The perversities of the New Zealand bureaucracy have been on full display during Scrutiny Week at Parliament.
MPs on the Transport Committee have been listening to stories of how there is a tangle of different agencies working on infrastructure.
One agency, the Crown Infrastructure Delivery Agency (CID) was not so much created as resuscitated after its original incarnation as the Otakaro/Rau Paenga agency tasked with rebuilding Christchurch after the 2011 earthquake.
In September 2022, with the majority of its Christchurch recovery projects completed (or nearing completion), CID was repurposed to provide infrastructure delivery services to Crown agencies nationwide.
Now it has moved to Wellington and is supposed to use its expertise and experience to manage infrastructure projects across Government.
That is the theory.
The reality is that two of the biggest infrastructure developers, the Ministry of Education and Te Whatu Ora (Health NZ) have little or nothing to do with it.
The Ministry of Education has a $572 million building budget for the year, but only about $100 million of that (for the Wellington Girls College seismic strengthening) is being managed by the agency.
Te Whatu Ora (Health NZ) has a 25-26 building budget of $1 billion.
This funding is allocated for projects like redeveloping Nelson Hospital, upgrading Wellington’s Emergency Department, and other hospital improvements.
Only one project, involving 140 new beds across Middlemore, Waikato, Wellington Regional, Nelson and Hawke’s Bay Hospitals, is being managed by the agency.
And, incredibly, the agency has got nothing to do with what will be New Zealand’s largest hospital building project, the new Dunedin Hospital budgeted at $1.88 billion.
The agency also has nothing to do with the other big government-funded infrastructure spend on roads and transport projects by the New Zealand Transport Authority.
Thus, a large percentage, if not the largest percentage, of government-funded infrastructure construction is not managed by the Government agency tasked with doing exactly that.
The Government has “mandated” that some agencies must work with CID
John O’Hagan, Chief Executive, told the Transport and Infrastructure Committee that there were mandated agencies that must use CID.
“So, if they have an infrastructure need and there are some rules and requirements around what they can and can’t do, they have to use us,” he said.
“There are other agencies that aren’t mandated to use us, but if they have a capacity restraint or restriction on delivering their infrastructure, they can partner with us.
“Health New Zealand is an example; the Ministry of Education is another one where there was a capacity issue that we were able to fill a gap with them.”
But in fact, those other agencies end up building in-house capabilities that duplicate what CID already does.
“There is an element of risk of agencies building their own capability for one-off projects,” O’Hagan said.
“They can get people in. Quite often, it’s contractors at much higher costs, but also at the tail end of a project, those key people leave.
“And so, the agency loses that IP and knowledge of the project and the close-out of a project is often quite complex.”
It is the Cabinet that has selected which agencies must use CID. And they have (so far) avoided asking the big agencies that do the most building work to work with CID.
O’Hagan argues that there is a risk in the big agencies not voluntarily choosing to work with CID.
“There is a risk that if they don’t choose to, then they will keep doing the way things have been done in the past,” he said.
Nevertheless, he is optimistic that eventually those big agencies will come on board.
“It takes a wanting partnership to get those (agencies) over the line, and as time goes on, the lights of education and health are seeing the benefits now and starting to engage more,” he said.
But if the agency is having trouble finding work, another infrastructure entity, National Infrastructure Funding and Financing Limited (NIFF), presented a glowing account of its activities to the same committee.
The agency describes itself as the shopfront for investment in infrastructure and is chaired by the highly experienced energy and construction industry leader, Mark Binns.
He ran the shovel-ready projects exercise for Shane Jones during Covid.
It is no secret that Jones would like to see the agency become the lead agency for not only the funding but also the delivery of infrastructure projects in New Zealand.
Given the difficulties the Crown Infrastructure Delivery Agency appears to be having, that would suggest a merger could (and perhaps should) eventually happen.
As Transport Minister Chris Bishop has recently conceded, the demand for road funding exceeds the potential to find that funding.
Thus, the funding of any infrastructure project will be fundamental in terms of whether it goes ahead.
But because of the innovative ways that funding is now being packaged and provided (such as public-private partnerships), the funding and development function is increasingly becoming entangled with the development and delivery of the projects.
The agency is managing around $1.8 billion of cyclone recovery money, which has been given to local bodies to administer.
Labour MP, Tangi Utikere, asked how the agency was finding the ability of councils to deliver those projects.
NIFF CEO Graham Mitchell said it varied.
“There is some mixed capability amongst the councils, but generally we’ve been supporting them quite strongly to move forward and get the infrastructure in place, to rebuild or put new flood protection in place as quickly as we can,” he said.
The agency was intimately involved in the March Investment Summit, which was aimed at attracting offshore investment for New Zealand infrastructure projects.
Mitchell said that after the summit, the agency had met with some 30 potential investors and concluded there was definite market interest in investing in New Zealand infrastructure and also in public-private partnerships. (PPPs)
There are currently three at various stages of implementation.
They include the northern motorway to Whangarei, the Christchurch men’s prison redevelopment and the Waikeria prison expansion.
Mitchell said NIFF had given the Department of Corrections advice on some aspects of the financing, but it was “very much their project.”
“Our role is to support the agencies that actually take the lead on those. (PPPs),” said Mitchell.
“We’re sitting there assisting them on the financing, on some of the procurement elements and things like that.
“We’re very much in support of them.
“We’re not a control agency across them or anything like that. We’re not getting into the details. We’re making sure the risk settings are right.”
The whole tangle of different agencies working on various infrastructure projects that has been revealed at the Transport Committee over the past two days must raise questions in the Beehive about whether some structural reform is needed.
Jones has previously proposed that what is now NIFF could serve as a base for a revived Ministry of Works.
That might be a step too far for a National-led Government, but what is clear is that at the moment, there is no clear plan for how all Government infrastructure should be funded and delivered.
