What to do about Roads of National Significance?

The most significant recent development in transport policy is the Government’s decision to reschedule the Roads of National Significance (RoNS) programme. The sheer scale of the proposed projects makes them neither affordable nor practical to build within the next three to five years.

The funding gap was already clear from the Infrastructure Commission’s analysis. Delivering the full package of proposed land transport spending would require fuel tax and road user charges to rise by around 70% (and then continue rising with inflation). A petrol tax increase of nearly 57 cents per litre (including GST) is politically toxic — no government could expect to survive it. Something had to give.

Even if road users nationwide could somehow be forced to pay more, there is simply not enough construction capacity to simultaneously deliver multiple large highway projects across several regions.

Deficit between user fees and planned land transport spending

From the late 1970s through to the 1990s, New Zealand typically had one — or at most two — major road projects underway in its most populous regions at any one time. In the late 1990s, for example, Auckland’s biggest project was the Northern Motorway extension from Albany (Greville Road) through to Silverdale/Orewa. This steady, measured approach kept skilled people and equipment reasonably utilised and helped control costs.

Spending increases at the time were carefully managed so they did not overwhelm the sector’s ability to recruit staff and secure plant. That disciplined approach stands in stark contrast to today’s stop-start political cycles.

Construction capacity is not just a national numbers game. It is highly regional and specialised. Every region needs a baseline level of capacity for routine maintenance, renewals, and emergency response (clearing slips, rebuilding after storms, etc.). For large projects, it makes sense to sequence them so that one flows into the next, preserving expertise and minimising mobilisation/demobilisation costs. Certain skills and equipment — particularly tunnelling — are especially scarce in New Zealand. Running multiple major tunnelling projects concurrently would be inefficient, but so would long gaps between them. The current major tunnel project, Auckland’s City Rail Link, is now largely complete. The next significant one is likely to be the 850-metre Dome Valley tunnel on the Warkworth to Te Hana motorway — the largest road tunnel since Waterview. It is prudent to avoid starting another large tunnelling project in the upper North Island until this one is well advanced.

So what has the Government done?

It has rescheduled the RoNS programme, which was really the only realistic option politically. Raising national fuel tax and Road User Charges so that drivers in Southland subsidise roads in Auckland and Wellington is neither fair nor efficient. Tolling can help at the margins, but it typically recovers only 10–15% of construction costs. While useful, tolling is nowhere near enough to fund these projects — and it can divert some traffic back onto older routes, diluting the intended benefits.

The infographic below summarises the outcome of that rescheduling. The first page shows projects now under construction, including Roads of Regional Significance and other priority works.

There is a solid spread of projects across Northland, Auckland, Waikato, Bay of Plenty, Hawke’s Bay, Manawatū, Wellington, Canterbury, and Otago. These are the schemes we know will proceed. By far the largest is the Warkworth to Te Hana section of SH1, which alone accounts for 26% of the distance from Warkworth to Whangarei.

The remainder of the RoNS programme remains unfunded for now. This includes the extension north of the Christchurch Northern Motorway, the Hope Bypass near Nelson, upgrades to SH1 in Wellington, and the balance of the Northland expressway — including the long-awaited bypass of the Brynderwyn Hills (which is already in pre-implementation and likely to follow Warkworth to Te Hana).

This situation is the predictable result of excessive political ambition, ongoing budgetary indiscipline in other areas of government spending, and a funding system that lacks rigorous discipline on costs and project scope.

It would be optimistic to expect the politics around these projects to disappear with a change of government. The other side of politics has shown little concern about cost blowouts on the City Rail Link, and appears relaxed about the $1 billion earmarked for a new rail branch line to the Port of Marsden Point.

