$3 billion aimed at fast tracking infrastructure projects to try to boost recovery from the economic effects of the Covid-19 pandemic were announced yesterday.
Infrastructure investment to create jobs, kick-start COVID rebuild
A new package of infrastructure investments will help kick-start the post-COVID rebuild by creating more than 20,000 jobs and unlocking more than $5 billion of projects up and down New Zealand.
That is presumably an estimate of job numbers. There is no indication whether people with the right qualifications and skills are available to do the jobs, or if they will need to be trained – which would take time.
Finance Minister Grant Robertson and Infrastructure Minister Shane Jones today outlined how the $3 billion infrastructure fund in the COVID Response and Recovery Fund will be allocated across regions, following extensive engagement with local councils and businesses.
The investment package includes about $210 million for climate resilience and flood protection projects, $155 million for transformative energy projects, about $180 million for large-scale construction projects and $50 million for enhanced regional digital connectivity.
The COVID Response and Recovery Fund (CRRF) set out in Budget 2020 earmarked $3 billion for infrastructure projects. Cabinet’s initial decisions on this allocation include:
- Housing and urban development: $464m
- Environmental: $460m
- Community and social development: $670m
- Transport (cycleways, walkways, ports and roads): $708m
The projects are in addition to the $12 billion New Zealand Upgrade Programme and existing Provincial Growth Fund investments.
Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.
Cabinet has now made initial decisions about key sectors it would like to support and general regional distribution of funds, with more than 150 projects worth $2.6 billion being approved in principal. Officials are now undertaking final due diligence to ensure projects are viable and offer the benefits stated by applicants.
That doesn’t sound like ‘immediate economic activity’.
About $400 million has been set aside as a contingency as the Government takes a responsible approach to managing spending on behalf of taxpayers. Funds not required in the contingency will be put towards further infrastructure projects, providing an incentive for local councils to deliver the approved projects on time and on budget, as this would unlock a further potential $400 million of investment.
Large infrastructure projects have a habit of running over budget, especially when the investigations and planning of them is rushed.
Rushing projects also raises the risks of them being ill-conceived and chosen so the Government is seen to be doling something.
And there are suggestions the announcements that the announcements are more timed for the election than practical progression of the projects. This announcement included government self promotion:
“This is about creating jobs as we recover and rebuild from the recession caused by the global COVID-19 pandemic. Because we went hard and early with our health response, we’ve been able to open up the economy quicker than other countries and get a head start on our recovery,” Finance Minister Grant Robertson said.
“This package will provide Kiwis with confidence that the Government is backing them in this challenging economic environment by creating new jobs and opportunities in communities around the country.”
Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.
“Both are critical to our economic and social recovery from the COVID-19 crisis,” Shane Jones said.
“Not only has this massive undertaking provided us with the largest stocktake of infrastructure projects we’ve ever had but it’s enabled us to partner with central and local government, the private sector and community groups to deliver projects for all Kiwis.
“The specific projects we’re announcing today are examples of the sort of projects we’re supporting – from nationwide investments in flood protection and better digital connectivity to civic facilities that we know form the bedrock of our communities.
“I am extremely proud of the depth and breadth of this unprecedented piece of work,” Shane Jones said.
Jones may also be hoping this unprecedented piece of work will help his electorate election chances, and Robertson may be hoping it helps Labour’s chances of being re-elected (but he may not be hoping for NZ First to interfere with them governing again next term).
It will be well after the election before the worth of the projects being pushed have been money well spent, or squandered.