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Business leaders and controversial Cabinet Minister Shane Jones haven’t gone so far as to smoke a peace pipe.

But this year’s Herald CEOs survey shows the sting has gone out of business criticism with just a few personally derogative comments on Jones compared to 2018 when he was slagged off for “pathetic populist posturing” and “short-sighted political point scoring” after the string of personal attacks he mounted against leading business people.

Respondents were asked to rate Jones on his performance as Regional Economic Development and Infrastructure Minister over the past year.

On a scale where 1 = not impressive and 5 = very impressive he received a score of 2.43/5.

Jones has toned down the bombast so his personality does not eclipse his policies.

This came after a word from Prime Minister Jacinda Arden, who Jones told the Herald had said to him “no news is good news”.

His championing of the new Infrastructure Commission has raised his reputation with that sector.

But his jawboning has also got results. Air New Zealand, where he called for top brass to go after the airline axed some provincial routes, this year hosted Jones on an inaugural direct flight from Auckland to Invercargill.

Jones, who refers to himself as the “provincial champion”, has attracted criticism over the Provincial Growth fund which sits within his portfoilo responsibilities.

“It has delivered for Mr Jones and NZ First,” suggests independent director Craig Stobo. A professional director suggests it is a “NZ First get re-elected fund”.

The Provincial Growth Fund has been allocated three billion dollars over three years to invest in regional economic development.

Investments include upgrades to infrastructure, such as the announcement earlier this month that the Auckland to Whangārei rail line will be upgraded to the tune of $94.8 million, getting freight trains back up and running by next September.

Some say it has already delivered on what it set out to do.

“In some aspects it has, particularly in attracting investment into the smaller regions,” says a professional services chief.

“Solely based on the recent allocation to rail infrastructure improvement between the North and Auckland,” adds a top exporter.”

Business leaders were asked to choose as many of the following that apply in terms of the Provincial Growth Fund (PGF). They say the fund is:

  • In need of financial monitoring to ensure appropriate investments (61 per cent)
  • A political slush fund (60 per cent)
  • Getting much needed economic focus on regional New Zealand (24 per cent)
  • Delivering infrastructure investment that will boost regional links and infrastructure (11 per cent)

When asked how confident they were that the fund would help to address New Zealand’s infrastructure challenges, 2 per cent are very confident and 22 per cent are quite confident. The overwhelming majority — 76 per cent — say they are not confident it will help.

“It’s a solution in search of a problem which, when it finds a problem that does need solving, discovers it’s not the right solution,” says a real estate chief executive. “It’s also — let’s be fair — not the Government’s PGF, but NZ First’s, and it would exist whoever Winston Peters had chosen as his coalition partner.”

“The idea is a good one but these things take a while to feed through, so we’ll only be able to judge its success in a few more years,” suggests a top banking boss.

Beca’s chief Greg Lowe suggests the existence of the PGF is encouraging a significant increase in ideas to improve regional growth. But he says “a more integrated regional plan, bringing a collection of initiatives together within a region that can support each other, might give more effective outcomes”.

Questions about the way in which the PGF operates were frequently raised by respondents. “Investing in the provinces is a great idea — this model for doing so is a joke … ,” says one investment boss. “It has potential in places, but is also open to be used to finance projects that never stacked up in the past,” says another.

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The New Zealand Initiative’s recently released report — #localismNZ, Bringing power to the people  — argues the case for localism in New Zealand. It calls for a radical shift of political and fiscal power from central government to communities.

The Mood of the Boardroom asked New Zealand’s leading CEOs and directors whether central government should give more decision-making responsibility to city and district councils; 67 per cent of respondents agree, 20 per cent disagree, and 13 per cent are unsure.

Beca’s CEO Greg Lowe says that local authorities are facing increasing infrastructure challenges but in many cases they do not have the funding mechanisms to pay for all the improvements needed.

“Better regional investment plans would help the conversation between central and local government about how these needs can be funded and implemented,” he says.

