The government’s announcement of a $12b investment in infrastructure wasn’t quite what the headlines said.
For a start, the spending announced last week was for around $7b. No doubt the government is leaving the other $5b for announcements later in the year.
And while the government has been clear it’s borrowing to fund this investment, it hasn’t given a timetable for repaying the debt, nor has it mentioned the interest that will accrue. Yes interest rates are at historically low levels but even a little interest compounding on $12b soon turns into a lot more to repay.
The announcement on new and better roads has been well received but as Steven Joyce points out:
. . .Hallelujah! A victory for sanity and the reasonable belief of most New Zealanders that personal mobility in the form of cars, trucks and motorbikes will continue to be the norm well into the future, even as the fuel that drives those vehicles radically changes for the better.
Beyond that, the government’s announcement was tepid and unambitious, despite all the hype.
Alongside a few worthwhile already scheduled rail and local roading projects, they are simply re-starting five of the major state highway projects that were cancelled after the last election.
To provide some context, when completed these projects will provide just over 60 kilometres of modern four lane highway.
The Roads of National Significance of the last decade just wrapping up provide over 300 kilometres of new highway to the same standard.
Also the pace of construction over the next five years will be about half what it has been over the last three years.
We’re getting less, it’s taking more time, and the government’s borrowing to do it.
The Government is therefore expecting a lot of applause for a massive reduction in roading investment. I suppose it is better than nothing.
It must be questioned however why there is a need to borrow all those billions when a programme nearly five times the size was able to be mostly funded from petrol taxes and road user charges (which are much higher today).
There is also a sizeable fish-hook embedded in the fine print. The government is to investigate dedicating one of the two lanes each way on each project for buses, or cars with multiple occupancy.
I can see that going down like a cup of the cold proverbial if it ever comes to pass. . .
The government has wasted two years before deciding to do some of what National would have done and is borrowing to do what National would have done from better management of crown accounts rather than debt-funding it.
There is a better way:
With all that in mind, here is a starter for ten on what a new state highway building plan for New Zealand could look like: three networks of modern four lane highways based through and around our three biggest cities of Auckland, Wellington and Christchurch.
The Northern Expressway network would safely and efficiently link Whangarei, Auckland, Hamilton, Tauranga and Rotorua. The Central Expressway network would do the same for Wellington, Hutt Valley, Levin, and Palmerston North, on towards Whanganui and over the hill to Hawkes Bay.
The Southern network would radiate out from Christchurch, north to around Amberley, south to Ashburton and on towards Timaru, and inland towards the Alps.
A decent chunk of each is now already built. Completed over say a twenty year period the three networks would provide safe, reliable, stress-free travelling of a standard that is taken now as a given in the rest of the developed world.
They would help spread around growth and development as has occurred in the Waikato with the new expressway, and much earlier on Auckland’s North Shore with the Northern motorway.
They would lower the road toll by eliminating the temptation for dangerous passing manoeuvres on our busiest two-lane roads, as we have seen with the Tauranga Eastern Link and Waikato Expressway.
This sort of plan would be an upgrade worthy of the name, and would require simply upping the pace of the last ten years. . .
So it’s a start, but only a start and a late one on borrowed money at that.