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Budget 2022: Good start, but more infrastructure investment needed

19 May 2022


New Zealand’s national association for civil contractors has welcomed the $230 million investment in trades training programmes, increased funding for rail and rural broadband infrastructure, and support for Construction Sector Accord Transformation Plan initiatives included in Budget 2022. 

However, it cautions far more will be required to solve the civil construction industry’s worker shortage, upgrade and maintain transport and water networks and help communities mitigate the impacts of climate change.

Civil Contractors New Zealand Chief Executive Alan Pollard said Aotearoa’s infrastructure sector was facing immense challenges, including a lack of workers, uncertainty around future projects, and spiralling expenses caused by supply chain disruption and rising fuel and materials costs.

“Today’s budget is a good start. The Government investment in trades training, rail and telecommunications infrastructure and the Construction Sector Accord initiatives is very positive but it doesn’t go far enough. As a country we are missing a trick when it comes to dealing with other key infrastructure issues.”

Key challenges facing the industry were identified in New Zealand’s first 30-year strategy for infrastructure investment - Rautaki Hanganga o Aotearoa - developed by Crown entity Te Waihanga New Zealand Infrastructure Commission and tabled in Parliament in April.

Pollard acknowledged the Government was still considering the findings of the strategy and was not required by law to respond until September. However, he expressed concern that the modest Budget 2022 allocation for infrastructure could delay action on many of the report’s recommendations – and many critical infrastructure projects – until 2023 or beyond.

“Treasury’s 2022 Investment Statement has put our combined infrastructure gap at a whopping $210 billion. If we are going to make headway and create a thriving New Zealand for future generations we need a lasting commitment, from all political parties, to building and maintaining the transport, water, energy, and communications infrastructure that’s desperately needed.

“We must continue to innovate, look for efficiencies and work smarter, but we can’t build our nation on the smell of an oily rag. The $37 million to progress Construction Sector Accord Transformation Plan initiatives will help foster smarter and more efficient ways of working, but without additional funding it will be difficult to make progress against a rising tide of escalating costs.”

Significant infrastructure funding was announced in the 2020 and 2021 budgets but some of the ‘shovel-ready’ projects outlined over the past few years are still to begin. Pollard said delays had been exacerbated by inefficient consenting processes and insufficient funding to cope with inflation and rising costs.

Lack of workers is another key challenge faced by the industry, he said. The New Zealand Infrastructure Commission strategy forecasts that New Zealand will have a shortfall of approximately 118,500 construction workers in 2024.

“The civil infrastructure and construction workforce shortage is acute. Australia has launched a major international attraction campaign for infrastructure workers and New Zealand must do the same to attract people to our country and dispel the myth we are not open for business.

“We also need to do more to remove the barriers preventing people from being able to work in New Zealand. That means investing in more resources for Immigration NZ to process the number of applications we will need, as well as broadening visa eligibility criteria – we need engineers and planners, but we also need people out in the field doing the work required.”

Taking action on climate change was another big focus of Budget 2022. Pollard said there was broad agreement across New Zealand and within the civil construction industry that more needed to be done on this front, but investment in reducing vehicle emissions was only part of the solution.

“More consideration should be given to the role infrastructure can play in risk management, community protection and mitigating the impacts of the climate crisis.

“There’s an urgent need for more central government support for sea walls, and river- and lakeside- flood protection for vital transport networks and vulnerable communities.”

Pollard said the Government would have a golden opportunity to re-align its infrastructure investment later this year when it issued its response to the recommendations in the Rautaki Hanganga o Aotearoa infrastructure strategy report.

“The New Zealand Infrastructure Commission has done some outstanding work over the past few years, gaining input into our country’s first ever long-term infrastructure strategy from over 20,000 New Zealanders, over 700 consultation submissions, and stakeholder meetings and workshops.

“It’s our hope that the Government takes this report seriously and moves quickly to ensure New Zealand’s infrastructure needs are given the attention, and funding, they deserve."

 

 

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