Port of Tauranga chief Mark Cairns agrees with the suggestion, assuming that “taxes or rates raised in a region are hypothecated to that region”.

Says an energy boss: “decentralisation isn’t about existing councils having more power, it is about distributing that power on relevant topics to even smaller democratic units.”

A software boss agrees, suggesting that “decisions are always better made when the decision maker is closer to the community”.

Simon Ellis, managing director at Ovato NZ, is unsure, and says it depends in what areas the decision-making is in. “In most instances in New Zealand we should have the same rules across the country — central government cannot absolve its responsibilities to NZ Inc,” he says, giving water quality, water safety and fluoridation as examples.

In New Zealand, council revenue is largely separated from economic performance.

Local government is the core funder of transport and water services for new development, yet its revenue is derived from property rates — which are a cost allocation method linked to council costs, and not to the success of the economy or land prices.

Conversely, central government is the direct benefactor of growth: receiving increased GST, income tax and corporate tax when the economy grows.

New Zealand is unusual in that it is among the most centralised countries in the world. Local government is responsible for almost half (46 per cent) of public spending in OECD countries on average, whereas in New Zealand, central government controls 88 per cent of public expenditure. Business interest in localism was fired up when NZ Initiative executive director Oliver Hartwich organised a group of his think tank members to go to Switzerland — which is the poster-child for localism — on a study mission in 2017.

Vector chair Dame Alison Paterson disagrees in the idea for New Zealand — at least “until there has been an assessment of the capability of local body politicians to assume this responsibility”.

This lack of confidence that local government in New Zealand has the capability and capacity for localism to work here was frequently raised by respondents.

A prominent chairperson suggests localism in New Zealand could work “only if they are capable of carrying out the additional responsibilities”, but says he has seen nothing that gives him the confidence that they can.

The CEO of a large retail chain takes a similar stance, suggesting “councils across New Zealand are exceptionally good at incompetence — I am not in favour of increasing any of their responsibilities”.

A lobbyist head offers a more candid take: “Hell no. They are often completely loony and I wouldn’t trust most of them to run a pub raffle.”

The NZ Initiative has published a string of reports on localism, including examining the myths, facts and challenges about local government; advocating for a Local Manifesto to restore local government accountability and giving a global perspective on localism.

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http://bit.ly/2kFnIG6

The Prime Minister’s Business Advisory Council was on the money when it warned Prime Minister Jacinda Ardern New Zealand is at an “infrastructure crisis point”.

Some 86 per cent of CEOs and directors responding to this year’s Mood of the Boardroom survey agree: Just 7 per cent disagree, 7 per cent are unsure.

Roads, ports, hospitals and mass transport systems frequently appeared among comments from respondents as areas that need urgent attention.

Beca chief executive Greg Lowe says New Zealand’s current infrastructure — on many fronts — is struggling to meet current demand and is falling further behind in regions that are growing. “We need to be catching up on the infrastructure backlog, not letting it get bigger,” he says.

A dairy industry chief executive makes the case that infrastructure is an enabler for a thriving and productive economy that impacts on everything — from people’s mindsets, productivity and life balance, through to the flow of goods and services. “Make it easy to be productive and get things done.”

Waste Management’s managing director Tom Nickels suggests “if we do not address our inadequate infrastructure, we risk becoming a nice place to visit providing you don’t mind second rate amenities.”

A transport chief executive says the infrastructure challenges are more acute in some regions over others, “however the country is years behind and must not only catch up — but get in front of the curve”.

The significance of infrastructure as a concern to our top business leaders can be demonstrated from a question respondents were asked about business confidence.

Asked how concerned they are about the impact of infrastructure constraints on business confidence (on a scale of 1 to 10 where 1 = no concern and 10 = extremely concerned), they scored it 7.39/10. This was the second highest constraint among those polled, the constraint of highest concern was congestion in Auckland — also linked to infrastructure — which scored 7.60/10.

