rely on
from day to day what it takes to make sure
that that happens, and we will over the next thirty years,
(01:40):
ending in the order of twenty billion dollars every year,
just to keep that stuff turning over. That is the
real megaproject that New Zealand can't avoid in its over
its next sort of thirty years. And getting that right
means that when we're thinking about those tech to call
(02:00):
upgrades that we need to make to various networks, that
we're able to do that in a way that doesn't
result in big cost blowouts and assets that we're unable
to renew and replace in the future. So this is
a plan which is clear eyed about that, and also
(02:20):
I think takes these issues of resilience from the storms
and the natural hazard disasters that are going to become
more with greater intensity and more severity. We need to
start planning for that in our capital appropriations now in this.
Speaker 2 (02:41):
Report, I mean, do you think it's an eye opener
or I mean we know this right.
Speaker 3 (02:46):
We know that we've.
Speaker 2 (02:47):
Underfunded our country's infrastructure over decades. We see that every
time it rains in some parts of the country, you
can't go swimming at certain beaches when it's rained a bit.
Speaker 3 (02:59):
And that's just only that's one example. You've got people
in you know, emergency.
Speaker 2 (03:04):
Rooms citing mold, which you've got all these different things.
When is it going to be Do you think that
this is enough to give us a kick up the bart?
Speaker 1 (03:14):
Every event kind of does feel a little bit like that.
But let me put this to you. New Zealand actually
spends on a per capita basis among the top ten
percent of all advanced countries on its infrastructure, So we
don't I wouldn't characterize this as saying we have a
funding problem. To struggle is turning that cash into services.
(03:36):
You know, we're among the bottom ten percent of advanced
countries for doing that, and so there's you know, I
think people get frustrated that we don't always have the
services we want. There's two parts to that, like we
need to get better at the delivery side so that
we do turn that cash into services that people people value.
But the other thing I would sort of say here
(03:58):
is that, interestingly enough, like when you look at the infrastructure,
the quantum of infrastructure that we have for the country
that we have in many places, actually we stack up
pretty well. And that comes to a surprise to some people.
But you know, let me give you an example. We're
a country that are the size where the size of
(04:20):
Greater Sydney five five and a half million people, but
we are trying to develop an area that is twenty
one times larger, and so that is far more challenging
on a Pacific island, the bottom of the world, with
very difficult geotechnical issues and so on and so forth.
So you know, the plan is really trying to make
clear some of these difficulties and and you know, so
(04:43):
that people can see that as one of the reasons
why that's not always is easy.
Speaker 2 (04:48):
Yeah, I'm glad you brought up the what we actually
put in because it's you know, we invest around five
point eight percent of GDP annually on infrastructure. That's over
the past twenty years, making us, like you said, one
of the top spenders in the OECD, yet we ranked
towards the bottom right for bang for back.
Speaker 3 (05:08):
Why is that? Where is that money actually going?
Speaker 2 (05:11):
Well?
Speaker 1 (05:11):
To my earlier point, I think when you look at
New Zealand as a you know, it's land mass, it's
geography where this long, skinny country we're spread out over
a lot of land. We're trying to connect very distant
things over very difficult geography. So one part of this
is that we have folks that are operating and investing
(05:32):
our infrastructure and dealing with actually quite difficult conditions. And
I think the more we understand the difficulty of those conditions,
the more difficult they seem. So at the moment, a
lot of work is being done on things like flood mapping,
seismic risk, wind risk, for instance, and we're getting a
picture really actually Landslide risk is another one where we're
(05:57):
learning more about it and we're seeing that the difficulties
of build and delivery on New Zealand is really difficult.
So that's one part to this. Other times, I think
we sort of do this to ourselves. Right, let me
give you an example. We have somewhere in the order
of twelve hundred different land use regulation zones in New Zealand.
(06:19):
Japan has thirteen, right, So we have in many ways
quite complicated rules that make it difficult for us set
owners to deliver cost efficiently as well. And I think
that's why the plan really talks to the need for
sustained focus on things like resource management reform, making it
easier to build the services that New Zealanders need and
(06:42):
want and rely on.
Speaker 3 (06:44):
I saw this in the report.
Speaker 2 (06:45):
There are currently two hundred and seventy five billion dollars
of projects in planning and delivery across New Zealand. And
that's just over eleven thousand, nine hundred projects. Now, this
means absolutely nothing to the average key we and when
I read this, I was like, that does seem like
a lot?
Speaker 3 (07:04):
Is that a lot?
