Rebuilding New Zealand by Reinventing Public Works
In 1988, at the height of the neo-liberal free market reforming era the MoW was dis-established and privatised. New Zealand may require the spirit of the MoW to be reinvented to recover from its current crises.
For New Zealand to recover from the Covid-19 pandemic may require a stronger expert-led public service to successfully guide the redeployment of the nation’s resources. Whole industries, like hospitality and aviation have sustained a body blow that will permanently change their nature.
The pandemic comes on top of a housing crisis and the climate emergency that have not gone away. The nation building spirit of the Ministry of Works may be needed to provide the public good framework needed to overcome these systemic challenges.
To progress New Zealand forward, MoW type government departments specialising in capital works could take responsibility for delivering on the country’s democratically determined strategic direction.
A reinvented MoW can help deliver a new vision. Such as, Sir Stephen Tindall’s green, high tech vision of the future. An example of high tech New Zealand is Microsoft in May 2020 announcing it would make a big data centre investment in New Zealand.
I have previously written about the vision to Electrify the Recovery in the Greater Auckland website and this paper fleshes out some of the ways this vision could be delivered.
Climate Change Commissioner Rod Carr would like some of the unallocated $20bn in funding from the May 2020 Budget to be used for climate change investment. In an Interest.co.nz article outlining Rod Carr’s request, several readers advocated for the Onslow pumped hydro scheme which was a central plank of the Electrifying the Recovery vision. This indicates a growing public awareness of a what a green high tech future will involve.
What would decarbonisation of our transport sector look like? How could it be achieved? What sort of public entities are required?
A useful way of describing a public building approach to governance is the difference between positive and negative planning as articulated by Professor Alan Evans in his book Economics and Land Use Planning, (2004, P.176–180). He describes two types of plans for the built environment:
- Positive planning where the government buys the land (outright or in partnership with the landowners) and builds what it understands should be there, benefiting from the capital value uplift the developed properties creates, to fund, in part or in whole, the infrastructure provided (note local or central government may also gain rising tax revenue as a result of the economic activity induced by the public works that could also fund the infrastructure provided).
- Negative planning is the use of district plans and planning rules to prescribe or proscribe what types of land-use development can occur in an area. Yet how much and what type of built environment that is actually constructed is determined by the private sector, as long as they act within the boundaries of the planning rules.
Positive planning for towns and cities is a government-led method of constructing much of the most critical parts of the built environment in a way that the urban area can achieve low land prices that is affordable for housing, business and workers. Positive planning can be as competitive as the alternative affordable urbanisation method — an absence of planning — that allows the private sector to develop land with no rural urban growth boundaries or other land-use restrictions.
The positive planning approach has the advantage of maintaining a compact city configuration that reduces long-term infrastructure costs (in particular reducing the expansion of motorways), motor vehicle use/ownership rates and the negative externalities that result from high motor vehicle use, such as, high spatial demand, too much land wasted on car parking, road congestion, road deaths and injuries, pollution and carbon emissions. Whilst increasing the built environments positive externalities of better access for connecting, meeting, partnering, employing, congregating, sharing, learning and trading.
In practical terms it means building towns and cities that are more like Vienna and Singapore and less like Houston.
The positive planning approach and variations on it have been successfully implemented in several countries in Europe and Asia.
The Japanese centralisation model (or more generally the East Asian development model) is a genuine success when it comes to delivering needed public goods as outlined by Professor Natasha Hamilton-Hart in her talk on Anglo-American capitalism in an East Asian Mirror. In Europe these functions are often delivered at the local or regional level which can also be successful.
The fragmented state of New Zealand’s centralised public service unfortunately may mean it struggles to deliver these functions.
The contrast to the positive planning approach is negative planning — which is New Zealand’s current default with RMA District Plans. Negative planning can achieve compactness by imposing urban growth boundaries or other land-use rules but at the cost of decreasing land-use competition and increasing urban land prices.
Examples of positive planning specific to city-building, was the planned integration of urban development with rapid transit (rail) used in New Zealand’s state housing boom of 1937 to 1955 following the government purchasing strategically located land at earlier cheaper prices. Especially in the Wellington region. The planned extension of this model to Auckland and Christchurch did not occur due to a change in central government direction (Slow Train Coming: The State Changes its Mind about Auckland Transit 1949–1956, by Christopher E Harris, PhD -Planning, 2005).
Disappointingly, the political understanding of the land-use mechanisms that affordably integrate housing with transport was poorly articulated in the 1950s and a sprawling auto-centric urbanism model was established with little or no challenge.