That Marsden Point branch line stands out as a genuine boondoggle — right up there with the worst of any RoNS project. Its Benefit-Cost Ratio was massaged from a dire 0.32 to a more politically acceptable 1.19 under the Ardern Government through heroic assumptions about massive freight transfers to rail. Making the project even remotely credible would require another $1.3 billion to upgrade the North Auckland Line. Some might call this economic alchemy; most would simply call it a government-commissioned business case. Notably, it was Winston Peters who helped create these circumstances — one of the more expensive “costs” of that coalition agreement to the taxpayer. 

It would be refreshing to see a consistent willingness across the political spectrum to reject boondoggles, regardless of mode. However, that currently seems unlikely.

Background

I understand why the Key Government launched the Roads of National Significance (RoNS) programme. For the previous two decades, the land transport funding system had struggled to deliver large, transformative road projects.

New Zealand has long funded roads on a fundamentally different basis from energy, telecommunications, aviation, and port infrastructure. While those sectors moved toward commercial models in the 1990s, land transport has continued to rely almost entirely on the cashflow from motoring taxes. With few exceptions (mainly legacy toll roads such as the Auckland Harbour Bridge and Lyttelton Tunnel), the system operates on a pure Pay-As-You-Go (PAYGO) basis.

Under PAYGO, new capital projects are funded from existing road users — whether or not those users will ever benefit from the new infrastructure. Future users pay the same charges, but their contributions are spread across further new projects and ongoing maintenance of the existing network. PAYGO works reasonably well for maintenance, renewals, and smaller-to-medium projects, but it is poorly suited to large capital investments. Funding capacity is limited by annual cashflow, making it difficult to finance major projects that take many years to build.

While there has been some increase in borrowing (via PPPs or Crown loans) against future revenue, it remains the exception rather than the rule. Roads are still managed as a government function rather than a commercial business.

The RoNS programme was a pragmatic workaround. It directed a significant portion of available cashflow toward a small number of big projects, bypassing a system that was otherwise well-tuned for maintenance, renewals, and high-value projects under $100 million. Large projects only proceeded if they offered exceptional benefits. Many of the successful ones — such as much of Auckland’s SH20 and SH18, the Albany to Puhoi extension of SH1, and large sections of the Waikato Expressway — clearly met that test.

By explicitly listing specific mega-projects, the National Land Transport Programme was reoriented to prioritise them. However, this approach came with real risks.

The two big issues with the RoNS are:

• Displacement of higher-value projects: Lower-profile but collectively more beneficial initiatives were deferred or cancelled. The Melling Interchange, for example, should have been built 10–15 years earlier.
• Weaker cost control: Politically prominent projects often faced greater cost escalation. Officials and contractors, wary of cancellation, tended to apply less rigour to commercial risk management and scope control.

That said, few people today would argue against key RoNS projects such as Transmission Gully. Even the Puhoi to Warkworth section — once derided as the “Holiday Highway” — is now widely seen as worthwhile. 

Completing the Waikato Expressway has saved lives and dramatically improved connectivity from the Waikato and Bay of Plenty to Auckland. Importantly, the RoNS programme would never have been necessary had the Clark Government not dismantled two critical elements of the more independent, professional funding system established by the previous National and Labour governments.

Why did it go wrong?

From 1996, Transfund operated as an independent Crown entity responsible for land transport funding. It was financed entirely from what is now the National Land Transport Fund — revenue raised directly from motoring taxes. Its job was to spend that money in ways that maximised value for the road users who had paid it. In effect, it functioned as a proxy user-pays system.

The Transfund Board was required to deliver a safe and efficient roading network. This naturally led it to prioritise maintenance, renewals, and resilience first, then fund only the highest-value improvements. It was never intended as the final destination of transport funding reform, but rather as a stepping stone toward a more complete user-pays model.

Transfund’s main constraint was the level of motoring taxes set by Parliament (in practice, the Government of the day). It advised Ministers on what could realistically be delivered at different tax rates. When first established, the revenue from those taxes was sufficient to cover maintenance and renewals while still allowing new capital projects with a minimum benefit-cost ratio (BCR) of 4:1.

That was a deliberately high threshold, yet at the time there was no shortage of projects that comfortably cleared it.

