There has been a lot of noise recently about concerns there’s no ‘pipeline’ of future transport projects coming online within the next few years, especially after the government moved away from a few very large roading projects while still struggling to get light-rail up and running. For example:
Infometrics economist Brad Olsen said the transport spending was a “brake on the economy”.
And Treasury agrees lower spending is concerning.
It said industry was concerned about the 12 to 18-month stall in construction projects while the new Government was revising its transport priorities.
There are 12 large roading projects which Treasury says are “market-ready”, but these have been effectively scrapped under the new Government’s pivot away from highway investment, although only two of the ten Roads of National Significance were fully funded before the election.
Treasury is concerned that when the last of National’s projects wrap-up, there won’t be any new projects ready to replace them.
It said around $4.8 billion worth of “major projects” are due to be completed in the next two years, but there are only $1 billion worth of new projects getting ready to start.
That means there’s $3.8 billion worth of construction projects that aren’t ready to go when the current round finish.
This means the workforce on those projects may leave the construction industry, or move offshore, possibly to Australia where the Government has announced a $100 billion transport infrastructure package.
Olsen said this was particularly concerning, because when the new Government’s projects were finally at the stage they could be built, there might not be the workforce ready to build them.
“Noone will be ready for it,” he said.
If the government wasn’t stupidly delaying light-rail by entertaining a laughable proposal from the NZ Super Fund, much of this issue would likely go away. But nevertheless, there’s another gigantic project that is just about to ramp up into construction that should tide things over until big rapid transit projects like light-rail, Pukekohe electrification and the main part of the AMETI Eastern Busway are ready to go. That project is, of course, City Rail Link.
Perhaps because City Rail Link isn’t being funded from normal transport budgets it gets missed in some of these typical calculations. Bizarrely it doesn’t seem to show up at all in Treasury’s infrastructure pipeline. But City Rail Link is a huge project – with a total investment of over $4 billion and some truly massive yearly spends over the next five years as it’s being built. This was highlighted a few months back when Auckland Council gave the project its final funding approval:
Just eyeballing these totals, it seems like the total spend for the four years starting in FY20 will be $400 million, $800 million, $1.55 billion and $850 million. That’s around $3.6 billion of investment over the next four years.
In fact, CRL alone will require larger investment for the three years from 2021 to 2023 than Auckland Transport’s typical annual capital budget across everything. Investment in the peak year of FY22 will in fact be higher than the total investment into new state highways across the entire country in most recent years.
Furthermore, it’s not like the spend from the normal transport budget has just disappeared. While NZTA have been completely hopeless in recent times when it comes to progressing anything and seem to be tied up in knots by their business case processes, major initiatives like their Safe Network Programme – which involve investing $1.3-1.5 billion over the next three years – are starting to ramp up. So it’s not like the money isn’t being invested – it’s just going into different kinds of projects.
All this said, it seems like the next few years are likely to be a golden opportunity to make transformational investments to New Zealand’s transport infrastructure through taking advantage of very low interest rates for borrowing. There are a lot of amazing and desperately needed investments out there, especially the huge work required to make our transport network safe and the up front investment in high quality public and active transport networks across New Zealand’s large and fast-growing cities that will be essential if we are to decarbonise the transport system and avoid future gridlock.
So we can and should do more, but it’s disingenuous to say that there isn’t a future pipeline of transport work. It might be different to what we’ve built before and it might not be enough, but transport investment is still higher than it’s ever been (especially once you add in money from the Provincial Growth Fund that’s going into transport projects like the North Auckland Line upgrade). And the biggest transport project the country has ever seen, in the form of City Rail Link, is just starting to ramp up.