Politics
Got a humongous project in mind? Get a humongous expert to back it.
When small children face adversity, it’s common for them to threaten to tell their mother or father on their adversary, or even to get their big bruv or sis to beat them up.
It’s something that even people in quite advanced states of adulthood never quite grow out of.
We’re seeing this in the various brawls over major infrastructure projects. First comes the snivelling to Mum and Dad, aka the Prime Minister and Finance Minister. “They’re picking on my port!” Then come the hidings. Dare to vie with me for the light-rail contract and I’ll get my consultant to give you a good thumping. Question my electricity pricing review and I’ll get my consultant to scare the bejesus out of the entire country with terrifying costings.
The beauty of this approach is that the term “consultant” freights authority. Some are international consultants. If such experts say a new rail line will cost a trillion bucks and cause ducks to fall from the sky, who are we, or even politicians, to argue?
The Treasury, of course, will always argue, but politicians find it easy to ignore, because it often gets the costings wrong on the Budget, on which it is the expert. So, alas, there’s been no independent arbiter of the expert reports on which so much taxpayers’ capital is staked.
Expert consultant A will invariably say something is black and expert consultant B that it’s white. Typically, A will have been paid by one vested interest and B by a competing one. Let’s not pretend their reports are neutral or disinterested. “I’m afraid your proposal to farm albino bison in the Maniototo is stark raving mad. That’ll be $300,000 plus GST.”
Some consultants’ reports are not just biased, but flawed. New Zealand Initiative think-tank economist Eric Crampton this year deconstructed the methodology of reports on alcohol and landfill waste and found what even the layperson could see were serious mistakes – and these in two documents intended to form the basis of public policy-making.
Happily, the new Infrastructure Commission will be fully under way within the next year, with statutory independence, consultant-grade expertise and only one client: the taxpayer. The consultariat must be spitting.
LONG LAST HURRAH
But the billable hours will have a massive last hurrah, because the Government has just announced a new infrastructure spending programme to be determined before the election. The commission will have a big input into these projects, most of which are yet to be determined. But there are already masses of reports from various sectoral interests in the mix and, in its first year, the new agency can’t possibly assess them all. Nor is it possible or prudent to wait until it can.
As the Reserve Bank and an unusually concurrent chorus of economists have said, the time to borrow for big infrastructure investment is now, and, preferably, yesterday. The cost of borrowing makes it a governmental no-brainer. The current conditions won’t last, and some experts argue – well, they would – that the Government has already left it too late.
But the other problem with this decision-making challenge is that behind many of the duelling consultants are state-asset owners, who are only owners in a legalistic or theoretical sense, but who think they’re guard dogs rather than guardians. What they “own” are public utilities: the ports, the councils, the railways, the roads, the state pension fund. They exist only because the state established them, but decades of corporatisation and sundry other ad hoc reconfigurations
If experts say a new rail line will cost a trillion bucks and cause ducks to fall from the sky, who are we to argue?
have left us with a sometimes perverse accountability mish-mash.
A prime example is Ports of Auckland (POAL), which is running out of capacity and will have to devolve some or all of its cargo traffic. Politicians decided some years ago that the old Auckland Harbour Board should be owned by the local council for administrative simplicity. Another long-ago admin patchwork determined its biggest rival, Port of Tauranga, be corporatised and stock exchangelisted. It later came to own 50% of Whangārei’s Northport, now POAL’s potential rival, with New Zealand First pressing the Government to transfer Auckland’s port business to Northland.
FAUX UPSET
POAL is outraged, as would befit any private company whose business the state was threatening to commandeer. But it’s also a public facility that should, theoretically, act with the city and the nation’s interests front and centre. It doesn’t, because it doesn’t have to. Why should it, when the council, too, behaves as if the port belongs to it, in a “we earned it!” sense, rather than just having had its governance conferred upon it for convenience’s sake?
For the Government and most Aucklanders, who resent the city’s showcase harbour frontage being a massive parking lot, it’s like trying to persuade a mama bear to hand over its cub.
POAL even goes on Twitter to troll opponents, recently calling a citizens’ campaign to move the port a “fake campaign”, adding, “Kinda feel sorry for them.”
Worse still, we now have one report that says Auckland will be quids-in without the port business because of all that freed-up prime real estate and less road congestion, and another that says the average Auckland family will be at least $1200 worse off a year because of higher freight costs for goods.
Also obfuscatory is the way all the vested interests bang on about “the business case”, as though these complex decisions about vital public facilities – which interlock with so many other entities, public and private – can be rendered as straightforward profit-or-loss deals. “Business case” is a bottomless hold-all for strawman arguments, because public utilities are not “business” as we normally understand it. There’s probably no profitable railway in the world, but governments still build them because they judge them to be of net public benefit.
There’s almost never a good business case for public infrastructure. You can’t even just pick the cheapest option. Ideally, governments choose the least-bad one, and even its numbers will inevitably be utterly terrifying. Perhaps almost as terrifying as the amount our public-assets guard dogs spend on patch-protection via consultants.
The average Auckland family will be at least $1200 worse off a year because of higher freight costs for goods.