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No Right Turn: A new Ministry of Works

Written By: - Date published: 7:05 am, April 2nd, 2020 - 22 comments
Categories: Economy, infrastructure, Parliament - Tags: , , ,

Idiot/Savant at No Right Turn writes:

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While the economy is on pause under lockdown, the government is beginning to plan how to cope with the post-lockdown, post-tourism, post-export education world we will eventually find ourselves in. They’re planning a lot of infrastructure spending as economic stimulus, and have asked for proposals which can start the moment the lockdown ends. And they’ve signalled a more direct role for the government in construction – effectively reviving the old Ministry of Works:

Ministers are rushing to prevent the country’s construction sector hollowing out under lockdown.

However, they’ve also admitted the state’s role in construction will massively expand in a way unheard of in several generations. That could include turning Crown Infrastructure Partners into a new Ministry of Works-style government department.

[…]

Answering questions on whether the Ministry of Works would be revived at the end of the country’s Covid-19 recovery Twyford said he “wouldn’t want to rule out that more hands-on approach”, and Jones said he was strongly in favour of it.

“We’re receiving a great deal of advice. And I have to say quite a lot of senior identities in the infrastructure community have already put forward the notion of something akin to the Ministry of Works,” Jones said.

Good. Because the current way of doing this – contracting everything out to the private sector – doesn’t work. Instead of getting “efficiencies”, it turns out that we get screwed. Its been obvious for some time that it would be better value for the government to cut out the middle-leech and just build stuff directly, rather than paying for other people’s profit margins and ticket-clipping. Rebuilding the economy after the pandemic is a chance to start that.

Its also a chance to do some other things too. Pretty obviously, we need to make this a green rebuild, focused on clean energy, efficient buildings, and public transport, things which reduce our emissions rather than increase them. We should be expanding Auckland’s train network, extending Wellington’s commuter rail to Otaki, Levin, or Palmerston North, building wind farms to push Huntly out of the market, and starting a mass house-building scheme of zero-emission homes to use as state houses. These are all opportunities to create jobs and breathe some life into the economy, while building for the future rather than the past. And hopefully, the government will take them.

22 comments on “No Right Turn: A new Ministry of Works ”

  1. tc 1

    Long overdue IMO and re-start the wind farms proposed along the west coast from Port Waikato down which were closed down after National came in 2008.

  2. millsy 2

    I always thought NZ was one cataclysmic event from some form of Ministry of Works reboot.

    • tc 2.1

      It's shown the state is actually great whereas business only ever understood the bottom line, just look at Amazon's behaviour !

      We're seeing all over the world the impacts of austerity and politics on health systems play out on a country by country basis.

    • Ad 2.2

      If it was to happen, it would have re-formed to rebuild Christchurch, or the North Canterbury earthquakes.

      Also don't forget that the vastly enlarged Kainga Ora – Housing and Communities (previously HNZ) is now a massive state-owned developer in its own right.

  3. Molly 3

    Would be a way of getting necessary infrastructure works done with direct control, and raising work and conditions for those who do it. The profit margin on the consultants, is not evenly distributed to the workforce, sometimes not even distributed in NZ.

    There may be an updated report on contracting out, but this was one from 2006 that I remember from the Office of the Auditor General: Achieving public sector outcomes with private sector partners.

    "…It is not the purpose of my report to advocate the use of partnering. My principal aim is to inform leaders and decision-makers about the key issues they need to consider across the public sector and for individual projects. My report draws on the experience of overseas jurisdictions, mainly Australia and the United Kingdom, and provides examples of partnering arrangements that have been entered into in this country. My report is not legal advice and is only a general overview of the issues.

    The experience of other countries suggests there is a need for clear government policy and direction if partnering is to be used to any great extent. Governments in other countries have also expressed clear views about certain public services that are not suitable for delivery through partnering.

    New Zealand is a small market for partnering arrangements compared to countries such as Australia and the United Kingdom. Projects here may not be large enough in size or number to attract significant private sector interest. However, there is evidence that small projects have attracted interest in some service sectors, and it is possible that New Zealand could take measures to increase that interest.

    In general, the Crown has executive power to enter into partnering arrangements. In each case, however, the power of a public entity to enter a partnering arrangement is subject to any procedural or substantive limits imposed by statute. There are only 2 substantive limits, which concern water and wastewater services, and prisons management.

    Public entities choosing to use partnering will need a high level of expertise and a sound business case to support their decision. The business case should clearly show how the chosen partnering arrangement fits with, and helps to achieve, the vision and policy objectives of the public entity. It should also show how a partnering approach would result in better value for money than other procurement options.

    A value-for-money assessment should consider the benefits of opting for a partnering approach against the costs of doing so. A key issue will be the value for money achieved by the proposed division of risks between the parties.

