3rd March 2009

Infrastructure industries need to know where they are going

IPENZ considers the establishment of a national infrastructure unit in Treasury and the intention to develop a 10 year infrastructure plan as helpful, but asks does anybody know where is it all going?

“The announcement by the Government of new rail carriages and locomotives is commendable and while this is welcome, to a large extent this is just renewing existing aging assets – it’s business as usual. It tells us nothing about Government’s future direction for rail,” says Tim Davin, Director of Policy, for the Institution of Professional Engineers of New Zealand (IPENZ). “The area that is of concern is the infrastructure unit will rank projects on their economic benefit – but those in the industry need to know more– they need to know what is the overall strategy.”

“IPENZ believes there are some very real risks in the creation of an infrastructure unit as it could lead to a focus on infrastructure itself without recognising that infrastructure is but a means to an end. For example transport infrastructure is about providing for the movement of people and freight to achieve economic and social outcomes. These types of general objectives are usually expressed in the form of a transport strategy which also sets out more detailed objectives and measures,” says Mr Davin.

“Ranking projects on their economic merit is helpful – particularly if they are ranked across different types of infrastructure. But building projects solely on the basis of their economic merit will be a return to the bad old days of building New Zealand’s roading network on a benefit cost ratio basis, project by project, without any idea where it was all heading,” he says. “This is what contributed to Auckland’s transport woes where many congestion projects didn’t rank high enough against safety projects, and the larger projects were not built at the expense of the smaller, higher benefit projects.”

“The economic benefit and ranking of projects is valuable for deciding the order in which the transport network is built and its sequencing. In the current recession this is particularly important – but it shouldn’t decide the overall shape of the network. In times such as this, we have to recognise that we will have to get there more slowly,” he says.

“IPENZ want to know where and what is this government’s overall transport strategy? There are rumours that this Government will place a greater emphasis on road over rail – what does this mean for the freight industry, manufacturers and the broader economy?”

“Taken more broadly, what is the government’s strategy for other forms of infrastructure? To achieve economic goals the golden triangle of Auckland, Waikato and Tauranga will be need to be serviced by transport, electricity and broadband. To achieve social and health outcomes in our needy communities, we need to understand where the underlying infrastructure will be needed.”

“These priorities can only be decided by a Government with an overall vision for the outcomes they want to achieve, and the roles and strategies of each infrastructure sector to contribute to those outcomes. New Zealand needs some strategic thinking – and not, in times like this, to resort to simply picking projects on economic merit.”

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