A Minister of Delivery is unlikely to be enough

This week Grant Robertson became the unofficial Minister for Delivery, with the announcement that he’d be getting a dedicated unit within the Department of Prime Minister and Cabinet that would focus on ensuring policies were completed.

The timing is unfortunate. Robertson has, albeit in a somewhat more limited capacity, been a Minister of Delivery for a little over a year. In January 2020, he took the lead on the NZ Upgrade Programme, the Government’s $12 billion preCovid infrastructure package. More than half of that money, $6.8b, was allocated to transport projects, which the Government has decided it can no longer commit to delivering in the way, shape, and cost in which they were announced.

It puts projects like Auckland’s $1.3b Mill Rd, or Wellington’s $817m O¯ taki to North of Levin motorway and $258m Melling interchange in doubt. It appears some of those projects might be scaled back and made more modest, while others could be rescheduled.

This is very much Robertson’s responsibility. Progress on the upgrade projects was reported back to him, which is what you’d expect from an infrastructure programme that spanned portfolio areas like health, education, and climate change.

But the move was also quietly briefed out as a way of assuaging fears that then-transport minister Phil Twyford wasn’t the person to look after another $6.8b of infrastructure projects, given his history with KiwiBuild and the question marks over the Auckland light rail project.

Since January, progress on the transport upgrade projects has been reported back to the joint ministers, one being Robertson, the other being transport minister Twyford in the last term and Michael Wood in the current one.

With question marks now hanging over the projects, it’s fair to say that putting Robertson in charge hasn’t made a massive difference to their deliverability. To be fair to him, though, he spent most of last year talking the economy from the edge of a Covid cliff, a task on which he undoubtedly delivered.

The upgrade programme was more difficult. Yesterday, Robertson laid the blame for its troubles firmly at the feet of Covid, saying pandemic-related cost escalations across the infrastructure sector were making themselves felt. That’s undoubtedly true – but before leaping to the conclusion that the Government needs a crack delivery team to solve its problems, it’s worth being more specific about the type of problem the team is trying to solve.

Cost inflation was rife in the infrastructure sector before Covid, for a multitude of reasons that a new delivery unit is unlikely to fix. KiwiBuild was plagued as much by overpromising as it was by under-delivery. Long-term, something approximating KiwiBuild should have been possible, had the Government been seriously committed to bringing under control the rapidly escalating price of land.

The recent Transmission Gully review doesn’t lay blame for that troubled project at the feet of Covid-19. Instead, it goes into some detail about the fact that it was put out to tender at an inappropriately low cost – so low that most people knew it would be impossible to deliver.

That in itself wasn’t exactly revelatory. Both private and public sectors have a habit of putting projects out to tender at ridiculous prices, resulting in top-up payments later, or construction companies going bust when they have to shoulder losses from inevitable cost overruns.

This was the main thrust of the Government’s 2019 Construction Sector Accord, drawn up by last term’s building and construction minister, Jenny Salesa. After crises at Fletcher Building and the collapse of Ebert Construction, the Government saw it needed to step up and show best practice when it came to tendering work on new projects.

Essentially, the Government promised it wouldn’t always pick the lowest bidder, but would focus on realistic tender prices to avert a race to the bottom, which often led to massive losses on the part of construction companies. In cases like these, it appears a few extra dollars upfront would have averted catastrophe down the line.

None of this has anything to do with Covid, but that doesn’t really matter. Anything that causes the transport projects in the Upgrade Programme to come in above $6.8b is a problem for the Government. It’s also something an implementation unit is unlikely to help with: it can’t upend global supply chains, and the cost of land is a political problem that no amount of good policy will fix.

One fix that deserves attention is Greens transport spokesperson Julie Anne Genter’s call for a select committee inquiry into infrastructure cost inflation. Genter is trying to get parties to agree to getting the transport select committee to look into the issue. It’s something it might want to consider, given the massive amount of construction taking place.

There is, of course, a risk that in the hands of a parliamentary committee such an inquiry could turn into a political blame game, which Labour and National would be especially keen to win.

Anything that causes the transport projects in the Upgrade Proogramme to come in above $6.8b is a problem for the Government.