CCNZ update

CCNZ Comment: Digging into Government’s transport investments

Last month (May) this column highlighted the changes in investment signalled in the Draft Government Policy Statement on Land Transport. By PETER SILCOCK

For members who do central or local government transport work understanding the changes is critical to your future so it’s worth a bit of digging.

While, the overall investment increases substantially over the next three years it is important to understand the changes in the type of work which is being prioritised and funded.

The graph below shows the investment information from the Draft GPS. The highlights are the major new bubble of investment in rapid transport, the dwindling investment in state highway improvements and the increased investment in local road improvements.

While we are still waiting on the final version of the GPS there is unlikely to be substantive changes with the government strongly committed to changes embodied in the plan. CCNZ submission has asked for some important changes and we are hoping that the final document will;

  • Make the retention of industry capability and capacity a priority within the GPS by accelerating construction-ready projects to fill the gap in the construction work pipeline. This will support the civil construction industry’s transition to the new priorities and work levels.
  • Provide a more consistent investment in rapid transport over time, rather than the current three to four-year bubble, which will enable contractors to develop the New Zealand based skills and capability to deliver this work.
  • Further increase the funding ranges for State Highway Maintenance to address previous under investment and the goals around road safety.
  •  Support NZTAs leadership in construction and maintenance industry health and safety initiatives and improvement in local      and central government procurement practices.

Over the past month NZTA has been very busy interpreting the changes and communicating to contractors about them.

I want to congratulate the Agency on the effort it has made to quickly revise its Draft Investment Assessment Framework and develop the Draft Transport Agency Investment plan 2018- 2027 which sets out their investment approach and proposed programme of works across all types of land transport.

All be it still draft (as we wait for finalisation of the GPS), the work they have done gives contractors visibility of the projects that will proceed, and which ones are still being re-evaluated. It is well worth having a look at the Investment Plan (Just Google “NZTA TAIP”) which provides a detailed region by region commentary, investment levels and listing of proposed jobs both large and small.

It is also encouraging to see the positive response to CCNZ’s advocacy around consistency of work and the emerging hole in our infrastructure pipeline. NZTA are already looking at opportunities to accelerate some key projects to fill that gap, including Auckland’s State Highway 20B (Puhinui Road to the airport) and the new Manawatu Gorge route.

This is a good start and we hope to see other projects accelerated.

The gap has been created by the eight months pause where major infrastructure projects have been cancelled and the entire programme put in limbo awaiting the redraft of the GPS and ATAP documents. As a result, we are seeing a significant gap emerge in the infrastructure construction pipeline as state highway improvement projects come to an end and we wait for construction of the large public transport jobs to start.

Many of these new public transport projects are only just getting started and will take several years to progress through the process of funding, financing, design, property procurement and consenting. Construction is effectively at the tail end of the investment.

The challenge for the government and the industry is how we retain, transition and develop the people that we will need to deliver the future level of construction work signalled in the GPS and to be funded by the $1 billion per annum Provincial Growth Fund?

There is a significant infrastructure boom occurring in the eastern states of Australia. If the industry is unable to provide the certainty of future work to our people, we will lose them to Australia and it will be very difficult to attract them back when our construction needs increase post 2021.

A high level of rapid transit investment is signalled in the Draft GPS over a very short period. This bubble of investment peaks at over $1 billion pa in 2021/22 and then drops to less than $100 million pa by 2023/2024.

It is difficult to see how the industry will ramp up our rapid transit capability and capacity for such a short period of time. The investment in plant and people in the construction industry is long term by nature. The short peak will create resourcing difficulties and will most likely need to be met from off shore as our need is not long enough to justify the investment in the development of our own home-grown capability and capacity.

CCNZ has also advocated for the need for a greater level of investment in our state highway maintenance. Over recent years the investment in state highway maintenance under the “Network Outcomes Contracts” (NOC) has significantly reduced. This reduction has had a serious impact on the condition of our state highways and we believe that in many cases the “savings” have had a negative impact on road safety and were short term because maintenance has simply been deferred.

The state highway maintenance budget also covers emergency work which seems to be on the increase because of climate change impacts.

The deteriorating condition of state highway roads due to under investment, more frequent storm events, increasing costs of people and resources (e.g. aggregate and fuel) will result in a significant increase in maintenance costs.

In addition, over the next five years many of the NOCs will come back to the market and there is likely to be some readjustment. The industry now understands much better what is required and the costs associated with these contracts.

The proposed maximum funding range for State Highway Maintenance increases by a total of 10% over the next five years.

If the government is serious about safety, then that increase is totally inadequate.

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