Last week, Hamilton hosted the national economic forum at the University of Waikato. Former governor of the Reserve Bank, Alan Bollard, who now chairs the New Zealand Infrastructure Commission, made a couple of interesting points.
The first was that almost none of the 150 “Shovel Ready” projects totalling $2.6 billion have actually started. This was fundamental to Labour’s Covid recovery strategy which required projects to be ready to start within either 6 or 12 months.
This means the remarkable economic resilience we have enjoyed is entirely down to the private sector, while someone else (you know who) claims the credit.
The second point identified the main reason for the delay: the consenting process. Bollard described it as complex, slow, legalistic, and expensive. He put a figure of the cost at 20% of project budgets.
Imagine if the cost of new houses could be reduced by 20% by a better system. Labour wouldn’t need to blame landlords.
But cost is not the only problem.
The Shovel Ready projects were chosen by councils, and they themselves have failed to get through their own processes within Labour’s timeframes.
Delays are an enormous problem for private developers. They complicate contracts with both tenants and builders, introducing risk and uncertainty. It has been getting worse, simply because the more council planners get away with, the more they will try to game the system. Planners get to charge extra fees, which keeps council management happy, and incentivises creating problems.
The effect is to slow down the supply of houses, as well as the big infrastructure projects. There was never any need for Kiwibuild, just sorting out the council process. Maybe if planners had to pay for delays, the problems would disappear.
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