Merge funder and provider

This arm’s-length funding model was dismantled in two stages. First, Transfund was merged with the Land Transport Safety Authority, which had responsibility for the motor vehicle and driver licensing registers, commercial vehicle operator licensing, and land transport safety programmes. 

Second, the resulting entity — Land Transport New Zealand — was merged with Transit New Zealand, the state highway manager. The New Zealand Transport Agency (NZTA) was born: an organisation that was simultaneously the primary funder of land transport, its largest single recipient (as state highway owner and operator), a safety regulator, and the administrator of key licensing systems. “Chinese walls” were established in an attempt to preserve the independence of funding decisions. In practice, it was always going to be difficult for an agency whose board and chief executive were also responsible for building and managing the state highway network to avoid favouring its own projects over those of local authorities.

I remember Transport Minister Maurice Williamson in the mid-to-late 1990s openly welcoming the separation. He was “glad” when people lobbied him to build a particular road, because he could reply: “It’s not up to me — it’s up to Transfund to decide how best to spend the money on the roads.” The principle was simple and sound: professional, evidence-based funding decisions would deliver better outcomes for road users than politicians picking high-profile winners.

Enabling political direction of funding

One of the more damaging changes in New Zealand’s transport funding framework was the introduction of the Government Policy Statement (GPS). Setting aside the clumsy decision to appropriate a widely understood acronym, the Clark Government effectively dismantled Transfund’s operational independence. In its place, Ministers gained the power to direct spending: defining funding categories, setting allocation levels, and leaving NZTA to manage delivery. This structure inherently allows Ministers to prioritise politically favoured projects, including Roads of National Significance.

The results have been underwhelming. Successive governments of both major parties have channelled funds into large, high-profile projects while maintenance and smaller, high-value capital works have been squeezed. Under National, this meant big motorway projects. Under Labour, it meant heavy emphasis on rail, public transport, and cycleways — often accompanied by years of expensive planning and design work on schemes such as Auckland Light Rail and Let’s Get Wellington Moving, with little to show for the expenditure.

Politicians are rarely effective at picking infrastructure winners. We saw this clearly in the 1990s when decisions on airport terminal developments were taken out of political hands, finally delivering Wellington an airport terminal fit for purpose rather than a leaky 1920s relic. No one would suggest politicians should dictate the location of mobile phone towers, yet the trend toward greater political interference in infrastructure has re-emerged strongly in recent years.

The long-running saga over replacement of the Cook Strait rail ferries is a textbook example. A commercial operator has been prevented from making a straightforward business decision (i.e. not having rail enabled ferries) because politicians insist on vessels that users are unwilling to pay for at the price required — hence the need for taxpayer subsidies.  That's a different argument though.

So what should happen?

While a more fundamental reform of New Zealand’s land transport funding is ultimately needed, a practical interim step would be to restore genuine transparency around the merits of individual projects. This would allow genuinely high-value initiatives to be advanced on their own terms. Once the National Land Transport Fund (NLTF) is exhausted on its core priorities, any additional Crown funding from general taxation could then be directed transparently to whatever other projects Ministers deem worthwhile.

The next Government Policy Statement (GPS 2027–2030) should be the last. It should focus squarely on delivering an efficient, productive, and safer land transport system. Clear targets and funding criteria should be set for improving network productivity, reducing congestion, enhancing trip reliability (including resilience to disruptions), and cutting serious deaths and injuries on our roads.Any Roads of National Significance (RoNS) or other major projects that sit above this baseline should be funded separately through Crown grants or loans raised specifically for those purposes. Some, such as the Hawke’s Bay Expressway upgrade, already stack up as relatively strong value-for-money investments on their own merits.