The head of a major education institution reckons “crisis” is the new buzz word. “A bit overdone in places,” he says. “Not sure it is a crisis — but it is certainly challenged,” says an energy boss. Local Government Funding Agency chair Craig Stobo suggests “New Zealand’s infrastructure is a big bucket… I’m not sure that all of it is in crisis.”

The Government recently appointed Alan Bollard to chair a newly launched Infrastructure Commission.

The Independent Commission will have two broad functions — strategy and planning, and procurement and delivery support:

  • It will provide expert advice, planning and strategy, and support the delivery of major infrastructure projects across the country.
  • It will also be a one-stop shop for investors, including publishing a pipeline of infrastructure projects.
  • As an autonomous Crown Entity with an independent board, the commission will have the credibility and influence required to effect real change. Ministers will retain final decision making rights, as is appropriate.

Some 7 per cent of respondents were very confident that the Bollard-led commission would help address New Zealand’s infrastructure challenges.

Some 58 per cent were quite confident. But 35 per cent had no confidence the commission would make an impact.

Bollard is a former Governor of the Reserve Bank and Secretary of Treasury. The five other members of the   board are: Infrastructure New Zealand’s former chief executive Stephen Selwood, MinterEllisonRuddWatts chairwoman Sarah Sinclair, Watercare Services chief executive Raveen Jaduram, former banker and independent director Sue Tindal and Simpson Grierson special counsel David Cochrane.

The Government has shifted transport infrastructure focus from roading to public transport and rail, including the recent announcement of   funding for the construction of a Hamilton-to-Auckland passenger rail service. Though when asked to rate the coalition government on its performance in addressing transport constraints on a scale where 1 = not impressive and 5 = very impressive, respondents gave a grade of just 1.57/5.

Many of those responding to the survey specifically mentioned roading improvements as essential to the country. A quarter of those surveyed that suggested building more roads to reduce congestion should be a “top three” priority for the Auckland mayoralty.

Waste Management’s Nickels says congestion in Auckland remains a major constraint on productivity and quality of life in general.

“The movement of goods and services have become extremely challenging. Our drivers’ unproductive time is increasing and it is becoming more difficult to meet customers’ needs in a timely way,” he says.

“We must invest in roading infrastructure to free up traffic over the next decade or two in support of the forecast growth of greater Auckland. For the longer term we also need to invest in our rail system.”

On rail, an agribusiness boss disagrees: “Where railway works best is between large population centres, over huge distances with straight lines and limited hills to climb, carrying consistent cargo on a large gauge and with a modern rolling stock — New Zealand has none of these.”

He suggests the answer has to be getting the roads right: “Imagine the benefit of a two-lane highway from one end of the country to the other. The new two lanes could be built where the railway lines currently are. We need to stop half-doing both.”

The boss of a lobbying firm says that “with Twyford in charge and no money spent on roads anymore, no one is surprised that we’re at a crisis point”.

The Business Advisory Council’s damning indictment of New Zealand’s infrastructure regime says there is “no overarching vision or leadership in New Zealand for infrastructure development”.

“This means there is no nation-building narrative upon which to build a strategic direction,” it says — although it acknowledges the problem at hand was not created by the current government but is instead intergenerational.

Barfoot & Thompson’s Peter Thompson agrees, adding that many of the existing issues have been around under prior governments before. “It is a matter establishing what are the essential ones and to actually get on and rectify such,” he says. “Costs of fixing won’t come down, so the longer they are put off the more the costs will go up”.

Says the managing director of a large investment firm: “It was at a crisis a decade ago and National did bugger all”.

Funding rail

Some 55 per cent of CEOs felt rail investment in NZ could be bolstered through an in increased share of the National Land Transport Fund (petrol excise tax and road user charges). But 30 per cent felt this mechanism had no role to play in rail investment.

A similar number (55 per cent) felt rail investment could be stepped up through the public purse: an increased share of funding from general taxes to fund health and environmental benefits of rail; 35 per cent were opposed.

There was two-thirds support however for bolstering investment through commercial, industrial and residential land development adjacent to rail.