Speaker 2 (07:06):
And is that a lot of money in terms of
or is that just how many projects are happening at
any given time?
Speaker 3 (07:11):
What's kind of the average?
Speaker 1 (07:13):
Well, it is a lot, but most of those about
ninety eight percent of those projects are under one hundred million,
so they're actually small. So the real bread and butter
of infrastructure is actually really small projects. We have about
forty four that are over a billion dollars and most
of those really are not funded, don't currently have a
(07:34):
path to funding. So you know, when we kind of
look and feel like are frustrated that these projects are
not getting across the line, it's actually a very small
proportion of projects. You sort of asked this question about, well,
how should we think about two hundred and seventy five
billion dollars. It sounds like a big number. What does
that actually mean? And we sort of comment on this
(07:56):
that it is a big number. It's an enormous number
for a country of five and a half million. The
capital appropriation each budget that the central government runs, the
allowance for that, as signaled previously is three point seven billion, right,
So that's you know, not central government doesn't do all
of our infrastructure. They do about sort of forty to
(08:18):
fifty percent. But it gives you a sense of the
affordability pressures. And you know when we will often look
at these projects and say why are they why are
we continually to push things out further and further and further.
One of the reasons for that is because you know,
there are people looking at whether or not we can
(08:39):
afford the operating and maintenance costs of these of these assets.
You know, the moment you build a new bridge or
a new road or whatever it is, it comes with
a tail of expenditure that needs to be funded either
through rates, taxes or user charges, and you know, there
needs to become confidence that households can afford this and
(09:03):
some of these levels of expenditure that we see in there.
You know, we look at that and go, actually, households
are going to struggle to afford some of that, and
so we need to sort of think about sequencing and
staging of these projects to keep them affordable for every
Achiis well, it feels like.
Speaker 2 (09:20):
That should be something that should be thought about before
it's announced to the public.
Speaker 3 (09:24):
Is that right?
Speaker 1 (09:25):
Well, I mean I think that this is an essence that,
you know, one of the first things that you should
be thinking about in the business cases, whether it's a
reason why there's a financial case to a business case.
And to your point, yeah, I think that, you know,
I think the from over in Australia, you know the
what was it, the sort of third of projects that
(09:45):
were announced before their business cases accountant for sort of
two thirds of all of the cost overruns, right, So yeah, like,
if you want to look at good ROI doing good
due diligence in the business case phase, there's probab no
better bang for back, but asking the question of what
does this mean for the household should be central. And
(10:09):
I know that you know this recently came up for
Aucklanders on the City rail link. You know that that's
going to require operational and maintenance and depreciation funding which
needs to has been funded out of higher rates. So
this is these are not hypotheticals. This is visceral. This
this will hit the balance sheet and we need to
think very carefully about those those sorts of things.
Speaker 4 (10:37):
Most it's actually really important you've got a government that
actually responds very well in those moments to actually meet
those people with their needs that are very immediate. And
then actually we have a very good recovery and as
you can see, we're building back a much more resilient
infrastructure network well as as we've talked before in recent weeks.
You know, just look at what we're doing and rebuilding
the Hawks Bay Expressway. It's building back to be twice
a strong prospective flood to resilience. We're building back road
(11:00):
networks across the country. You think about State Highway twenty five.
The building resilience into everything this government does. We've put
a lot of money into over successive budgets. That's how
we roll.
Speaker 3 (11:10):
Now you mentioned this before, but i'll mention it again.
Speaker 2 (11:13):
Over two thirds of the total value of the projects,
those eleven thousand, odd, one hundred and ninety three billion
out of two hundred and seventy five billion, do not
yet have full funding commitments. Are we going to realistically
have to scale back on those promises and make some
really hard and fasting like a real priorities list as
(11:34):
to what we do, you know, say something like sorry,
the oldmate promised you this, but we're going to have
to cut it.
Speaker 3 (11:41):
We can't actually afford it.
Speaker 1 (11:43):
The plan really speaks to how can we fit this
all in to a capital budget that we can afford
since we're so you know, we're so far away from that.
And the answer to that is that we're probably going
to need all of these projects over over a long
period of time. But the question is really around sequencing, staging,
(12:03):
and phasing of these projects. And you know, yeah, like
we should be thinking about doing low cost interventions first.
Maybe we can get the safety improvements from significant investments
in whatever the road is by doing some other lower
cost things that allow us to you know, to keep
up on our hospital rebuilts, which frankly we're a long
(12:25):
way behind not so yeah, those are those are the realities.
