Monday, October 27, 2008

National's Infrastructure Policy in the New Zealand Election

National party leader John Key announced his party's election policy on infrastructure on Monday. More details here.

A National government would spend $8.55 billion on new infrastructure over the next six years, some $3.7 billion more than the Labour's infrastructure policy provides for.

National sees its policy as part of a "stepped up" capital spending plan to act as a counter-cyclical macroeconomic management plan to deal with the forecast decline in economic activity resulting from the global financial crisis.

Key identified several major projects, already announced as part of National's election policy, that would expand New Zealand's infrastructure. Expanding the broadband network will be the single largest project, costing $1.5 billion over six years. Roading and other transport projects, including the Waikato expressway, will total $750 million and additional prison facilities at a cost of $315 million will be constructed. National will also increase the building programme for schools by $500 million over three years.

Further infrastructure projects will be announced later this week.

Infrastructure projects will be funded in part by capital channeled through the 40 percent of contributions in the New Zealand Superannuation Fund being directed to the purchase of NZ-based assets. Key has been reluctant to state whether the deposit guarantee fees payable by the major trading banks, estimated at $100 million, will be used to help finance infrastructure despite speculation that National will do so. Key has said National will not borrow to finance infrastructure.

National pledges to streamline and speed up resource consents required under the Resource Management Act (RMA). A "Priority Consent" will be introduced to streamline resource consents for major infrastructure projects of "critical national importance". While environmental assessment will still be required, consents will be removed to the national level with local councils no longer involved in the priority consent process. A decision on priority consents will be required within 9 months.

Older voters, and students of recent NZ economic history, will recall National's "fast track procedure" that was rammed through in the National Development Act of 1979, an environmental impact assessment being required as a response to appease public resistance to fast tracking projects in the "national interest" that might otherwise be subject to insufficient public oversight.

Although only three projects were fast-tracked before the legislation was repealed by a Labour government in 1986, a National government in 1981 narrowed the basis for environmental assessment and the grounds for judicial review of such reports. Voters might well be best advised to adopt a "once bitten, twice shy" approach to this particular element of National's infrastructure policy.

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