An incrementalist’s approach to fixing infrastructure

There’s no single reason for how we got here.

Partly, the issue lies with consecutive central governments. Unmanaged migration (180,000 net gain in the last two years, for example), a large share of it unskilled, has been used to support GDP growth. Advantageous to businesses, but has placed huge additional pressure on local infrastructure across the country.

Central government legislation and policy have big implications for local infrastructure requirements. An example of this is National Policy Statements that do not often balance “National Bottom Lines” with a huge compliance price tag.

Our communities also contribute to the infrastructure shortfall. Service level expectations continue to rise, while we tend to vote for the lowest property rates increases, compounding the pressure on ratepayer-owned assets.

Political polarisation means every change in government triggers a rethink of infrastructure needs, with re-litigation and re-scoping, which doesn’t help us to plan or build infrastructure efficiently.

But local governments have contributed to this situation, too.

Many councils have not depreciated their assets properly, although recently many have moved in the right direction. Asset management has been highly variable, with the location and condition of underground infrastructure sometimes unknown.

We often think too small, building infrastructure that reaches capacity soon after building it.

Local government nationally gives away up to $1 billion of unearned windfall land value gains every year by not charging accurately for growth infrastructure. International and New Zealand evidence unequivocally shows that charging accurately for growth infrastructure does not increase house prices; it reduces land prices to reflect the absence of infrastructure. It is encouraging to see some councils now tackling this head on.

Zoning decisions sometimes leave swathes of land close to city centres at low densities despite their proximity to jobs, public transport, amenity and in some cases, pockets of existing infrastructure capacity. If we are serious about improved housing affordability, less congestion, fewer emissions, better equity and more efficient use of infrastructure, our planning decisions need to reflect that.

Finally, poor prioritisation has led to lists of nice-to-haves often being funded at the expense of core services like water and transport infrastructure.

There is no single solution to the problem, but there are several manageable steps local governments can take, central government having several of its own. These steps will help to stop things getting worse, and over time could reverse the shortfall. GHD already works with clients in many of these areas.

• Develop a robust framework for project prioritisation that reduces subjectivity, can be used across infrastructure types, and balances timing, funding, and criticality with how projects achieve our mandate.
• Adopt a zoning policy that prioritises development where land values and public transport density are highest. High land values are the best indicators of amenity that people value.
• Review what we charge for growth infrastructure across the entire District/City and what tool we use to charge it, moving rapidly to a full-recovery model.
• Take our 30-year high growth scenario and then double that figure again to determine the scale for new pipes, airport upgrades, or transport capacity needed.
• Invest in understanding the location and state of our assets.
• Line up zoning increases with asset replacement timeframes to provide certainty to developers about when new capacity will emerge.
• Improve financial hygiene when depreciating assets, ringfencing the money adequately.
• Communicate trade-offs to communities clearly. e.g. “Wastewater treated through our proposed new treatment plant will meet XY standards. Land disposal for this wastewater requires more land purchases and will therefore cost $450 a year per residential property, to river disposal which will cost $170 a year per residential property.”
• Plan to the middle. Don’t be caught up in the politics of “cycleways only” or “roads only”.
• Advocate consistently to central government to explicitly include affordability requirements in all National Policy Statements while setting clear paths for progress on environmental issues.
• Insist on a central government 30-year population strategy that sets out how it plans to manage migration flows at a rate that local infrastructure can sustain.