This poor public defence of co-ordinated housing and transport planning occurred even though positive planning was well established in New Zealand.
A variation of positive planning was a feature of many early European settlements in New Zealand, such as the pre-planned communities of Christchurch, Wellington, Nelson and Dunedin. Where the gains from provincial government land sales at the so-called ‘sufficient price’ was used to fund infrastructure and cultural amenity (C E Harris, 2005, P.8). Infrastructure and cultural amenity initially funded by debt could be fully repaid by the resulting value uplift in government land holdings. The land being sold once the ‘sufficient price’ was reach.
For instance a £300,000 loan was used to construct the 2.6km long Lyttelton Tunnel in the 1860s to give direct rail access from Christchurch to Lyttelton port. Canterbury when it made the decision to build the tunnel in 1857 only had a population 12,000 people. The rail tunnel raised the value of urban land in Christchurch and agricultural land throughout the Canterbury plains. It is no exaggeration to say the future economic well-being of Canterbury was established by successfully providing the infrastructure connecting town and plain to the port.
Auckland’s land-use development (both the city and the rural hinterland down into the Waikato) had a different history that evolved into a model that was more about the private sector, legal and financial entities, and land speculation. It also involved some pretty unsavoury war-mongering to gain access to Maori land (actually steal is probably the more accurate term).
In the past the MoW took the positive planning approach to making New Zealand. In partnership with elected representatives they identified projects that would advance the development of the country. The MoW had their own economists who could evaluate and determine how nation-building projects might fit into wider considerations, such as, the economic cycle. The Ministry was at odds with a neo-liberal Treasury, as it could hold its own in economic debates. Given this fight for political-economic attention it is not surprising the MoW was dis-established.
Whether the old MoW is resurrected or if a new modern structure with a similar purpose is created, I am sure the construction community would prefer to be led by their own people much like the health community does. Leadership instilled with knowledge, science and expertise from years of professional practice. Capital works government departments could then be led by experts who are at the top of their game.
In the past I am sure there were problems with the public sector approach. Institutional racism against Maori land-use needs? Pork barrelling? Gold plating? The civil service acting as if they were the permanent government (Yes Minister)? And communism never worked anywhere did it?
A balanced approach is probably best.
Thesis — > Antithesis — > Synthesis.
State as only developer — > Neoliberal Wild West — > Balanced public and private sector model; coordination plus competitive tension.
1870s - 1940s — > 1950 - 2020 — > 2020+? (H/T Patrick Reynolds)
To implement a new democratic vision, such as Electrify the Recovery, the old model of a one-stop shop MoW capital works provider could be modernised by recreating it in three parts. Kainga Ora — Communities and Homes (KO) could be the government’s chief architect and urban planner. The New Zealand Transport Authority (NZTA) is the government’s chief civil engineer specialising in transport infrastructure. The third entity could be a new department — maybe called Construction, Works and Innovation (CWI) — that would be the government’s chief industrial and energy engineer.
The positive versus negative planning concept can be expanded from describing the building of public civil works to describing the wider New Zealand public service. Being the current ethos is that many government departments ‘negatively’ plan/contract what separate providers then do.
Meaning many government departments lack the expertise to take a ‘hands on’, ‘in-house’, ‘do it themselves’ approach. The departments are silos mostly led by generic managers without a background of expertise in the core competency of the department. There is little evidence these managers see their role as taking responsibility for remaking a better version of New Zealand.
This is no accident. This is the worldview of Treasury who prevailed to embed neoliberal free market reforms in the 1980s and 90s. Two of the key pillars of these state sector reforms were the ‘funder-provider split’ and the adoption of a ‘new public management’ model for running the civil service.
The neo-liberal reforms replaced the old model of a career public service, headed by senior figures drawn from within the public service ranks, and directed by ministers who through the democratic process were publicly accountable for the delivery of public services.
The public service was reconfigured to operate under a managerial model, with outside appointees on short-term contracts. Many services were delivered by third parties under the Treasury’s model of a contractual funder-provider split. Government departments were often stripped of professional expertise in favour of generic managers.
The negative planning approach risks the public sector losing the connection that allows those who gain on-the-ground expertise in implementing successful new public works and services being able to rise to positions of ministry leadership.
The Director-General of Health, Dr Ashley Bloomfield, is a conspicuous and fortunate exception to the general rule of having departments headed by non-specialist managers who do not understand the core business of their organisations and don’t have time in their short contract terms to learn that core business.