    Public entities are ultimately accountable for delivering public services, which is a responsibility they cannot transfer to the private sector. The public entity must have robust internal arrangements in place for deciding to opt for a partnering approach, and for managing its implementation. There will need to be strong leadership from the top of the organisation to drive the process and ensure proper accountability and control. There should be a clear definition of roles and responsibilities, identification of relevant authorities and delegations, and adequate arrangements for public scrutiny of performance under the contract.

    It will also be vital to ensure that the process for selecting a private sector partner is fair and transparent, and that it stands up to public scrutiny.

    The public entity should be aware that its responsibilities do not end once it awards the contract, and that it will be important to set up and maintain effective contract management arrangements throughout the life of the partnering arrangement. The contract documentation will need to define the responsibilities of both parties, including responsibilities for managing relationships, risks, assets, and performance. The documentation will also need to define accountability requirements clearly…."

    • RosieLee 3.1

      Absolutely.

    • Ad 3.2

      Public Private Partnerships – after Transmission Gully – are not as in favour as procurement models as pure alliances are.

      The government is still wrestling with the Light Rail model and is well overdue now to release its decision. That would have been pretty interesting ppp.

      On our larger scale projects in market now there is a stronger appetite from clients for pure alliance or hybrid-alliance models.

  4. mikesh 4

    Rebuilding Wellington's City Library would also be a worthwhile project.

  5. Ken 5

    Is this pandemic being used as an excuse for a massive financial reset?

    Could nations and multinational corporations be forgiven their debts while our personal savings and investments disappear?

    • KJT 5.1

      OBR rules make that a distinct possibility.

      However it will be fortuitous, for the banks, rather than deliberate.

  6. mary_a 6

    MOW! … Been missing for too long. Bring it onyes

    • tc 6.1

      Long overdue with the duopoly that are FH and Fletchers effectively divvying up the projects, taking as long as they like knowing there's nobody else.

      SH1 Rangiriri section is late because Fletchers 'broke' the earthworks contractor with their tactics then had to find another. No worries the commcomm rubber stamped their Higgins acquisition.
      Skycity's a rat national offered them to swallow that's having inevitable digestion issues.

      MOW built to last, we need to go back to that.

      • Ad 6.1.1

        The infrastructure and vertical construction markets are plenty competitive here – too competitive often for firms to survive. And it is completely a matter of survival for most of us now.

    • Anne 6.2

      Hear hear!

    • Some of us still remember the MOW as the enemy, damming our rivers ruining our lakes … does no one still remember ….

      Way back up in Cromwe-ell Gorge
      Tons of co-oncre-ete they-ey will-ill forge
      All our farmland they will drown
      Right back up to Albert Town
      Flood the Wilkins, dam the Rees
      Will their pla-anin-ing e-eve-er cease
      We must know where danger lurks
      Vandals of the Public Works

      (to the tune of God Defend NZ)

      I still groan every time I cross the “Hugh Watt” bridge coming into Auckland from the airport, how could anyone name something after that bugger

  7. RedLogix 7

    NZ has a 'Three Waters' infrastructure crisis that is an ideal target. Every city and town has aging assets that need replacing, extending or enhancing.

  8. pat 8

    If…and at this stage it is quite a big if, there is new MoW created it will be years before it is a significant contributor to NZs economic performance….it may however provide employment opportunity in the near term provided the will remains to maintain the investment….and that means across administrations.

    How confident are we?

    • millsy 8.1

      Its highly likely that MOW v2.0 would be a project management and design bureau type operation, that would subcontract the work out to private sector contruction companies.

      Despite the fake news offered up by ACToids, the old MOW contracted a lot of work out to the private sector.

      • pat 8.1.1

        yes they did…but one of their critical functions was as a alternate opinion (economic) to Treasury….in other words a more practical approach to economics than from the bean counters ….theres always more than one way to skin a cat.

  9. Observer Tokoroa 9

    Building and Rebuilding post Covid Virus

    As other contributors have said, we must rebuild our structures. There is much work for us to do. Fix Wellington and Auckland water and waste structures. They are but two necessities.

    The whole of our nation needs attention.

    In my opinion, the most important of all, is the building of State Housing. It is absolutely appalling to deprive low wage and no wage citizens to live in utter hardship.

    Yes, it would suit David Farrar, the disgusting Paula Bennett, and the great Simon Bridges to keep the greater part of Kiwis in distress. But they belong to the Party of Filth.

    No Private LandLords would be given Licence. The Housing would be Built by the State.

    Lets' do it ! The State Houses of Post WWLL still stand. We don't need Rubbish. We don't need anything called National. We don't need the filth of dirty LandLords.

  10. georgecom 10

    I am going to suggest that some of the announcements made under the Provincial Growth Fund should be scrapped, those aimed at promoting tourism in the regions or tarting up parts of towns/cities with tourism in mind. There are a plethora of such plans, some tied into hotel development as well by the looks. Some of the projects are for airport expansion, wonder if those now need to go ahead. And I suggest Ports of Auckland needent be concerned with expansion for cruise liners for a while. For a number of projects the need or the target market or the economic return just wont be there in coming months.

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