Champagne roads, beer income: The hard truth about New Zealand's infrastructure
Sunday, 5 July 2026
Kevin Norquay is a senior writer for The Post and Sunday Star-Times. This is his weekly explainer.
New Zealand needs to stop treating all infrastructure like a political “must haves” and start swallowing its economic greens, economist Cameron Bagrie says.
Currently the system works something like this: a big storm, more slips, busted bridges flooding, a rebuild, another big storm - in the south Wairarapa the SAME bridge has succumbed to weather-related injury twice this year.
How can New Zealand ever cope with the constant assault on its infrastructure? A broccoli and spinach approach is the answer, says Bagrie in his nutrient-dense metaphor.
He explains: New Zealand must leave behind an era of political convenience and enter one of absolute necessity.
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'We're entering an era that's a broccoli-spinach era.The thing about broccoli and spinach is that a lot of people don't like it… but broccoli and spinach tend to be good for you,' he tells the Sunday-Star Times.
District councils can’t afford to rebuild every broken bridge, to restore every rural road, even as consecutive severe weather events leave small regional communities isolated, as parts of south Wairarapa were this week.
Bagrie argues New Zealand must face the harsh economic reality that local government funding models are broken, and we can no longer afford to continuously bail out underperforming infrastructure.
Councils and ratepayers within them must prepare to face a period of uncomfortable, disciplined choices regarding risk management and climate adaptation, Bagrie says.
To him the core crisis is around mismanaged assets which are turning in a negative return. We invest about the same percentage of GDP into infrastructure as other OECD countries, yet fail to measure up in long-term asset management and productivity.
OECD figures show New Zealand sits significantly lower in capital efficiency than peers like Australia or Canada. For every dollar of physical infrastructure built, we generate far less economic output and tax revenue return than other advanced economies.
“We're just not good at managing assets,' Bagrie says.
Why not?
Because large chunks of central and local government assets are no longer fit for purpose.
And councils often engage in short-term fixes that get wiped out in the next major storm event.
'We build stuff, and then we mismanage it… doing it right the first time is not exactly top of mind.'
Then, there’s the money issue, highlighted by Infrastructure New Zealand chief executive Nick Leggett, who cites south Wairarapa as a classic (but not unique) example of an extensive rural road network with a relatively small population paying for it.
“Many rural councils face the same challenge. Ultimately this is a funding system issue as much as an engineering one,” Leggett says, pointing out local government owns 36% of public infrastructure yet has access to only 11% of total public revenue.
“We’re asking councils to maintain nationally important assets using funding tools that were never designed for the scale of the challenge they now face,” he says.
“Amalgamation may create efficiencies over time, but it doesn’t solve the underlying funding imbalance.”
He called for an “honest” national conversation about alternative funding mechanisms and the role central government should play where infrastructure serves much broader economic purposes than simply local access.
“Bridges aren’t simply local assets. They’re economic connectors carrying freight, emergency services, school buses, tourism, and communities. Their value extends well beyond the district boundary.”
Bagrie agrees our local government model is heavily reliant on rates and “entirely unsustainable”.
The pressure on regional councils with small populations and expansive road networks is immense.
When a bridge costing millions washes out, yet it serves only a few hundred residents, cost-benefit analysis dictates it should not be replaced. Hard boundaries need to be drawn, he says.
Solutions? Sell landholdings, sell assets - for the past two decades there has been a move “away from the basics”, Bagrie says.
'You can't have champagne roads when you've got a beer income. The roading network must become more aligned with income… individuals need to bear more of the risk going forward,” Bagrie says.
'The big fundamental issue here is the taking and managing of risk. If you've got a branch within your business, and the branch is underperforming, do you continue to subsidise that branch, or do you eventually cut it off?
“Doing that is tough.'
So the question is whether local authorities have the political courage to stop subsidising traditional infrastructure that is no longer viable.
Bagrie points out the insurance market has adjusted; it now tailors pricing aggressively to specific flood risks and can bore down in the data to assess the risk of individual properties.
“We need to have that debate as to where the line is drawn, because we can't have that continued expectation that central and local government is going to continue to write the cheques,” he says.
Residents in remote or high-risk locations learn to accept permanent inconveniences, such as significantly longer travel times, rather than expecting the council to keep them in the fashion to which they become accustomed.
Finally, council structure: small, isolated authorities with restricted incomes are ill-suited to fighting the infrastructure cost onslaught. Council mergers to gain scale are “inevitable”, Bagrie says.