Dr Bloomfield’s success in leading the public health response to Covid-19 raises the question of ‘what else could the team of 5 million that is New Zealand achieve given expert leadership’?
New Zealand’s successful fight against Covid-19, as an example of an expert-led government department responding well to challenging circumstances. This success may lead to a desire from the public for change in the management ethos of the wider public service.
Left-wing opinion writers, like Chris Trotter, have called for Bringing back the Ministry of Works in response to the Canterbury and Kaikoura earthquakes. Although the seismic ruptures were significant the political-economic rupture was not great enough to trigger a new way of doing things. The Covid-19 pandemic on top of the multiple other crises facing New Zealand might though trigger a change.
Chris Trotter’s piece highlighted the labour market implications of reinventing the MoW.
Within just a few years, MoW 2.0 would be passing out highly-trained and experienced engineers, architects, scientists and tradespeople to take up new positions in the private sector…
Not all of those inducted into MoW 2.0 would move out into the private sector, however. Many would make the defence, restoration and construction of New Zealand’s public infrastructure their life-long career. In time, MoW 2.0 would build up a formidable body of highly-qualified and highly-creative professionals, dedicated not only to the resolution of present problems, but also to the anticipation of new ones.
The proposed New Zealand Infrastructure Commission — Te Waihanga, appears like it is going to be an independent body. Independent means siloed with a very narrow remit, not leading what would be useful to do, but rather keeping to a narrow advisory objective. Independent can mean disconnected and dissonant.
As to the future of construction, given New Zealand’s size the best way to keep up with technology advances would be to have a strengthened ‘hands-on’ MoW type government department(s).
The private construction sector struggles enough not to go bust, let alone to keep New Zealand’s construction technology progressing in a systematic manner. In Japan they have eight large construction companies that develop technologies, but our construction industry is not of the scale of Japan’s. Other Asian countries like Taiwan have an equivalent of a MoW, at least in terms of progressing earthquake engineering.
Engineering colleagues have informed me that in many cases the MoW led technology transfer. For example the Ngauranga flyover in Wellington which used the incrementally launched method (also known as a push bridge where it is built at one end and pushed out over onto the piers), the MoW bought the launching nose and let the private contractor use it.
Another example of technology transfer is for gas pipelines for Taranaki gas, an American company was brought over to do the pipe welding, as part of their contract they were to teach locals how to do it well.
In both of these examples a deliberate approach by the MoW allowed overseas technology to be transferred to New Zealand successfully, both technologies having become well established.
In New Zealand there is a desperate need for the quality of building work, especially in residential housing, to be raised to international standards. Technology transfer is a very important issue. It needs to be done well.
A bad example of technology transfer was the use of monolithic cladding, which is part of New Zealand’s leaky homes saga, that occurred after the neoliberal reforms that favoured generic over expertise management structures in government departments.
More recently the KiwiBuild housing scheme failed on several different levels. In particular there was insufficient demand, as house prices were too high for most renters to afford and the houses were too often poorly located. A considerable part of the failure though was the split between an inexperienced non-expert funder and providers who did not ‘buy into’ the vision.
The private development sector did not want to change their established practices. Developers wanted to continue designing and selling housing sub-divisions that target the high end of the housing continuum with expensive bespoke housing. They did not want to reallocate resources to the mass building of more modest housing targeting the middle or lower end of the housing continuum.
It is unfortunate that KiwiBuild’s ‘buying off the plans’ funder/provider initiative has tarnished the whole concept. That this failure is inhibiting government departments ability to demonstrate prowess in areas where a government-led building process should have a natural advantage. Such as, spatially planning the integration of housing with transport infrastructures and master planning new built environments in locations that involve complex relationship building between multiple stakeholders — such as, local councils, multiple government departments, iwi, landowners etc.
More generally than the discussed housing, transport and construction examples, for the public and its elected representatives there is a danger that if an expert-led public service is not re-established then the public’s desire for effective responses to the challenges of the day will be thwarted. As the levers of power are disconnected.
It is vitally important for the future success of New Zealand that all its levers are fully functional because the challenges the country faces appear to be rising at an exponential rate. Addressing rising inequality, a housing crisis, a mental health crisis, the climate emergency, Covid-19 pandemic and so on is a massive challenge. I suspect collectively it amounts to a rupturing crisis in our nation’s story. To get ahead of the curve New Zealand needs to use all its resources wisely.