But look, I would say that, you know, in truth,
truth be told, we sort of already know that, right,
Like I think New Zealanders know this where we're looking
at an enormous pipeline of projects, and on the other hand,
(12:46):
we're having conversations every day about cost of living. Productivity
levels are not going up, we are having to rebuild
assets because of natural disasters, and you know, you just
look at the Hawk's Bay, the MNA, We're two and
so on. These are real costs that are hitting us
right now. And so we say, you know, I don't
(13:08):
think this should come as a surprise, but you know,
for ASIAT owners and for investors around the country, what
we're sort of saying in the plan is let's optimize
around what we can afford rather than continually planning for
things we can't afford. And you know, getting frustrated at that.
Speaker 2 (13:28):
Yeah, So basically, all of these projects, like you said,
are needed, but there aren't really any massive kind of
vanity projects that we can chop or something, you know,
like we've just gone ahead and we've thought ahead too much.
Speaker 5 (13:41):
Maybe I think they're all legitimate needs out and one
of the key questions that we need to ask though,
is are there enough people to justify the enormous capital
upgrade in many places?
Speaker 1 (13:53):
And so you know, there might be certainly some people
that need the project right now, but for ASIAT owners,
they're thinking about, well, what is the right number such
that we have enough people using it so that we
can maintain, renew and replace this asset in a financially
sustainable way into the future, so that our cities and
regions are financially strong rather than in the position we're
(14:16):
currently in, which is, you know, financially very weak and
laden with a lot of debt.
Speaker 2 (14:22):
So that's only about thirty percent of the total value
of the pipeline relates to maintenance and renewals.
Speaker 3 (14:29):
How much should it actually be do you think.
Speaker 1 (14:31):
Well, when we're looking at all of the assets we own,
and so anytime you buy a new asset, you go
away and buy a car. Every year there's wear and
tear on that car, and it creates a sort of
idea of like what a useful, useful life of an
asset might be, but orders of magnitude. If you've got
(14:53):
sort of annual depreciation rates of two to three percent,
it means that you're replacing your assets every thirty, forty
fifty years. It's a slightly slippery idea, but the sort
of general nature of it is you know, I think
this makes a lot of sense if you're trying to
maintain a house or a car or anything. And so
when you do the math on this, for all of
(15:14):
the assets that we own and the way that we
see those assets wearing and tearing out over time, we
would expect that number to be in the order of
sixty percent.
Speaker 5 (15:25):
Right.
Speaker 1 (15:25):
For some assets, it's going to be and in some
places it's going to be higher. You can imagine places
that say, don't have significant population growth, those ones might
actually have a higher number on the totality for replacement.
And for places that are experiencing a lot of growth
so they're building out their networks for new people that
(15:46):
are coming into the city, you might expect that number
to be a bit lower. But on the whole, that's
what you would expect to see it to be across
the portfolio. We know we know that is not the case.
And the thing about that is that if we're not
renewing and maintaining and renewing our assets in an optimized way,
(16:07):
what we're actually doing is lowering service levels and kicking
costs to future generations. And the sticking point is this, Right,
if you don't keep on top of these things, the
cost to get on top of them in the future
is going to be higher.
Speaker 5 (16:24):
Right.
Speaker 1 (16:24):
If you don't sort of paint the weather boards on
your house repeatedly, eventually you're going to have to replace them,
and the difference between painting a weather board and replacing
one is significant.
Speaker 5 (16:35):
Right.
Speaker 1 (16:36):
So if we kick the can down the road on
this mundane maintenance thing, which doesn't hit the headlines very often,
what it's ultimately going to mean is less infrastructure services
over the long term, and that's going to you know,
that's going to be hurtful to our economy, but also
all of the social infrastructure that we need as well.
Speaker 6 (17:03):
Can't build everything all at once, but we need to
get the balance right, so we do need to be
investing and the stuff that's boring that people can't see.
One of the reasons as a country we've underinvested in
water infrastructure is pipes below the ground are not front
of mind for most people until they stop working, and
then suddenly everyone's like, why hasn't this pipe been maintained?
(17:23):
But maintenance also draws a lot of complaints. So if
you're sitting around a council table, you know that when
you rip up pipes. People complain about that because it
causes a lot of disruption, and so we've got to
tackle some of the boring stuff that can actually be
a bit annoying. Maintaining pipes is very annoying for people.
But it has to happen.
Speaker 1 (17:43):
Is it all?
Speaker 2 (17:44):
Because you know, governments of any day, any color, any stripes,
they just love unveiling a huge project. You know, it's
that cutting ribbon moment. It's promising these big promises and
these kind of announcements that are you know, much more
sex see them talking about how we're going to handle
your excrement or something.