To support this approach, NZTA (and its successor state highway manager) should develop corridor plans for all State Highways. Similarly, local road controlling authorities should prepare plans for their major arterial corridors. These plans would identify the key challenges on each corridor — whether safety black spots, capacity constraints, or resilience gaps — and set out a prioritised pipeline of interventions across short, medium, and long-term horizons.Longer-term projects would provide the justification for early land acquisition, consenting, and design work. Shorter-term fixes could be advanced quickly to deliver immediate user benefits. The result would be greater certainty for the construction sector, better cost control through a steady pipeline of work, and more disciplined prioritisation overall. Some corridors would require little beyond routine maintenance and renewals; others would need substantial, staged upgrades.

For example, a corridor plan for SH1 from Auckland through Northland would sequence improvements to the Whangarei area based on actual user demand, safety data, and network performance. The solution might not be a full expressway the entire way, but a series of targeted, high-return interventions. Investment decisions would flow from evidence rather than political whim. If a future government wanted to accelerate large-scale upgrades, it could do so — but it would need to top up funding transparently from general taxation, without cannibalising the core NLTF programme. This model would also create a much clearer picture of future spending needs, borrowing requirements, and the balance between road user revenue and expenditure on the network.

Wouldn’t this be more honest, more transparent, and ultimately more effective? It would deliver a steadier flow of work for the sector, ensure road users receive the benefits of continuous renewal and improvement, and create a far closer link between the people who pay for roads and the roads they actually receive.

Next up: What about the choices made for rescheduling projects?

Has Brexit been a disaster?

It's not surprising that a decade since the UK's vote on leaving the European Union that the pro-EU media is crowing. RNZ has republished a CNN piece called "Ten years on, Britain counts the cost of Brexit" as if there is some grand consensus in the UK that it was a mistake. Given that the leading party in opinion polls is Reform (which is essentially a reconstituted Brexit Party/UKIP) that would seem like the same foolish arrogance that saw the bureaucratic/media/academic establishment, and most politicians (although some Conservatives and a handful of Labour politicians promoted Leave) be gobsmacked when the UK voted "Leave".

They couldn't believe that a majority of voters disagreed with them, and now of course they think most people regret it. No doubt leaving has imposed costs on businesses that trade with the EU, and no doubt both major parties in Government have barely touched the sides in setting Britain free but Michael Gove, whose career highlight, as far as I am concerned, was as Secretary of State for Education under David Cameron (when he pioneered free schools and enabled high rating state schools to become independent Academy schools), has written persuasively in the Spectator that it HAS been worth it:

The reality has been different: Britain is growing at least as fast as our major European partners (the countries growing fastest in recent years have been those which imposed the most savage austerity in the early 2010s). We took the lead among European nations in the fight against Russia when it invaded Ukraine. The City is flourishing: Britain remains the world’s largest net exporter of financial services, according to TheCityUK, an industry-led body representing UK-based financial and related professional services. Net exports were £84 billion last year, 12 per cent higher (in real terms) than in 2015. And however many masters there are in the universe, they still seem to be flocking to London. There were 162,000 people working in finance and insurance in the City of London in 2015, pre-Brexit, and 223,000 in 2024.

Could that growth have been more impressive? Of course. Is there still a long regulatory tail of EU legislation holding us back? Absolutely. But the choice to go further, faster is there – and can be exercised in a manner impossible while still in the EU.

Gove has identified policies both good and not so good, that leaving the EU has enabled.

• Cut tariffs on over 100 foodstuffs to counter inflation (EU Membership put the UK's entire trade policy in the hands of Brussels)

• Preferential trade agreements with the US and India (and Australia and New Zealand)

• Being outside the EU Digital Markets Act enabling the UK to outstrip investment in AI and technology compared to EU Member States

• Enabling gene-editing of crops (the EU effectively prohibits genetic engineering outside the lab)

• Turing student exchange scheme (globally focused) replacing the EU’s Erasmus (focused only on the EU)

• Liberalisation of agricultural subsidies and reduction of production restrictions (compared to the sclerotic Common Agricultural Policy)

• Increasing the UK share of the fisheries sector and reforming the sector (which was previously fully open to EU fishing fleets, many of which were subsidised).

