Friday, April 19, 2024

Provinces cleaning up after the cities, again

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Alan Emerson is tired of the provinces being taxed to fix the incompetence of the cities.
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I get extremely frustrated at our infrastructure deficit – where governments come in and do their own thing and then demolish what the previous administration built.

Both of our major parties do it and the taxpayer ends up the loser. It’s actually worse than that as often it is the provincial ratepayers bailing out their city cousins and my belief is that it is about to get worse.

Recently we have had the shambles over the Cook Strait Ferries and the cancelled Auckland Light Rail project.

While I have little knowledge of Auckland Light Rail, I’d make the point that one government started the project and another cancelled it. The loser in the process was the taxpayer to the extent of $228 million.

Auckland transport is a shambles that needs fixing but there seems little political will to develop a consensus and get the problem fixed once and for all. That, in my opinion, is an indictment on all of our political parties. It seems to me that debating points are more important than action.

The key issue is that we have an infrastructure crisis right across the board and it is going to get worse. Our roading system is a disgrace, we can’t provide water or safely remove sewage, we’re not building resilience into our structures, our electricity system needs billions of dollars of investment and provincially communications are appalling.

Our political parties seem intent on providing roads more for political support than need or economic return. Again, it is the provinces that lose out.

To give a simple example of the problem: during covid the previous government borrowed heavily. It was roundly criticised for it. The issue for me is that at the time interest rates were zero, so why didn’t we borrow more for infrastructure?

We need political vision. Take the London Underground as an example. It was started by a visionary in 1863 when London had a population of just 3.5 million. The cost was £1 million,  which at today’s value would be £152 billion.

What started with steam trains is now fully electrified, is 402km long and used by 1.35 billion people annually. 

The rationale for starting the underground was “to reduce street congestion”. Imagine modern-day London without the tube. Imagine Auckland in 20 years without a proper transport fix.

Well thought-out, resilient infrastructure makes good common sense.

For example, the cost of congestion in Auckland is estimated at $1.3bn annually. It needs to be fixed and that requires considerable investment.

The current axing of the Auckland fuel levy won’t help, with mayor Wayne Brown complaining that key infrastructure projects will need to be cancelled. Either that or they will be paid for by you and me, the taxpayer.

The problem is that any remedy needs to be agreed to by all political parties if that is remotely possible because without that agreement we are going to be in a worse position in 10 years’ time with billions of taxpayer dollars wasted.

In addition it will be infinitely worse for us in the provinces as the political parties will chase the votes from the most populist centres and that won’t include Masterton or Ashburton.

Something needs to be done, so the government will allocate funding or borrowing along regional council lines. If that happens the rural ratepayers of Wairarapa and Horowhenua are going to be well and truly screwed to support Wellington City’s self-inflicted water woes.

Another example is Three Waters. I was strongly opposed to the original Three Waters but saw some merit in the revised 10-organisation approach.

That’s now toast, leaving a bill for the taxpayer of $1.2bn and no real answers going forward. We’re told that to fix the country’s water woes could cost up to $180bn.

So what’s going to happen now? Councils are complaining that their rates could treble and that would be lethal for rural landowners already paying excessive rates.

I’d argue that rates can’t significantly increase as it would make them unaffordable for many. We’ve already been told we’re having tax cuts and not tax increases.

That begs the question of where the money for our much-needed infrastructure will come from and the only answer I can see is to either introduce new taxes, such as capital gains, or borrow. I don’t believe we can cut enough services to provide the hundreds of billions of dollars our infrastructure desperately needs. And don’t tax the provinces to fix the incompetence of the cities.

What we desperately need is political leadership that can take us forward as a country by working across the political spectrum to develop key infrastructure that will last beyond a political cycle.

At this point we seem to be doing anything but.

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