New Zealand paying premium for big-ticket projects

Transmission Gully. (Source: 1News)

Budget blowouts and lengthy delays have become part and parcel of just about any large-scale project in Aotearoa, and a new report out today confirmed the country’s approach to big builds is inefficient and expensive.

The research by the Infrastructure Commission Te Waihanga compared how New Zealand’s infrastructure costs stacked up against other high-income countries.

It showed the cost to build railway stations, power lines, wind farms and hospitals were on par.

But while this country’s construction workers were paid less, big-ticket items like motorways, tunnels and underground rail came at a premium.

The commission’s director of economics, Peter Nunns, said that was partly because equipment, land and construction materials were pricier here.

But he said it was made worse with poor planning.

“We might want to do the work to figure out all of the fixes that we need across the network, and then sequence them out over a multi-decade period, so that we could just do them in a predictable, stable way, set up a bit of a machine to keep turning them over and learning from those projects and getting better at them.”

Transporting New Zealand chief executive Nick Leggett agreed and said the government must ditch its tendency towards patch-up jobs.

“New Zealand I think under-specs its infrastructure, it tends to react and build, rather than planning for that 50-to-100-year horizon.”

Leggett said that has led to the dire state of our roads.

Waka Kotahi is carrying out its biggest road repair season yet.

“Our roads are openly telling us that the construction and the methods of construction and design are not up to the standard that New Zealanders would expect,” Leggett said.

The report also said the government must get better at procurement.

New Zealand Council of Trade Unions economist Craig Renney said Aotearoa does not have the skills and expertise needed for the bursting pipeline of complex, large-scale projects.

“We don’t have a lot of companies, if any, who can actually undertake that work.

“We tend to import those companies as and when we need them.

“That’s how we end up with overseas contractors building Transmission Gully, for example, or Italian contractors who are building the central interceptor in Auckland.”

That made things even more expensive – but Renney said it didn’t have to be that way.

He said NZCTU had been campaigning for the return of a Ministry of Works.

“So we can actually become a much more sophisticated procurer and deliverer of these projects, so we’ve got that capacity in hand in New Zealand, and we can deliver the kinds of complex, difficult projects that we know we’re going to need in the future.”

The report noted there were some factors boosting costs in Aotearoa that were impossible to get around, like the country’s vulnerability to earthquakes and eruptions.