Bill English – Minister of Infrastructure

Categories: Engineering and science.

Think Discuss Evolve

 “We’ve come a long way on infrastructure,” the Hon. Bill English says.

 Looking back on three years as New Zealand’s first Minister of Infrastructure, Bill English pronounces the high level of consensus on the country’s second National Infrastructure Plan as his most satisfying achievement in that portfolio.

He rates the slow progress in getting Public Private Partnerships off the ground as the least satisfying. This wasthe most frustrating, he says, because “we didn’t understand the complexity of the task properly”.

The next period in government will be about managing existing assets better. Infrastructure is now one of the words that trip easily off the tongues of politicians; we want more, better and sooner.

Mr English says the Government can now move from catch-up to growth mode. “The previous [Labour-led] Government started lifting the spend and we have maintained that momentum.

Broadband, electricity, road and rail are the big four. Now we are trying to develop the talk to make sensible decisions about growth; to look at where we might get beneficial investment where we have not considered it before.”

The Government is now looking at assets such as schools, prisons and defence facilities, where Mr English believes there is room for better management. “We need to apply to these assets the principles that the engineers have been talking about for years – whole of life asset management.”

An Infrastructure Unit was set up in the Treasury in 2009, and the Government appointed an Advisory Board of private sector leaders headed by Dr Rod Carr. “The Infrastructure Advisory Board introduced a very healthy tension between the bureaucratic culture and theprivate sector culture,” Mr English says.

“The Board is always dragging the bureaucrats to focus on the specifics: what are you going to build, have you got the money, is there a good case for it? The officials have tended to focus on the higher level policy.”

Two National Infrastructure Plans have now been prepared and released – one in 2010 and the second in July 2011.

“We got version one out quickly because people needed something to talk about, and then we developed a more wide ranging version two. There is now a great deal more certainty about the projects,a lot more transparency about funding.

We’ve now got a common language across central and local government and the infrastructure industry. But as version two shows there is still quite a long way to go about whether we really understand the asset life cycles of these things, whether the players, the investors, have the right incentives – local government with water, for example.”

However, “there is general agreement that we can use economic tools to make better use of our water and that would improve the environmental results as well”.

The value of government-owned assets is identified at around $110 billion, but ongoing investment is still only $6 to $10 billion a year. Mr English acknowledges that this is not much more than depreciation.

“We had a discussion recently about one of our largest asset classes, and that’s schools. We now know something like 60 per cent of them are 50 years or older and there’s no policy framework around the age of those assets. The process has thrown up all sorts of shortcomings about the Government’s management of its own infrastructure.”

Public Private Partnerships are seen as a way forward. The planned new prison at Wiri may be built as one of these. Two schools at Hobsonville are going ahead as Public Private Partnerships. A proposed all-of-government radio network may be another.

“It has been slow progress because we have been starting from zero. We started with no capacity and no understanding about how these things work. And now we have built up a capacity and a pretty good understanding. And I wish that we could have gone faster. But we have been thorough. There are two other areas in the pipeline – that’s housing and defence.

“The big plus is what you learn from having someone else look at your business and ask very hard questions that you hadn’t thought of. In the case of the prison PPP [Public Private Partnership], we haven’t finalised that, but what we have learned has changed our approach for the rest of them. What we are learning from the school process is helping us to make significant changes to how we run $13 billion worth of schools. So the big plus is what we learn that we can apply to the rest of our asset base.

“Looking ahead, anyone who has a proposition that they wish to put up, needs to have a pretty strong analytical base to it. Wearing my finance hat, I’d say that despite our recession and the Government’s books being a bit tight, where there is a good case we will spend – for instance, in IT, in government, in prisons and schools.

He lists the specific challenges for National’s new term as: the policy settings, the challenges around Auckland (the central business district rail loop and the harbour crossing in particular), the rebuild of Christchurch, and the growing pressure on local bodies.

“Government is starting to understand how badly it manages its infrastructure, [so there’ll be] less of a focus on new projects and more on the efficient

management of existing infrastructure.”

WRITER John Bishop