THE STATE OF OUR SOCIETY IS REFLECTED IN ITS INFRASTRUCTURE.
Successive government housing, spatial planning and infrastructure policy flip-flops have highlighted the fragile state of our democracy and the shallowness of party ideology. There is no better example than the need to plan, fund and build the social and economic infrastructure required for the development, improvement and protection of society and our physical and natural environments — and the complete absence of pan-political, long-term and financially sustainable policies, plans and strategies to realise these goals.
A lot of our infrastructure is visually uninspiring (although it needn’t always be) or hidden below ground and citizens going about their daily lives just expect it to be there and work — the water and wastewater networks, energy networks, communications networks, road and motorway networks, public bus and train networks, right through to our schools and hospitals. But without good governance, foresight, planning and ongoing investment, public infrastructure systems will soon deteriorate and fail. Such systemic failure is visible in health sector underinvestment and long hospital waiting lists, clogged motorways, potholed roads, the absence of light rail networks and temporary pre-fabricated school classrooms. A recent series of water, wastewater and stormwater failures have metaphorically exposed cracks in our infrastructure strategies and funding, as well as in the institutions and agencies charged with their oversight and management, and highlighted a flacking veneer of local and central government accountability.
The Sixth National Government’s ‘Going for Housing Growth’ agenda — conceived and implemented in the absence of the necessary infrastructure planning, funding and capacity to support it — is just one more example of the disconnect between policy and reality. Compounding this disconnectedness the Sixth National Government has at the same time dismantled the resource management legislation originally conceived to mediate the competing interests of commerce and community and proactively diminished the role of our municipalities whose very existence was to ensure local needs were effectively heard, realised and managed. The democratic checks and balances embedded in the Resource Management Act has instead been replaced by ideologically-based legislation prioritising private property rights above all.
The OECD (2021) offers a useful definition of what social and economic infrastructure is, as follows.
“Infrastructure is the set of fundamental facilities and systems that support the provision of goods and services essential to enable, sustain, or enhance societal living conditions and protect the surrounding environment from erosion and other disasters that reduces the usefulness for economic purposes. The set of fundamental facilities and systems are composed of public and private physical structures as well as intellectual property products supporting the effective operation of these structures.The following functions are considered to be provided by economic infrastructure: transport; utilities (provision of energy, water, and sanitation and waste management); flood protection and water management; and IT and communications. Social infrastructure relates to the provision of the following functions: education; health; public order and safety; culture; and recreation.”
The OECD considers the provision of such economic and social infrastructure as a pre-condition for enablement of affordable housing. In assessing and understanding localised economic stimuli and social infrastructure pre-conditions for urbanisation the OECD also highlights the important role of municipalities which are ideally positioned at the interface between top-down state policy and bottom-up local needs.
A key factor in the success or otherwise of current, or future, Government housing policy will be the extent to which the state proactively facilitates New Zealand’s infrastructure strategy and needs through current and new direct intervention mechanisms — including dedicated funds, long-term and low-cost loans, and state guarantees. For funding certain categories of infrastructure such as new motorways and tunnels, perhaps special purpose vehicles (SPVs), private-public-partnership (PPPs) and even purely private structures, may be appropriate. However, such private sector funding models based on cost-shifting from the for-profit housing developer to the occupier are devoid of any notion of collective social responsibility and directly conflict with the lowest-cost objectives of not-for-profit housing providers. They are simply loading on costs within a housing value chain already very overloaded.
To avoid further burdening our failing and under-funded public infrastructure, a national spatial development strategy needs consideration based on sustainable growth and fundable infrastructure — and which has pan-political agreement (central and local government) and, importantly, community consensus.
Facilitating densification of our major urban centres in advance of the necessary infrastructure and related funding to support this smacks of poor public policy and will entrench the infrastructure investment catch-up loop we're in. For example, the Auckland Council Unitary Plan was preceded by years of planning, budgeting, independent expert input, extensive analysis, public submissions and judicial review. It was informed by other policy documents including the Long-Term Plan and ratepayer consultation regarding future rating costs. Where and how urban housing might occur was meticulously detailed. The MDRS (densification) idea was informed by econometric modelling and densification could occur anywhere. It epitomises laissez-faire political thinking, autocracy and poor strategic planning.
Questions were left unanswered as to where, how and when the envisaged housing densification would occur in the target high growth cities, what the unplanned infrastructure implications were and who pays for this. PPPs might be relevant in the context of a large-scale greenfield subdivision — but it is difficult to see how PPPs can apply to dispersed medium density housing as per MDRS type policies. That means additional infrastructure capacity funding would have to either come from individual property developers in the form of financial contributions levied against their projects (which many developers oppose), or municipal funding paid for through rates increases (recently capped here by central government). Whatever approach is adopted, it is just another cost in the value chain. And what is the point of densification if it is simply adding a whole lot more unaffordable owner-occupier housing at full market prices?
Government could of course contribute directly to shortfalls in local authority infrastructure funding and there are plenty of precedents for direct taxpayer funding of local economic initiatives. Examples that come to mind include the New Zealand Screen Production Rebate for investors in Hollywood and other film production companies, the owners of Rio Tinto for aluminium production in Southland which has been subsidised by taxpayers since 1971 in the form of very cheap electricity, and more recently the (many commercial) beneficiaries of the Sixth National Government’s proposed LNG import and storage facility in Taranaki. It seems that taxpayer-funded grants and subsidies etc. are OK to support private sector screen and aluminium production, and continued fossil fuel use, but not for the delivery of essential infrastructure or affordable housing.
The 2021 report prepared for the New Zealand Infrastructure Commission estimated the deficit in catch-up and future funding of infrastructure at ~NZ$244 billion with ~NZ$1 trillion required over subsequent years to keep up with upgrades and renewals. Those numbers are eye-watering but in essence they are meaningless in the absence of the required pan-political agreement, policies, plans, strategies and institutions needed to realise the objectives. By way of example, policies and plans covering; national and regional spatial and resource management, population growth, migration demands, public infrastructure funding, productivity improvements, skilled workforce gaps and availability, materials supply chain availability and capacity and, importantly, non-market alternatives.
Frankly the state of our infrastructure and our spatial planning legislation and systems is a mess. We have a lot of work to do which will only happen with inspired leadership and pan-political agreement. That is absent and remains our biggest and most urgent challenge!
© 2024-2026 Níall Mayson. All rights reserved.