Travel opinion: On being a real traveller (NZ Herald)

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Opinion: Build a bridge, make Wellington pay for it (NZ Herald)

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Last week, mayoral hopeful John Tamihere announced his first transport policy: promising to turn the existing Auckland Harbour Bridge into a two-level bridge with 10 lanes for cars on a lower level, and four rail tracks, walkways and cycleways above.

He says the superstructure could be completed within six years using the existing piers, swapping out the existing bridge with “minimal disruption to traffic”.

“My team have looked at overseas structures and costs and it is very doable,” he says. His policy document references the Milton-Madison bridge which connects Milton, Kentucky and Madison, Indiana — towns with populations of around 500 and 55,000, respectively.

Tamihere had not costed the proposal at the time of the announcement — but suggested he expects the New Zealand Transport Agency to pay for it.

Minutes after the announcement, Mayor Phil Goff shot back on twitter, claiming the bridge would cost over $10b to build and suggesting Tamihere either “intends to bankrupt the city, burden ratepayers with massive extra rates or he is making it up because he knows he is never going to deliver it.”

Goff continued: “Widening the motorway at either end to match the new lanes would see massive demolition of buildings and destruction of homes and neighbourhoods. This will cost further billions of dollars that Auckland doesn’t have and the Government won’t pay for.”

“This is total fantasy stuff and fundamentally dishonest to promise.”

Infrastructure experts and the public have largely ridiculed the idea, with some drawing parallels to President Trump’s border wall, which he insisted Mexico would pay for.

The comparison has been made before, to which Tamihere said: “it’s a very poor simile for me. I’m not a billionaire, I’m not a big white guy, my wife sold my golf clubs a long time ago… While I’m forthright, I like to be as respectful as I can be… To use a lazy simile like that on me, you’d have to actually express some specificity about that and give some evidence.”

But Tamihere risks turning his candidacy into satire. His pledge to launch a freephone hotline for the public to dob in beggars was an obvious jab at central government:

“Under my mayoralty, you will be able to ring 0800 JACINDA and a person all loving and caring that knows everything about your wellbeing will answer the phone and they will be able to dispatch a social worker,” he said.

He dug in further, saying social workers should change their work hours to work three shifts because the profession needs to “wake up to the fact that social work is a 24/7 job”.

The Social Workers Association chief executive Lucy Sandford-Reed labelled the quip provocative and poorly thought out. Once again, Goff took the opportunity to fire back at Tamihere on twitter:

“John Tamihere’s plan to set up 0800 JACINDA to report homeless people is a political stunt that demeans the seriousness of the issue. While Tamihere might be happy to criminalise homelessness, I believe we should be providing support to our most vulnerable.”

We know that local elections can be notoriously dull. Auckland’s turnout for 2016 was only 38 per cent.

As the election draws closer, candidates will continue the publicity stunts and attack lines in an attempt to get cut-through and secure a vote.

During the first head-to-head debate of the campaign last month, Tamihere announced his intention to sell 49 per cent of the council-owned Watercare, suggesting proceeds from the water company could be used to deliver cash to fund the city’s hefty infrastructure requirements. He said there was already a bid from ACC, claiming “Phil knows it, the public needs to know it.”

In some ways, the call for part-privatisation worked — it got significant exposure.

But Iain Lees-Galloway, the minister responsible for ACC, dismissed the claims. And in an unusual move, so did ACC:

“We do not normally comment on potential or actual investment opportunities; however, in this case, in relation to Watercare, we confirm that ACC has not received any investment proposal nor are we aware of any sales process.”

There is a place for imaginative thinking to help solve the infrastructure problems plaguing our biggest city. It’s just a shame they tend to be presented as hasty and ill-thought-out ideas, eight weeks out from an election.

Infrastructure: Can Auckland be a major hub?

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NZ could be a connector of China and Latin America, but it’s not without its challenges, writes Tim McCready

Developments in air travel are making longer non-stop flights possible and commercially viable. Currently, the longest distance flight is Singapore Airline’s 15,300km between Newark New Jersey and Singapore — not quite reaching the distance to fly direct to South America from China.

