Better scrutiny – but a RoNS-sized loophole?

Better information and advice about infrastructure projects is needed but it won’t do much if government ministers don’t listen to it.

Some of the recommendations of the recently released National Infrastructure Plan revolved around providing better scrutiny over infrastructure projects and yesterday at the Infrastructure Commission’s conference, the government announced changes to how that happens.

The Government is improving how it selects infrastructure projects by making a series of changes to the Investment Management System, to ensure infrastructure meets New Zealanders’ needs, represents value for money, and can be successfully delivered, Infrastructure Minister Chris Bishop and Finance Minister Nicola Willis say.

The changes include transferring responsibility for infrastructure project assurance from The Treasury to the independent NZ Infrastructure Commission.

“We’re improving the information Ministers receive and making sure there is proper scrutiny of major projects to support Ministers in making good investment decisions on behalf of New Zealanders,” Ms Willis says.

I can certainly see some benefits in shifting this from Treasury to the Infrastructure Commission. Though it’s hard to see how it’s going to make all that much difference when often Ministers ignore advice and push ahead with pet projects anyway.

“Since coming into Government, the Minister for Finance and I have been concerned by the quality of information provided on infrastructure including what we own and its condition, the forward investment pipeline, assurance on projects, and agency performance.

“When it comes to assurance, there are multiple project review tools across the investment system that serve slightly different purposes and have different assessors, information requirements, reporting formats, and outputs.

“However, none of these tools provide Ministers with unapologetically strong, clear, and actionable assurance that is focused on substance as opposed to bureaucracy, so that we can make well-informed investment decisions.

“What ministers need is clear, frankly expressed ‘go/no go’ expert advice on each project.”

“Instead, the current state allows investments to move through the system and lets bad projects gain momentum – until it’s too late – wasting tens or hundreds of millions of taxpayer dollars on Business Cases and early design and feasibility on phantom projects.

From what I’ve seen over the years, a big part of the problem with the advice ministers get, even from somewhat independent agencies, is that the advisors are always trying to appease ministers, and providing advice that says a campaign promise is impractical, undeliverable or unaffordable can be career limiting so just doesn’t happen all that often. Ministers are often the ones pushing the hardest to get bad projects through the system.

It’s therefore hard to see how this change will provide all that much difference. Real reform would involve shifting funding decisions away from ministers.

Even if this works as intended, will it hold NZTA more accountable and will it tap the brakes on low-value projects, like the Roads of National Significance? Unfortunately there’s a hole in the plans big enough to drive multiple trucks through. This was highlighted by Bishop in his speech at the conference.

I know people will ask if this independent assurance applies to NZ Transport Agency projects.

The answer to that is yes, under certain circumstances. Independent assurance will apply to NZTA where funding for a project is sought from central government, outside of the National Land Transport Fund (NLTF). This goes for other entities too.

This suggests all the government needs to do is provide additional funding to the NLTF i.e. top it up with Crown funding that would otherwise go to other worthy causes – something they’ve been doing a lot of in recent years – and they can bypass this new oversight process. That seems awfully convenient when they’ve got a massive suite of low-value projects they want to force though.

There are a few other interesting comments in his speech:

Before wrapping up, it would be remiss of me not to address the Strait of Hormuz sized elephant in the room.

The conflict in Iran has obviously impacted the transport portfolio.

Top of mind for me are a couple of things including Public Transport (PT), and the Roads of National Significance programme.

On PT – 80% of New Zealand’s bus fleet is diesel. So, in the context of diesel prices going through the roof, this has a flow on effect to the costs of providing PT.

We are working closely with Public Transport Authorities around exactly what those cost impacts are, and whether the Government needs to provide additional support.

On the revenue side of things, people are driving less – price is working, price is the great rationing mechanism – and people are buying less fuel, so less revenue is flowing into the National Land Transport Fund.

Providing additional support to PT would be a smart thing to do. An even smarter thing would be bring back funding to help transition all public transport to using electric vehicles.

As for the RoNS programme:

I’ve also been upfront that the 12-cent increase in petrol tax set for 1 January 2027, is unlikely to go ahead.

This combination will affect funding and delivery timelines for future transport projects. That’s just reality.

Before the conflict, we were already in a challenging and constrained funding environment as outlined in the Plan. The conflict has made a difficult situation worse.

We are working hard on a prioritisation exercise.

There are 17 Roads of National Significance we are committed to, plus progress on the Second Harbour Crossing, plus progress on projects like North-West Rapid Transit and the Airport to Botany Busway.

These can’t all be built at once – that was never going to happen. And they can’t all be funded at once. So, they were always a long-term pipeline of projects.

So, we are just working on a prioritisation exercise around what the sequencing looks like over the next 20 years.

Some projects are ready to go, others will be ready in the next three to five years, and others are off into the distance.

Bishop has been talking about this prioritisation exercise for a long time. I appreciate there’s likely a lot going on to inform it but I could also imagine that the biggest blockers to a rational prioritisation might just be the other ministers around the table.

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