COVER STORY : Going Nowhere Fast – Infrastructure or attitude. What’s holding us back?

The news clippings say it all: millions of dollars gobbled up in petrol, time wasted, and businesses under threat because of congested roads, likely shortages in electricity and the slow uptake of broadband.
It is national problem but south of the Bombay Hills the public dismisses it largely as “Auckland’s problem”.
To be sure, the Auckland region – four cities and three districts comprising 32 percent of the population but accounting for at least 40 percent of the national wealth – has the lion’s share of infrastructural challenges.
Roads, sometimes crowded before dawn and nearly always after dusk, top the list of infrastructural blackspots (see box story “Infrastructural blackspots”). They drive Aucklanders mad and cost the country dearly in higher fuel costs, ever-slowing delivery times and lost business opportunities. Add to that fears of electricity shortages – most businesses have not forgotten the blackouts of 1998 caused by failure in the isthmus transmission system – and Auckland has, according to the critics, joined the Third World.
“Auckland’s congestion is national disgrace,” says Business Roundtable executive director Roger Kerr. “Cities with population of million or so don’t typically snarl up the way Auckland does.”
Yet “Auckland’s problem” extends far beyond its borders. Wellingtonians battle to get in and out of their crowded capital yet will have to wait years for route through Transmission Gully.
Rail operator Toll Holdings, inheritor of rundown rolling stock, battles to run successful commercial operation on similarly rundown infrastructure – aging lines and bridges bought back by the Government. Commuter rail services in Auckland and Wellington, enjoying boost in popularity because of rocketing petrol prices, have similar problem.
In rural New Zealand there lurks more serious issue – water. Shortages of water and problems of water allocation threaten those regions where summer rainfall is low – Canterbury, Otago, Hawke’s Bay, Marlborough, the Kapiti Coast and the Wairarapa. Then there is the problem of drinking water which, for about nine percent of the population, fails to meet the Ministry of Health’s drinking water standards.
The water problem threatens the livelihoods of farmers, horticulturalists and winegrowers as it does the recreational pursuits of ordinary New Zealanders. It also puts at risk plans for much-needed new electricity generation.
There is also the problem of dwindling natural gas supplies, in part because of an over-reliance on the offshore Maui gas field and too little prospecting by oil companies.
But one of the biggest infrastructural hurdles is of our own making. From Victorian times until the mid-1960s, Kiwis cele-brated the building of railways, roads and dams. This infrastructure was not only politically correct but popular. However, plans to raise Lake Manapouri in Southland as part of major hydroelectric scheme unleashed wave of public protests that have accompanied nearly every proposed development with environmental implications ever since.
Roads, dams and power lines are no longer seen as “sexy”, though nostalgia still reigns for the least-efficient urban transport option, rail. Public-sector planning does not help.
“Planning is certainly on our list of impediments [to new infrastructure],” notes lawyer Matthew Cockram, chairman of the Council for Infrastructure Development. The real problem, he says, is the change in society’s attitudes to development.
“New Zealand has become consultative democracy to its great peril.”
As result, attempts to build infrastructure are thwarted by environmentalists, local authorities, Mori interests and governments. People demand better roads and more power but will fight to stop motorway coming past their door or power pylons being built in their neighbourhood. The consent process for the most simple infrastructural job is often painfully slow and unnecessarily expensive.
The pro-development lobby blames this on the much-maligned Resource Management Act (RMA) but the act has also been used in way unforeseen by its drafters – by companies keen to thwart the expansion plans of their competitors.
So it is then that one of the infrastructural hurdles New Zealanders have to battle is bureaucracy. This is because the infrastructure – roads, water, electricity and ports – is mostly in public hands and, in theory at least, the property of the people. This gives bureaucrats cast-iron excuse to act in the “public interest”, if not necessarily the public’s interest. And even where infrastructure is no longer publicly owned, such as telecommunications, the Government feels obliged to regulate in the public interest.
Roger Kerr says this high level of state ownership of infrastructure acts as barrier to investment.
“We should question whether the public sector needs to own infrastructure assets at all.”
Matthew Cockram disagrees: “Our brief and whole purpose in life is that we have world-class infrastructure in New Zealand. I don’t care whether it is public or private.”
Despite considerable talk about public-private partnerships (PPPs), which build infrastructure in many countries (Hong Kong is good example), few major New Zealand projects have developed along these lines. notable exception is Auckland’s Britomart scheme. The city now has world-class publicly funded underground railway station with commercial developer developing the land above ground. This happened only after the first Britomart scheme failed and Auckland City Council realised that property development was beyond its realm of expertise.
“PPPs can be very successful,” says Kerr. “Contracting-out has been consistent success story for local government in New Zealand with cost savings of 10 to 30 percent commonly cited … However, PPPs can also become dodgy and corrupt where proper processes are not followed or where performance cannot be adequately measured.”
The problems caused by creaky infrastructure have been well documented but the evidence is more anecdotal than real. There is little doubt it takes trucks much longer to cross Auckland than it did decade ago and that at peak times motorways are slow and congested. But is business really suffering?
Some people would say not, suggesting that infrastructural problems are just another excuse for poor performance. Aucklanders, they point out, get to work earlier than their southern counterparts, travel outside the busy times and avoid unnecessary meetings involving cross-town travel. In short, they work smarter, making better use of the working day. Thousands of professionals from architects and engineers to journalists and consultants also work from home, using technology to bridge the gap.
Tony Marriott, southern section chairman of the Chartered Institute of Logistics and Transport in New Zealand, says it is unlikely freight rates would drop if the roads were better and carriers could move more goods.
“Traffic congestion is not unique to New Zealand.”
But Business New Zealand chief executive Phil O’Reilly says Auckland’s traffic jams are “world class”.
“A lot of damage that is being done by poor infrastructure is in opportunity costs and it is hard to put figure on those. If we had world-class infrastructure would we have more foreign direct investment? That is hard to quantify.”
O’Reilly says given there are not many reasons for foreigners to do business in New Zealand compared with other countries, New Zealand needs to be more attractive to investors. “The lack of infrastructure is problem.”
John Hynds, chairman of Hynds Pipe Systems, agrees and can point to his company’s additional spending on expensive truck-and-trailer units to cope with increasingly congested roads in Auckland (see box story “Pipe-maker’s nightmare”).
He says Auckland missed the opportunity to complete its ring road and motorway networks in the mid-1980s and is paying heavy price.
“Auckland is geographically challenged area – narrow isthmus and two larg

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