Spread some of the infrastructure spending wider, Feds urges

An increase in central government’s contribution to local authority roading costs should be a priority for some of the $4 billion in unallocated infrastructure spending the Government still has up its sleeve, Federated Farmers says.

"It’s good to see some important road and rail projects back on track with the $6.8b worth of projects given the green light yesterday," Federated Farmers transport spokesperson Karen Williams said.

"But those spending commitments were concentrated in the north of the North Island, with considerably less in the South Island and not much at all for a number of key primary production provinces.

"Of course there is always going to be more demand than money available but an across the board increase in the central government subsidies available to councils to get on with improvements and maintenance on local and rural roads and bridges helps support the producers and industries that drive our economy, and helps keep all road users safe," Karen says.

In its report late last year on local government finances, the NZ Productivity Commission noted that roading was the second largest expense of local authorities.

"Most rural councils are cash-strapped with thin rating bases. Much of their key roading infrastructure is extensive, it’s ageing and it’s coming under increasing pressure from tourist traffic and forestry trucks. They’re struggling to cope with maintenance costs let alone capital expenditure," Karen said.

Other government-mandated costs are also coming down the line to ratepayers. The Productivity Commission said the upfront cost to councils of complying with the National Policy Statement for Freshwater Management are estimated at $1.4b-$2.1b, with ongoing costs of up to $59m a year (others have estimated the costs will be much higher). And analysis prepared for the Department of Internal Affairs estimated complying with the next drinking water standards could cost councils and owners of other networked schemes $3b-$4.4b in capex, and operating costs of $490m-$750m.

"New Zealand’s antiquated and often unfair property values-based rating system means that in the provinces, a disproportionate share of that burden lands on farmers," Karen said.

"If the government has infrastructure largesse still to distribute, Federated Farmers urges Cabinet to keep in mind these factors, and that exports from the primary sector are worth $46.3 billion - 78% of total goods/merchandise exports. In other words, those are the industries in the front seat as New Zealand generates income to pay back that borrowing for infrastructure."