ReBuilding Nations Symposium 2020 (Infrastructure NZ Conference opening session)
Tena koutou katoa and thank you for the opportunity to be with you today.
Can I acknowledge Ngarimu Blair, Ngati Whatua, and Mayor Phil Goff for the welcome.
Before I start with my substantive comments, I do want to acknowledge the hard work it has taken by everyone to ensure that we can meet together today. Before 2020, we would have called this a conference.
Now we call it a mass gathering, and we are amongst only a few countries in the world that is actually having them. I don’t take that for granted, and I know none of you do either.
But that is not to say that our path here has been simple, or that the job is done. COVID will be with us for some time to come. We will need to be vigilant for some time to come. But despite that, we cannot afford to wait for things to get easier before we start our recovery. Our response, and our rebuild need to happen at the same time. And that is exactly what we are doing.
In fact, the road to recovery will need to take place at the same time as our ongoing response. That’s why we have already laid out our plan, and we’re now getting on with it.
It’s a plan that has five elements. Many of you will have heard me repeat them over the last few months – elections do tend to turn politicians into broken records. It includes:
- Investing in our people
- Job creation
- Supporting our small businesses
- Backing our exporters
- Preparing and investing in our future
Under each of these headings lies specific policies and programmes. Things like the wage subsidy which ensured 1.7 million New Zealanders were supported to stay in their jobs. The small business loan scheme which I note has a high uptake from businesses in the construction industry, and is designed to support smaller operators through this period of uncertainty, and our free trades training and apprenticeship support programme, which is seeing a significant lift in those moving into vocational education.
The early signs are that our plan is making a difference. In a world where there is no cost free response to COVID 19, we are certainly minimising some of the impacts as best we can.
For example, as you will have heard during recent weeks, unemployment at 5.3% is well below the more than 9% prediction we faced at the budget, and puts us below Australia at 6.9% and the OECD average of 7.4%. There are other green shoots of recovery.
Merchandise exports since 1 February were higher than in 2019, we saw expansion in the manufacturing and services sectors in September and consumer and business confidence are holding up.
But, there is much more to do. Especially on the last area of the plan that I mentioned – preparing and investing in our future.
I don’t need to tell you all that any recovery plan for New Zealand cannot, and should not, be a return to the status quo. Because when it comes to the status quo and infrastructure, we have long struggled.
The World Economic Forum found in 2019 that New Zealand ranked first out of 141 economies for macroeconomic stability, third for the quality of our institutions and fifth for our labour market - but 46th for the state of our infrastructure.
And while estimates vary, prior to Covid-19 our infrastructure deficit has been estimated to be between $25.9 and $75 billion. That’s equivalent to the cost of up to 17 Auckland City Rail Link projects.
Those numbers don’t tell the full story though. They’re not just numbers that make for an interesting report. They are having an impact on people’s daily lives.
Whether it’s the 30,000 houses Infometrics thinks that Auckland is short of, the lack of adequate access to safe drinking water, or significant congestion issues that contribute to poor productivity.
The impact on our day to day lives is clear. And that’s why our recovery plan cannot and is not about a return to the status quo. It is about taking a crisis and turning it into a once in a life time opportunity to build back better. To address decades of under investment. To build the infrastructure the next generation needs and deserves. And to do it together – with local government, the private sector and with iwi.
But first, we need to have a very honest assessment of what has led us to where we are today.
That assessment will not provide us with one simple silver bullet that if we unleash will resolve all the problems successive governments have faced. I can assure you, politicians are virtual magnets when it comes to silver bullets – if there was one, we would have found it by now.
First, as a nation we haven’t been ones for long term planning. It’s probably cruel to recall that we were the city that built a harbour bridge and less than 10 years later had to clip on some extra capacity.
Local Government would also probably argue that our regulatory environment creates a disincentive to pursue large scale or ambitious projects, and that’s before you factor in the funding constraints of an ever decreasing rating base in some of the areas where there are critical infrastructure needs.
