Infrastructure Recovery

Dr Matthew Birchall
Insights Newsletter
24 February, 2023

Cyclone Gabrielle has battered New Zealand’s infrastructure.

Roads, bridges and powerlines across large swathes of the North Island have been decimated. A substation has been flooded. And thousands of homes, farms and businesses lie caked in mud and silt.

Finance Minister Grant Robertson has suggested that the rebuild could cost $13 billion. That rivals the initial estimate for the 2011 Christchurch Earthquake.

And it means that the fallout from Gabrielle will be felt for many years to come. The government needs to get its response right.

In the short term, Prime Minister Hipkins must do everything he can to facilitate the rebuild.

That means loosening New Zealand’s strict immigration settings.

Fortunately, there are promising early signs.

Immigration Minister Michael Wood has indicated that he is ramping up work to ensure that skilled workers from overseas are able to get into the country with relative ease.

Tweaks to the seasonal worker scheme are also in the offing.

Long-term policy decisions will be just as essential.

Adjustments to EQC premiums could help. Levies are primarily determined by property value, not location. A better approach for EQC might be to set premiums to reflect risk.

People should still be able to build where they want, but they should pay more if they want to live in cliff-side homes or in floodplains.

A greater challenge still concerns infrastructure resilience.

Commentators have rushed to pronouncements about New Zealand’s broken grid. We are implored to future-proof our roads and embrace “sponge cities.”

The reality is more complicated.

Investing in infrastructure involves making difficult trade-offs between cost and resilience that cannot be avoided. Therefore, it is unrealistic to believe that we can solve the problem by simply spending more money.

If we want to move roads or build them to a higher standard, then we need to re-examine how we pay for them. That will likely mean more user-pays options.

Resilience is not free.

The same goes for New Zealand’s critical infrastructure. There may well be a case for relocating or strengthening vital parts of the network, such as substations. That is especially true for legacy infrastructure that was built to different standards.

But answers to these questions are still unclear. And now is not the time to resolve them.

Gabrielle is a cruel reminder of the hazards that come with living in our beautiful country. The rebuild will hopefully remind us of the opportunities.

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