Speaker 1 (18:03):
Hey, no, there's no doubt that's true. Right But the
moment that we take our services taken away from you,
you start to really understand the value of the existing
asset base. And I think there's, you know, arguably no
greater example of this right now than the wastewater treatment
issues that we're experiencing in Wellington right now. Right that
(18:24):
was an asset that you know a lot of people
probably wasn't front of their mind, hadn't even thought about it,
like what is this wastewater treatment plant? And these are
services that we came to rely on and they were
taken away, and you know that's that's hit heart. So,
you know, these issues of making sure that our assets
continue to function. Let me say that some of our
(18:47):
most important infrastructure is the stuff that's already around us.
It carries the highest cost benefit ratio. It creates the
most value. That's why it's there and why it was
an invested in. So anytime we make an investment, you know,
it's an obligation to keep that up. And I think
the plan argues that we need legislative tools to make
(19:10):
sure that this is occurring.
Speaker 2 (19:12):
And so how can we make sure that this is occurring?
I suppose it would be pretty important to get cross
parties support on this.
Speaker 1 (19:20):
I think that's right, and I for you know, I
would sort of make the case that for many kinds
of infrastructure, commercial infrastructure, this happens as a matter of
course really because if they don't maintain their assets, and
I'm thinking about transmission lines, distribution lines, airports, if they
don't maintain their assets, they will see their revenues to climb.
(19:41):
So when your revenue comes from the asset, you have
a very powerful incentive to make sure the assets well
maintained and functioning right.
Speaker 2 (19:49):
Well, people living their lives aren't enough of an incentive.
Speaker 1 (19:53):
While it's not so in your face, I think right,
because if you're seeing your service level decline for your
asset and it's hitting your revenue line, you know the
next day, it's very visceral. Right, So the focus on
that is just as an observation, I would find that
(20:15):
when that is the case, the focus on that is
a lot sharper. In local government, we see that they're
kind of in the ballpark. They're not that their renewal
rates are lower than what you would hope them to
be sort of I would say seventy to eighty eighty
five percent, but have been below one hundred percent for
quite some time. In central government, which is about forty
(20:39):
percent there or thereabouts of infrastructure that we rely on,
we don't always know the condition of it. There's not requirements,
you know, it's not standardized, and so we don't always
have a great picture at all. So the plan is
really calling this out and is trying to provide some
options and recommendations to really tighten tighten things up in
(21:04):
that area.
Speaker 2 (21:04):
And just lastly, page thirty one of the two hundred
and twenty five pages. I'm going to keep bringing that
up because I've had to read through them and everyone
has to know. But I saw that there's this poll, right,
So should we increase spending to improve infrastructure in New Zealand,
even if that means higher taxes.
Speaker 3 (21:26):
Or costs for consumers? That was a question.
Speaker 2 (21:29):
Twenty eight percent strongly disagree, tend to disagree, thirty two
neither here nor there, forty percent strongly agree and tend
to agree. Now, that is actually a lot more people
who either don't mind or strongly agree with that statement
than I perhaps would have thought.
Speaker 1 (21:47):
I think New Zealanders see the value of infrastructure, and
we make this point right at the outset. New Zealand
is among the highest spenders on infrastructure, and so we're
prepared to put money into it. There's no question about that,
I think. But I would make this comment. I think
New Zealanders want to see the value as well, and
so that is the sort of proposition to investors and
(22:09):
asset owners is show me the high quality projects that
are able to be done in a cost efficient way, right,
because the blowouts, at the end of the day, they
do have big implications. Right, if we're building hospitals at
two to three billion dollars, we're going to really struggle
to get the hospital infrastructure we need for an aging population.
So I think that's that's a it's an open door
(22:33):
to ask owners, but we need to do the basics
well and we need to have the good disciplines to
show that there's value in it.
Speaker 3 (22:39):
Thanks for joining us, Jeff, all.
Speaker 1 (22:41):
Right, Thanks Chelsea.
Speaker 2 (22:45):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage.
Speaker 3 (22:52):
At enzidhrald dot co dot nz.
Speaker 2 (22:55):
The Front Page is hosted and produced by me Chelsea Daniels,
Caine Dicky, our studio operator Richard Martin, our producer and editor,
and our executive producer.
Speaker 3 (23:05):
Is Jane Ye.
Speaker 2 (23:07):
Follow the Front Page on the iHeart app or wherever
you get your podcasts, and join us next time for
another look beyond the headlines.
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