Investment Falling Well Behind Australia

NZ's Infrastructure Investment Falling Well Behind Australia

Media release, 25 August 2005

Australia is making much better progress than New Zealand in redressing its infrastructure deficit, says NZCID Chief Executive, Stephen Selwood. In Australia, major investments are being made in energy supply, railways, roads, health facilities, water treatment plants, stadiums, schools, emergency services and prisons. This kind of investment is helping to drive Australia's continued prosperity, growth in wages and improved living standards.

For example, by the end of 2008 the NSW and Victorian governments will have financed $A10 billion via tolls to build 170 kilometres of motorway in Sydney and Melbourne alone (see list of projects on the attached Table 1).

That's equivalent to the entire length of New Zealand's incomplete motorway network.

All of these major projects are being completed in less than 5 years. They are using tolls to fund the roads thereby releasing public funds for investment in public transport and alternative transport modes. In New Zealand, smaller projects take decades to complete and public transport continues to be under funded, despite ever increasing funds being allocated.

It's like we've become inculcated with short-term piecemeal development of our national infrastructure. We try to eek out every cent we can from a limited public purse, whilst losing $billions in lost opportunities.[1]

Ironically, the latest national state highway capital expenditure forecast actually projects a decrease in capital spending from 2007 to 2010 as the following graph shows.

Source Transit NZ State Highway Forecast 2005/6 to 2014/15 Update at August 2005. What's needed in New Zealand is a complete change of paradigm. It doesn't make sense to try to pay for major infrastructure development through taxes on a pay as you go basis. We'd be much better to borrow the money needed to build the infrastructure sooner.

We need to look out 20 years and develop an infrastructure plan which specifies exactly what projects will be completed by when, how they will be funded. We need parallel legislative change to streamline the Land Transport Management Act, RMA and political decision making processes.

There must be a clear commitment by Government and its respective agencies to work collaboratively with industry and the private sector to implement the programme to plan, with clear definition of risk sharing, responsibilities and accountabilities to make sure that happens.

That's what the Australians are doing. New Zealand should do the same, Selwood says. See table of Australian urban roading projects below. Contact: Stephen Selwood Chief Executive, NZCID 021-791-209 (mobile) Table 1: Sydney and Melbourne Urban Motorway Projects 1988 to 2008

Roading Project Length km A$m Value Start (including environmental approval processes) Finish

M4 Sydney 12.5 246 1988 1992

M5 Sydney 21.0 380 1988 1992

Sydney Harbour Tunnel 3.0 685 1988 1992

M2 Sydney 20.0 644 1994 1997

Eastern Distributor Sydney 6.0 700 1997 1999[2]

Cross City Tunnel Sydney 2.1 680 2000 2005

Westlink M7 Sydney 40 1,500 2001 2006

Lane Cove Tunnel Sydney 3.6 1,100 2002 2007

Melbourne City Link 22.0 1,780 1996 2000

Melbourne Connect East 40.0 2,500 2005 2008

Total 170.2 10,215

[1] A recent study conducted in NZ by Australian consultants Allen Consulting Group in association with Infometrics in NZ concluded that the economic benefit resulting from a representative sample of roading projects across the country would result in a $1.5 billion ANNUAL increase in GDP.

Allen estimated that the return to Government would exceed the cost because the increased tax take from the resultant economic growth would exceed the cost of projects within a relatively short time. [2] It took two years to construct the link between the Sydney airport and downtown Sydney.

ENDS

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