The Herald’s aviation editor, Grant Bradley, says new aircraft technology could allow load restricted non-stop flights from Southeast Asia to South America — but those departing from China must still stop along the way.

“By stopping over in New Zealand (or Australia), airlines do get the opportunity to tap into more passenger and freight markets,” he says.

“But in saying that, Auckland Airport’s aim of being something of a mini-hub for Southeast Asia — South America flights could be some way off too; the demand isn’t there yet.

“And worryingly for Auckland, Latam airlines will overfly the city with some of its flights from Sydney to Santiago from the end of the year, instead of calling here.”

The Building the Southern Link conference, held in Auckland earlier this year, sought to leverage the opportunity, suggesting that New Zealand’s place in the world as a major and natural connection between China and South America is an idea whose time has come. It brought together more than 200 international experts and key stakeholders, to discuss the opportunity, and develop recommendations to move forward.

“New Zealand is either first cab off the rank, or the last,” former trade minister Tim Groser told attendees.

He says that for a small country, you must have the wherewithal to not wait for good company, but to get ahead of the queue and move swiftly. This is a central lesson if you survey the history of New Zealand’s relationship with China in particular. China attributes “five firsts” to New Zealand:

  1. In 1997, New Zealand became the first country to agree to China’s accession to the WTO by concluding the bilateral negotiations component of that process.
  2. New Zealand was the first country to recognise China as a market economy in 2004.
  3. New Zealand was the first developed country to commence free trade agreement negotiations with China. In November 2004, New Zealand and China launched free trade agreement negotiations.
  4. In April 2008, New Zealand became the first country to successfully conclude free trade agreement negotiations with China.
  5. In November 2016, New Zealand and China jointly announced the launch of negotiations to upgrade its bilateral free trade agreement, a first for a developed country with China.

Groser says New Zealand has been an outlier in that respect. “Traditionally foreign ministries look for good company — political safety,” he says. “The tendency is to join queues, not to form them. If we’ve had some success, it’s because we’ve taken well calculated risks — because if we don’t, we end up at the back of the queue.”

Trade and Export Growth Minister David Parker says New Zealand’s geographic location — which was once considered a disadvantage — was now a development opportunity. He says the idea of the Southern Link is one that the Government is behind — it fits with their objective of diversifying our economic linkages further.

“What do we need this southern hub to do?

“At the simplest level, the hub should facilitate seamless and convenient exchange of goods and travel for people between the eastern and western sides of the Pacific Ocean,” he said.

“In this sense, New Zealand offers a clear alternative to crowded northern hemisphere airports.”

At the conference, Chinese Ambassador to New Zealand Wu Xi said: “The key features of the Belt and Road Initiative are connectivity, openness and inclusiveness. In many ways, it is like a modern version of the ancient Silk Road.”

She said it has created new energy and momentum for global economic growth, and a framework for ideas like the Southern Link to take shape.

Groser agreed — saying the Belt and Road Initiative, first described in 2013 by Chinese President Xi Jinping (and at that time known as One Belt One Road), is a “mother of a plan — you don’t get bigger vision than BRI”.

New Zealand is a small, sophisticated country — and well organised. The conclusion of working groups at the conference agreed that the potential exists to make the Southern Link a reality, but there are issues that will need to be addressed.

These include political complications, transit visas, air services, customs and biosecurity regulations, trade facilitation and border policies.

Many of these are a lot more complex than they might appear. Stephen Jacobi, executive director of the New Zealand China Council, told the conference that the Southern Link must be a partnership between government and business.

He says we need to convince government that the changes to public policy and regulation are worth making, “because the prize — in terms of increased trade, travel and tourism — is high”.

Groser wrapped up the conference by throwing down a challenge:

“A plan not backed by a vision is a nightmare. But a vision without a plan is hallucination,” he said.