• Potential of withdrawing from the European Convention on Human Rights (which has been used to insist on illegal migrants being granted refugee status in the UK, even if they have committed violent offences because of fear they would be mistreated if deported). 

• Measures to protect the remaining British steel industry including tariffs (up to 50%), subsidies and state ownership.

• VAT imposed on private school fees.

He noted on immigration, Brexit didn’t deliver what people assumed:

Taking back control of our borders was accompanied with the implementation of a points-based immigration system which enabled the inflow of many more workers, students and, crucially, dependents than the country ever envisaged or wanted. The higher-education, health and care sectors were already addicted to importing foreigners before Brexit – boosting vice-chancellors’ balance sheets and keeping labour costs low.

What Gove doesn’t say is that the UK political appetite to shut-down access to its welfare state including the NHS and social housing has been low. For that is a big part of the issue people have with immigration – people turning up to get something for nothing. If that tap were turned off, as is the case in plenty of EU Member States (some of which have language and national insurance contribution requirements to access healthcare, education and welfare), it would likely have a significant impact on demand.

For Gove the most important success is that it is now UK politicians fully accountable for UK laws. No more can they blame Brussels for requiring this or banning that, or taxing this or subsidising that.  Sovereignty in law making is no longer subservient to a higher level of government. As always that's a mixed bag, in some cases it was good for the EU to stop British protectionist politicians, but more often than not the EU was an expression of the stultifying "dirigisme" political economics embodied by France, which prefers protecting sunset industries and jobs, over allowing new ones.  I recall when France fined Google Maps for the audacity of offering a free map service, undermining the business of French map makers. The idea that the public benefited from Google Maps more than it lost is alien to the political culture of France, and that is also central to too much EU thinking on economics.

Gove concludes:

Brexit was a vote for a faster feedback loop between politicians and the people, the ability to yank the chain harder when ministers do not live up to their promises. That chain was yanked with great, cleansing, propulsive force in 2024 and I felt the spray. But that vote was not a repudiation of Brexit, it was its vindication. The failure I charted above to control migration, and indeed to go further, faster in re-building and re-balancing our economy, saw the Tories punished. Now it is proving Labour’s turn. The message from ten years ago – the demand that politicians change our society – has not diminished in force or fervour. That there is unfinished business is clear. But it is clearer still that Brexit alone makes that change possible.

Those who voted Leave knew it. They braved condescension and endured years of frustration to have it delivered. They must not be let down.

I’d conclude that this is the problem. The opportunity to set the UK free from hoards of regulatory instruments imposed from Brussels has barely been touched. The fundamental problems around immigration haven’t been confronted – such as the attractions of the welfare state and the inability to deport violent criminals because it would deprive them “of a family life”.  Of course prospects for any useful reform under the current Labour Government are remote, but the chances of another referendum on EU membership soon are as well.

Either a future UK Government tries to take advantage of this opportunity fully, or it may as well rejoin and decline in concert with the rest of the western European EU Member States.

Burnham will be another hopeless UK Prime Minister

From Ian Leslie in the Spectator:

For the most part, failed prime ministers do not fail because they’re socialists or neo-liberals or conservatives, but because they are situationists. I don’t mean in the sexy French sense, but in the sense that they are captives of whatever situation they find themselves in. Bad prime ministers don’t make things happen; things happen to them. They stand outside No. 10, say some fine words, then go inside and kneel down before the real boss: events. (By which I mean not just unforeseen events, but all the economic, political and institutional forces that constrain and batter you from day one).

Why do these leaders submit so meekly to this master? Because they cannot execute on the fundamentals of the job. The first of these fundamentals is a strong sense of purpose or mission. What everyone in this bad run has had in common is that they didn’t know what they wanted to do with power (and I mean across the board, from the economy to foreign policy to immigration and welfare). Either that, or they ‘knew’ but only in the vaguest sense, Liz Truss being the obvious example. Having a clear direction without having a sensible plan can be nearly as bad as having no direction at all, and maybe worse, especially when you are short on necessary leadership abilities. Johnson knew what he wanted to do at first – get Brexit done – but after it got done, he was clueless. Yes, he had to deal with the pandemic, but he dealt with it in his hapless, myopic style, which would have revealed itself under any circumstance.

