Josie Pagani: How to pay to fix our broken infrastructure

Thursday, 2 March 2023

Minister of Finance and Cyclone Recovery Grant Robertson and Minister for Regional Development Kiri Allan are making an announcement on Government support following Cyclone Gabrielle.

Josie Pagani is a commentator on current affairs and a regular contributor to Stuff. She works in geopolitics, aid and development, and governance.

OPINION: The bill for fixing the damage after the cyclone is at least at NZ$13 billion – equivalent to one dollar out of every eight dollars of tax collected last year.

That's just the repair bill. There is another bill coming for the upgrades, to make us more resilient.

Here's how to pay for it.

* State highway repair and red-zoning communities 'immediate issues' for cyclone recovery

* Grant Robertson outlines how cyclone business support package will be spent

Auckland's light rail to the airport is first on the bonfire. It is budgeted to cost $14 billion. That’s predicted to double. It sounds great. Who doesn't want our own London Underground? But the rebuild is more important. So that’s $30b right there.

Lake Onslow doesn’t stack up, says Josie Pagani.

Lake Onslow is the next to go. It's a massive valley in Otago that will be concreted over so we can use electric power to push water uphill, store it, and then generate power from the water running downhill when other lakes are empty.

Fans say it will reduce power prices, provide a 'battery' to support renewable energy, and decarbonise the electricity system.

If it did all that, I would support it, but no expert believes it will.

Josie Pagani: ‘’Taxing tradies with utes to give an $8k subsidy to people who can afford to buy an EV was always a middle class subsidy that didn't pass the sniff test.’’

If Onslow is such a good idea, why does the government have to pay for it? When I talk to experts they say Onslow will take until 2040 to build and cost $8b to $10b. Burn it.

So far I have freed up $40b. You could give every household in Auckland a free Tesla for the combined cost of light rail and Onslow.

The bridge linking Gisborne with the East Cape was damaged in Cyclone Gabrielle and will take months to fix.

Come to think of it, taxing tradies with utes to give an $8k subsidy to people who can afford to buy an EV was always a middle class subsidy that didn't pass the sniff test. The subsidy has cost $300 million, with the ute tax covering $100m of that.

Each of those EVs then gets another $2000-$3000 a year in avoided contributions towards the cost of the roads it drives on.

That's another $50,000 subsidy if the car lasts 20 years, like my Mum's Toyota. How much subsidy is too much? EVs could at least give way to the rest of us at intersections.

Get rid of the EV subsidy. It's not doing anything to lower our emissions. We need the money for the rebuild.

The next place to make multibillion-dollar savings is to spend better.

The auditor-general has called out a lack of precision in 'outcomes'. He means we don’t know enough about how money that is supposed to be used to solve problems really gets spent and whether it achieves the outcomes it is meant to.

Josie Pagani: I had more wow moments learning about the universe from six hours of podcasts than I had in 12 years of school.

Our public service likes to congratulate itself, but this seems like a basic failing. They can’t count.

During Covid the auditor-general called for something like a Covid money-tracker, with easy-to-access summaries of how much Covid funding was allocated, and 'the actual amount of spending to date on main initiatives and, ultimately, what has been achieved.'

Well. That didn’t happen.

Let's do it for the rebuild.

More savings can be made by eliminating long delays between project planning and delivery, which cost money but don't add value to outcomes. The time to get a consent has increased by 150% in 5 years.

The Waikato Expressway took 40 years from conception to completion. Infrastructure New Zealand reckons it could have been 20 years sooner. It says the delay cost our economy about $2.3b.

On average it takes 15 years to complete an infrastructure project. Why does it take longer to build here than in Australia? The commission reckons we can bring that down to eight years.

When we have made all those savings, we can borrow and tax more too.

Debt can be spread over many decades, even generations. Some British government debt dating from the Battle of Trafalgar was repaid only in 2015.

After floods in 2011, Australia imposed a temporary 'flood levy' on those who can afford it, including the forestry industry who left forest slash on the ground for decades.

For one year, taxpayers with an annual income between A$50,000 and A$100,000 paid an extra 0.5% levy, while those earning over $100,000 paid an additional 1%. Taxpayers living in the flooded places paid nothing.

YouGov polling of 11 countries similar to New Zealand shows, for the first time, overwhelming support for a ‘tax switch’.

Tax those who can afford to pay a bit more, and give the rest a breather, not out of envy, but because someone has to foot the bill and it is fairest for more to come from those who have the greatest ability to contribute.

We need a rebuild for all of us or we will become two nations. One is affluent, well educated, with modern roads, pipes and broadband. The other, poorer, unskilled and lacking a reliable way to travel, power and phones that work when it rains, and homes and workplaces that keep standing when the ground trembles the way we know New Zealand will.

Let’s get it right this time. Build back stronger, not cheaper.

Correction: This article originally stated that research was carried out by Infrastructure Commission and the New Zealand Initiative. In fact it was Infrastructure New Zealand.