The New Government’s Agreements

Last Friday, almost six weeks after election day, National finally came to an agreement with ACT and NZ First to form a government.

They also released the agreements between each party, and looking through them, here are the things I thought were the most interesting (and often concerning).

The Ministers

To start with, the announcement also included the ministerial positions that will sworn in today.

The one that will have the most impact on what we discuss is Simeon Brown, who among a few other roles, picks up:

• Minister of Transport
• Minister for Auckland
• Minster of Local Government

Then we have Chris Bishop, who gets:

• Minister of Housing
• Minister for Infrastructure
• Minister Responsible for RMA Reform.

And Matt Doocey picks up the Associate Minister of Transport role. The associate minister has often been the person who deals with things like the safety programme.

Shane Jones is also back in a role similar to the one he had in 2017-2020 as Minister for Regional Development. I include this as a good chunk of the investment from the then Provincial Growth Fund went towards transport projects – including investment in rail.

ACT

National’s policies understandably form the basis of the new government’s policy programme, but they explicitly call out a few changes made to these as a result of their deal with ACT.

• National’s Going for Housing Growth policy will now accommodate the ACT/National agreement to make the Medium Density Residential Standards (MDRS) optional for councils, and to consider sharing a portion of GST collected on new residential builds with councils.
• National’s commitment to supercharge electric vehicle infrastructure with a comprehensive, nationwide network of 10,000 public EV chargers by 2030 will specifically take into account ACT’s concern that there be robust cost benefit analysis to ensure maximum benefit for government investment.

Making MDRS optional is ultimately a way to try and kill it without actually removing it from the books. This is particularly concerning as all three major cities have spent a lot of time and public money to try and invent ways to avoid upzoning to not upset NIMBYs rather than embracing it. But given that the plan changes in response to the MDRS have already been notified and are largely in effect, will those councils go through the cost of stopping or changing them now?

This does also highlight the absurdity of Auckland Council leaving a huge swathe of the isthmus unchanged while waiting to hear about light rail, including the areas around existing rapid transit stations at Morningside and Kingsland.

Of course, all of this is about ACT continuing to argue for more regulation and fewer property rights for people when it comes to housing.

As for the EV chargers, this is unlikely to be a bad outcome. The private sector is already investing significantly in EV charger infrastructure, and National’s policy on this always seemed out of place.

On top of those changes are various ACT-specific policies they will pursue.

Tax

• Repeal the Clean Car Discount.

The Clean Car Discount has been extremely successful in encouraging the sale of lower emission vehicles, with those now making up around 12.5% of the light-vehicle fleet, up from 7.5% before it was introduced. Repealing this is very much a backwards step, and purely for ideological reasons.

Most of the items of interest to what we talk about sit in the Infrastructure and Housing section.

Infrastructure and Housing

• Institute long-term city and regional infrastructure deals, allowing PPPs, tolling and value capture rating to fund infrastructure.
• Introduce financial incentives for councils to enable more housing, including considering sharing a portion of GST collected on new residential builds with councils.
• Legislate to make the MDRS optional for councils, with the need for councils to ratify any use of MDRS, including existing zones.
• Work with Auckland Council to implement time of use road charging to reduce congestion and improve travel time reliability.
• Reverse speed limit reductions where it is safe to do so.

If all of this were implemented, it could potentially create a number of new revenue streams for councils to be able to fund their priorities, which is a good thing. The concern, though, would be if that then gets tied up in paying for big infrastructure projects – especially if those are made more expensive by using things like PPPs.

Given all of the housing that’s been built in Auckland in recent years, how about backdating that sharing of GST with councils a bit?

As for speed limits, Waka Kotahi and local government haven’t just been going around and arbitrarily dropping speed limits for the sake of it. Furthermore, as independent analysis has shown, speed limit changes on roads like the Napier to Taupo highway have created $93 million worth of benefits for only small costs – because journey times haven’t changed all that much.

One thing other thing that stands out is the lack of comment from ACT on ensuring transport projects stack up economically. There are a couple of mentions of policies needing full or robust cost-benefit analysis, including the EV chargers mentioned above – but there’s no call-out for the same approach to the billions of dollars that National have pledged for highway projects.

Public Service Delivery

• Immediately issue stop-work notices on several workstreams, including:
  • Auckland Light Rail.
  • Let’s Get Wellington Moving

I certainly won’t be mourning the end to the current light rail saga; the proposed tunnel option was absurd. Labour’s handling of light rail is one of the most frustrating and disappointing aspects of transport policy over the last six years. They were handed a scheme pretty much ready to go, and it would easily have been up and running by now had they not been distracted by dreams of building metro-style solutions.

New Zealand First

National’s agreement with NZ First also confirms that National’s policies form the basis of the government, and specifically calls out:

The Parties will also progress the following additional policies which are a priority for the National Party:

3. Build infrastructure with 13 new Roads of National Significant and four major public transport upgrades

The agreement also talks about NZ First’s priorities, and these are the ones that stood out to me.

Infrastructure, Energy, and Natural Resources

• Establish a National Infrastructure Agency under the direction of relevant Ministers, to coordinate government funding, connect investors with New Zealand infrastructure, and improve funding, procurement, and delivery to:
  • Prioritise regional and national projects of significance.
  • Facilitate or procure funding for regional and national projects of significance.
  • Procure from government agencies for appropriate Crown projects.
  • Oversee procurement from the private sector
• Prioritise strategic infrastructure to improve the resilience of heavy industry in New Zealand.
• Establish a Regional Infrastructure Fund with $1.2 billion in capital funding over the Parliamentary term.
• Cancel Auckland Light Rail and Let’s Get Wellington Moving and reduce expenditure on cycleways.
• Commit to building a four-lane highway alternative for the Brynderwyns and investigate the use of private finance to accelerate construction.
• Progress further work examining connecting the railway to Marsden Point and Northport from the Northern Main Truck Line.

On the first point: we already have an Infrastructure Commission, but this seems to suggest NZ First want them (or another government agency) involved in procurement too.

I also recall National regularly criticising the 2017-2020 government’s “Provincial Growth Fund”, which sounds very similar to this new “Regional Infrastructure Fund”.

Meanwhile, expenditure on cycleways continues to get blown way out of proportion. Despite all of the rhetoric and media articles about it, data from National Land Transport Fund shows that spending for walking and cycling in 2022 was less than $200 million – and nearly $60 million of that was spent by local authorities.

That’s out of nearly $5.5 billion in total transport spending, which means walking and cycling is about 3.6% of the transport spend. What’s more, much of the walking and cycling budget is currently going to a single project which is actually about protecting a motorway and rail line and just happens to have a cycleway on top.

Does an “alternative to the Brynderwyns” mean just that section, or the whole Whāngarei to Auckland corridor? Given the Warkworth to Wellsford section alone is now estimated at around $4 billion and there’s not a lot of funds in the transport budgets to pay for this (or even the debt on a PPP to build it) how far will this go?

Ensure all public service departments have their primary name in English, except for those specifically related to Māori.

Winston Peters has specifically called out Waka Kotahi over this, saying “How can you have a waka on the road?“. What’s notable about this is that the transport agency changed its logo to make Waka Kotahi more prominent in 2019, and began using the name Waka Kotahi in communication from March-2020 onwards, while Winston was Deputy Prime Minister.

Lastly, for all that is in these agreements, it remains to be seen how much actually gets achieved. Many of the big infrastructure projects on National’s list will require many years of design and consenting from an industry that is already at capacity with current and planned projects.

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