So yes, bad Prime Ministers are often bad because they are clueless about where they are heading and how to get there... but Burnham is particularly vapid says Leslie...

We all know the remark about not wanting to be ‘in hock’ to the bond markets, without seeming to understand what bond markets are or why we are in hock to them, but it was hardly an anomaly. He mouths the phrase ‘fiscal rules’ without ever giving the impression that he knows what they are or why they matter. Here’s how he answered a question about the EU, during Labour’s conference last September:

Journalist: ‘Rejoin the EU or stay out?’

Andy Burnham: ‘I want to rejoin. I hope in my lifetime, I want to rejoin the European Union. I believe in the unions of all kinds. The union of the UK. The EU benefitted this country. Trade unions. People prosper more when they’re part of unions.’

I’m sorry to break the flow of my Flaubertian prose, but – fuck me. I believe in the unions of all kinds. It’s like something from an essay by a primary school pupil. That’s the extent of his thinking, on one of the most important geopolitical questions of the age? I’m just not sure how you get from there to prime minister-level within a year, or ever. (I need hardly add that as soon as the by-election campaign started, he said he didn’t actually want to rejoin at all.)

You see Burnham's main achievement is .... advancement in the Labour Party...

I am sceptical that Burnham has the intellectual capacity to ‘learn on the job’ and certainly not at the speed he would need to do so if the job is not to overwhelm him. It’s not the hardware that’s the problem – as a young man, Burnham was clever and diligent enough to scale the British establishment from the outside. It’s the software he’s been running for the last 30 years, narrowly designed for advancement within the Labour party. His instinct has always been to please the party, and you don’t do that by challenging its worldview or assumptions. But unless you do, your intellect and curiosity will atrophy.

Leslie says he has a deficit of capability, although he cares what others think of them.... but..

I find it unbelievable that Andy Burnham is the person that Britain, a great country, is installing as prime minister, amidst war in Europe, major technological disruption, violent unrest across the country, and a public sector coming apart at the seams. Is this really the best we can do? Apparently it is.

It's time to reform land transport funding and management

I'm not usually a supporter of new bureaucracies, but I'll give the Infrastructure Commission its due, it's done quite a good job at summarising the main strategic problem in land transport funding.  That being that political ambitions, which match a lot of public ambitions, for spending on roads, railways and public transport, exceed the political willingness to tax the public to pay for them.

More precisely, it seems to exceed the willingness of the public to pay more fuel tax and road user charges, or rates, or for public transport, fares.  I say this because I think it is a fair bet that Luxon and Ministers Willis and Bishop don't think the public would swallow double digit increases in fuel tax or percentage increases in road user charges largely to pay for big highway projects, mostly in the North Island and mostly near Auckland, Hamilton and Wellington. 

The Infrastructure Commission notes that:

Since the late 2010s, spending on roads and rail has far exceeded user revenues, requiring large top-ups from general taxes. In the 2024–2027 funding period, Crown grants and loans totalled $12.8 billion, or nearly 40% of the $32.9 billion in planned expenditure. 

Source: Infrastructure Commission

The Commission continues:

New Zealand spends more on land transport than any other type of infrastructure. Mature road and rail networks connect most parts of the country, supporting the smooth movement of people and freight that underpins a well-functioning economy. While these networks perform reasonably well against peer countries, some important gaps remain. Land transport infrastructure providers face limited external oversight and no economic regulation to protect consumers – which is unusual compared with network sectors where consumers can’t choose between multiple providers. Transport faces several challenges, such as rising congestion on urban road networks, rising carbon emissions, and high health impacts from air pollution and road crashes

What's new

So this gives the impression that there are problems, today in 2026, with congestion, emissions and safety. You might think that this isn't exactly new, and you'd be right. Let's turn the clock back over 27 years...