“We have a big idea. I think it’s on the move — and I think we should seize the time.”

Infrastructure: Mayoral motivations

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Tim McCready put these questions to mayoral hopefuls Phil Goff and John Tamihere

  1. What are your top three priorities for Auckland’s infrastructure?
  2. How would you fund Auckland’s infrastructure requirements?
  3. What needs to happen to improve the quality of water and make Auckland’s beaches swimmable?
  4. What is your expectation for the Ports of Auckland? Should it be sold, shifted, or are there other solutions?
  5. Queen St is considered by many to be the heart of Auckland City, yet it has growing homelessness and safety concerns. What is your vision for it?

Phil Goff

Building a transport network to cater for population growth and ease congestion, infrastructure to allow home building to meet demand and cleaning up our environment are my top infrastructure priorities.

Working with Government I have increased investment in transport to a record $29 billion in our 10-year Budget. Housing consents are now running at a record 14,000 a year (3500 in 2009) and we have brought forward an end to wastewater overflows on beaches by 20 years.

Ultimately all of us as ratepayers and taxpayers meet the cost of infrastructure. We have pushed for, and got, more central government funding, and the regional fuel tax has replaced rate increases to meet our share of  building a new transport network. We are looking to use third party funding such as Special Purpose Vehicles and PPPs to meet capital costs.

I will not sell Watercare — a monopoly operation providing an essential service. That would add $200-$300 a year more to every household’s water rates, hurting most low-income people and those with children. To improve water quality, we have this week started the $1.1 billion construction of a huge interceptor from Grey Lynn to Mangere and are separating stormwater from wastewater. Together those measures will substantially stop pollution of our harbours within 10 years, 20 years ahead of schedule.

The 77ha of port land will remain owned by Auckland Council, but our goal is to shift the port operation when a suitable alternative site can be found, and the government commits to meeting the infrastructure costs of the new port. We will free up our waterfront for public access and for other uses which will make it a vibrant and interesting place to enjoy, work and live. Selling the port company now doesn’t make sense when nobody currently knows what the future holds for it. That would be a fire sale.

With light rail and the City Rail Link meeting transport needs, Queen St should be pedestrianised and become a great place to visit and enjoy. It will be people-focused, catering for a huge increase in resident population, workers, students and visitors. It will be well lit with more cafes and places to eat and drink.

John Tamihere

My top three priorities for Auckland’s infrastructure are transport, housing, sanctity of water supply and disposal of waste water.

Multiple tools will be required to fund Auckland’s infrastructure requirements, including: rates congestion charges, sale of the Ports of Auckland business — retaining the 77 hectares in citizen ownership, public — private partnerships — such as the NZ Super Fund funding CRL, releasing 49 per cent of the equity in Watercare.

Releasing the 49 per cent of equity of Watercare releases up to a minimum of $4 billion, to ensure that the work programme in treating the disgraceful sewerage outflows will be curved within the next five years. Ownership/control of Watercare will remain with the citizens.

The Ports of Auckland will over time shift from their historic 77ha on prime Auckland land.

The site of the opera house in Sydney is a case in point, given that site was Sydney’s port.

Accordingly, as the port business winds down, it is imperative that we sell the port business at the top end of its business cycle and separate the land which will return a lease stream of income back to the citizens.

Ultimately, infrastructure linking North Port and the Port of Tauranga to Auckland will occur and we anticipate both ports serving an enlarged cosmopolitan city.

In order to transform Queen St, I want to house the homeless and ban begging with compassion. This is an area where I have significant management experience, housing over 200 homeless people in the past 18 months in West Auckland.

It requires central government to ensure that social housing, mental health services and welfare services are made available to this growing group of citizens. Begging often progresses to demanding with menaces; in addition, begging teaches co-dependence and entraps a person to continue to beg.

Giving to beggars is one of the worst forms of charity known to mankind.

The present mayor has capped social housing on council land and has thereby increased homelessness. That cap will be removed.

Opinion: A robust conversation on GE (NZHerald)

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