We then have the skills deficit, a procurement environment that has led in some cases to a race to the bottom, challenges with the RMA, and the need for a pipeline of work to maintain capacity in the construction industry. Add that altogether and you can start to see why we have struggled.
But you can also see the solutions.
This list of challenges is why we created the Infrastructure Commission, to provide the long-term planning that we hope overcomes the short political cycles.
It’s why we worked collaboratively on the Construction Sector Accord to overcome some of the issues around procurement.
It’s why we have moved to a multi-year capital allowance to make sure we are moving past an annual Budget process for larger scale and longer term investment plans for areas like health and education.
It’s why we have supported local government to have greater flexibility in the way they fund the cost of infrastructure over the lifetime of an asset.
It’s why we have embarked on a massive piece of work to reform our resource management legislation. It’s why we have tried to move beyond the boom and bust cycles for residential building through government backed underwrites.
And critically, it’s why we have worked so hard to support skills and trade training, with incentives that support employers to keep on apprentices, and wage subsidies to help take them on too.
We will all be amongst the first to admit that in some of these areas, it’s early days. The work needs to bed in, and in some cases, the work will be ongoing. My hope is that you’ll see from the list an absolute awareness from us of the issues you have been raising directly, and a commitment to resolve them.
In the meantime, we know an ongoing programme of work will also drive change, and there is no shortage of that.
In the last term, we set out an unprecedented infrastructure programme. Even before COVID we were determined to address that long-term under investment in infrastructure, and to drive outcomes that yes were about jobs, but were also about greater public transport options, rebuilding public services, and generally contributing to our decarbonisation goals.
In February, approximately a lifetime ago, we announced the New Zealand Upgrade Programme (NZUP) and that we are investing $6.8 billion in transport projects to get our cities moving and boost productivity in the country’s growth areas.
The programme will play a vital role in helping to stimulate the economy, providing a pipeline of work for the construction industry and professional services sector for the next decade. But it will also support a shift to greater transport choice – with a balanced investment in public transport, roads and walking and cycling.
Add to that the Auckland Transport Alignment Project, Let’s Get Wellington Moving and the increase in the National Land Transport Programme.
Then there’s the Education Growth and Redevelopment Programmes – Minister Hipkins will be sharing more information about this tomorrow so I don’t want to steal his thunder but I don’t think he’ll mind if I share that it’s a large and tangible demonstration of this Government’s commitment to provide new and upgraded classrooms that will obviously benefit students but also provide much needed construction industry jobs.
The Health Capital Programme – estimated to be $3.9 billion across the next four years will see major projects like Dunedin Hospital – the biggest hospital build in the country.
The New Zealand Defence Force has a $4.5 billion dollar capital programme.
In the housing sector we are working to address both under supply, and inequality, and have committed to 18,000 additional public and transitional houses by 2024.
And for local government, we have a $760 million investment in three waters to help councils upgrade water services across New Zealand
Not all of our investment is large scale – we have been mindful of spreading opportunities across the country. The COVID response programme also included investment in community infrastructure such as the Blenheim Library/Art Gallery, Kaikōura Aquatic Centre, and the Auckland City Mission’s New Ground building which will provide detox beds and housing from some of our most vulnerable kiwis.
All of this is before you even consider the areas where we are embarking on business cases, such as the NZ Battery Project. The NZ Battery study we have funded is looking into how we can store renewable energy for those dry hydrological years, and beyond that, how we can get our electricity grid to 100% renewable energy.
Investigation of pumped hydro was a key recommendation of the Interim Climate Committee to help us meet our climate change goals. Additionally it will create much-needed jobs.
All up, this amounts to a plan for infrastructure that demonstrates just how central it is to our rebuild, to our recovery, to building back better.
We have a huge opportunity –– and I know you in the room here today are just as committed as we are to working together, to not just surviving through this period, but to finding a way to thrive and leave a legacy for our country for our children and grandchildren.
So let’s get on with it.