Maurice Williamson, Minister of Transport, 18 November 1998

For years we have seen steady growth in traffic volumes. Currently, the traffic on our roads is increasing by about 4 percent each year. Also, the way we use our roads has changed. Expanding industries like forestry, dairying and tourism have increased road use in many rural areas beyond their capacity. Population growth in areas such as Auckland, the Bay of Plenty and parts of Waikato has meant that road use in these places is growing more quickly than in other parts of the country.

Some roads are less safe than they could be because they were not designed to carry either the volume of traffic or the amount of heavy vehicles they do. We can improve the safety of our roads, and reduce the human and financial costs that crashes create. The increasing use of our roads also puts greater emphasis on the environment - the environmental impacts of road use can be reduced.

Traffic growth is causing increasing congestion problems in many, particularly urban, areas. It is also increasing maintenance costs and the demand for new roads. We are struggling to meet these new financial demands.

Simply spending more money on the problems would add costs to our total economy, which we would all have to bear. What we need is a system that is smarter at informing road users of the costs they are creating, and smarter at deciding where new investments should go.

A system that results in our road resources being used very wisely. If we wait the problems will get worse and the costs of changing will be greater. If we act now, the changes can be managed in a gradual process with minimal upheaval.

That press release was in the context of announcing a major reform of the land transport funding system, that didn't proceed.  

What did happen was three things. One of them is the most obvious, politicians threw money at the problem, and as happens so often when government spending increases exponentially, it doesn't deliver the value for money that it used to.

Spending spree

If we compare 1998 in real terms (using CPI inflation to bring 1998 prices to 2025 dollars), spending on road infrastructure and public transport alone (there was little government spending on rail infrastructure in 1998), has increased by around 350%. That's 3.5x increase over and above inflation in spending on roads and public transport.

As you see above, 40% of current land transport spending isn't coming from motoring taxes (let alone charging rail users even a quarter of the costs of maintaining their infrastructure), it's coming from general taxes. 

Taxpayers are literally subsidising the movement of goods and people by rail and by road, or to be more precise, subsidising those engaging in the construction and maintenance of the network. In 2025, $4.211b was collected from motoring taxes (fuel tax, road user charges and motor vehicle registration/licensing fees). User fees are sufficient to cover road maintenance and a little more, but not to cover road maintenance and all spending on public transport, or road maintenance and all spending on road improvements.

This table below outlines that increase, using the budgeted spending in 1998 (it being harder to access reported spending online) compared to reported spending in 2025.

Comparison of 1998 and 2025 land transport spending: New Zealand

Where has the money gone?

Public Transport

Despite what you might think if you pay attention to the likes of Julie Anne Genter, or some environmental lobbyists, by far the biggest increase in spending over this period has been on public transport subsidies and infrastructure.  That's money to subsidise the operation of trains and buses, and money to subsidise renewing or improving infrastructure, such as railway stations, busways, the City Rail Link in Auckland and the National Ticketing Solution.

This has been over a twelve-fold increase in spending on public transport. 159 million trips were taken on public transport in the 2025 financial year. It was around 60 million trips in 1998.  With a 40% increase in population during that period, that's an 89% increase in patronage, but I'll leave it to others to judge whether that increase in land transport spending by central government has been good value for money.

Then roads

Also notable has been a big increase in maintenance for local roads and state highways. While some of that may be attributable to increased heavy vehicle traffic, it also shows a remarkable drop in productivity and inflation in costs.  The system has not incentivised or encouraged much in the way of efficiency in managing existing assets.

While much is rightly made of the increase in spending on state highway construction (and much more is planned), but what hasn't happened is that local road construction has not grown anywhere near as much.  The demands for local road improvements are, on average, likely to be lower than the state highway network, as most local roads are either suburban streets or lightly used rural access roads, but there is little real indicator as to whether this split in spending is appropriate or not.

