Infrastructure challenges must be addressed

By Alan Pollard, Chief Executive, Civil Contractors NZ

The New Zealand Infrastructure Commission released its 30-year infrastructure strategy last month. It is sobering reading. The report highlights that we are facing serious infrastructure challenges.

The population is expected to grow to 6.2 million or more over 30 years with half of the population living in five major centres.

The average Auckland commuter spends more than five days each year in traffic; there is a 75 percent chance of an Alpine Fault earthquake by 2070; 115,000 more homes are needed to fix the current housing crisis; and $5 billion of council infrastructure is exposed to sea level rise.

Electricity generation needs to increase by 170 percent; it will take $90 billion to fix our water networks; we need to spend $60 on renewals for every $40 we spend on new infrastructure; infrastructure construction costs have risen 60 percent faster than other costs; and we will have a shortfall of 118,500 construction workers in 2024.

There is an infrastructure deficit currently sitting at around $210 billion, with a national need for infrastructure spending at around $31 billion per year.

Contractors need more people and more investment in plant and equipment to have any chance on delivering on multi-faceted future infrastructure needs. This is not just to overcome our infrastructure deficit, but it is also to replace and repair our existing well-worn infrastructure networks. 

At the same time, the investment needs to mitigate climate change, defend against increasing severe weather events, and manage earthquake risk. Any loss of momentum now will create serious resourcing and delivery risks downstream. Confidence will come from greater leadership from the government, and from contractors and clients working in partnership to ensure that skills are retained and developed, and projects successfully delivered.

Finance Minister, Grant Robertson delivered the 2022 budget on 19 May. Government investment in trades training, rail and telecommunications infrastructure and the Construction Sector Accord initiatives is very positive but it doesn’t go far enough. As a country we are missing a trick when it comes to dealing with other key infrastructure issues.

I acknowledge the Government has still to consider the findings of the strategy and is not required by law to respond until September. However, I am concerned the modest Budget 2022 allocation for infrastructure will delay action on many of the report’s recommendations – and many critical infrastructure projects – until 2023 or beyond.

We must continue to innovate, look for efficiencies and work smarter, but we can’t build our nation on the smell of an oily rag. The $37 million to progress Construction Sector Accord Transformation Plan initiatives will help foster smarter and more efficient ways of working, but without additional funding it will be difficult to make progress against a rising tide of escalating costs.

Significant infrastructure funding was announced in the 2020 and 2021 budgets but some of the ‘shovel-ready’ projects outlined over the past few years are still to begin. These delays have been exacerbated by inefficient consenting processes and insufficient funding to cope with inflation and rising costs.

Lack of workers is another key challenge faced by the industry. The civil infrastructure and construction workforce shortage is acute. Australia has launched a major international attraction campaign for infrastructure workers and New Zealand must do the same to attract people to our country and dispel the myth we are not open for business.

We also need to do more to remove the barriers preventing people from being able to work in New Zealand. That means investing in more resources for Immigration NZ to process the number of applications we will need, as well as broadening visa eligibility criteria – we need engineers and planners, but we also need people out in the field doing the work required.

The Government will have a golden opportunity to re-align its infrastructure investment later this year when it issues its response to the recommendations in the infrastructure strategy report.

The New Zealand Infrastructure Commission has done some outstanding work over the past few years, gaining input into our country’s first ever long-term infrastructure strategy from over 20,000 New Zealanders, over 700 consultation submissions, and stakeholder meetings and workshops. 

It’s our hope that the Government takes this report seriously and moves quickly to ensure New Zealand’s infrastructure needs are given the attention, and funding, they deserve.