What does seem clear is that highway construction and maintenance costs have grown exponentially, especially in maintenance which, in real terms, should not have increased that much above inflation. 

Warnings about risking poor quality spending.

However, this was exactly what was forecast in the late 1990s if there had been no substantial reform.  When spending on land transport infrastructure was increased then, there was concern about the capacity of the contracting sector to efficiently accommodate growth without inflating the cost of capital works.  After 1996, the Government increased spending gradually. Lowering the threshold for funding from a BCR of 5:1 to 4.5:1 in one year, then down to 4:1 in the following year, and at that point there were ample projects to advance. It was, at the time, thought that spending might be increased further, alongside increases in motoring taxes and reducing the diversion of part of fuel tax to the Consolidated Fund (this diversion ended completely in 2008). However, the view from Treasury at the time was that the threshold of spending should be a BCR threshold of 2.5:1.  

(Footnote: Be cautious about comparing BCRs of projects in the 1990s and 2000s to today, because today's BCRs include a lot of additional benefits, the evaluation period is longer and the discount rate is much lower than it used to be, but that's another story).

The main conclusion in the late 1990s was that just pouring more money into the system was far from optimal.  Big reasons why the system was not ideal were identified:

• The PAYGO method of funding capital from cashflow could not support large scale capital spending that has transformative impacts
• The artificial distinction between new capital and renewing capital/maintenance, with short term funding cycles for the latter generates poor incentives to optimise spending on maintenance across the asset life of roads
• Without better pricing of road use, some roads would be overused at certain times, with some road users not paying enough, and some paying too much to the use the roads.  Far better to enable pricing to reflect demand, capacity and the costs of supply on a more refined scale than the national average across all roads across the country.
• Little relationship between road users and road providers, with very limited feedback from road users to road managers and poor incentives on road managers to respond to the needs of the former.

Quite simply the incentives for innovation, especially for efficiencies was not good enough. This is particularly an issue for territorial authorities, which are more reluctant to engage in long-term contracting for road maintenance, or to consolidate contracting across multiple councils.  While it is possible to have political direction around some of these matters, none of this matches having financial and institutional incentives to optimise maintenance and performance,

On new projects there are five big factors that have influenced inflation in project costs:

1. Contractors do not think there is sufficient risk that large projects, once committed, will be cancelled or scaled down, so price accordingly. This is because the projects are explicitly politically identified, and contractors know that the risk of a politician cancelling a project because of cost, especially after a project has started, are low. Look at City Rail Link and Transmission Gully. Nobody was going to pull the plug on projects already underway because costs went up, and the New Zealand contracting market is too small to fear someone else being brought in to finish it. That's what happens when it is a politically-driven, not commercially-driven model of managing assets. By contrast, look at the M6 project in Sydney, which may be abandoned because the contractor is unwilling to complete the project under the current budget, following an unexpected collapse of part of the tunnel.
2. Gold-plating of projects to meet either institutional or political aspirations. The Northern Gateway toll road north of Auckland had its design speed increased and a tunnel included in its scope specifically because the agency involved wanted to "show off" what a great toll road the first new generation toll road would look like in New Zealand (the original design had a gully instead of a tunnel, and 80 km/h design speeds). Whether that was justified or not, the reasoning for doing it was nothing to do with economics, it was driven by a belief that the money would be spent anyway and for a Crown Agency to "show off" to the public. Likewise, insisting that the Northland Expressway is four lanes throughout with grade-separated interchanges its full length, amplifies costs with insufficient economic benefit to justify the cost.  There are very sound reasons to rescope (and indeed this used to happen in New Zealand from time to time).
3. The start-stop-start cycle of project development. The infrastructure sector advances this as the main reason, which is false, but it is an important factor. Long term strategies for corridors would help plan both the resourcing, sequencing and encourage competition in project delivery, so that equipment and skilled professionals could be guaranteed being occupied for a decade or longer. Starting and stopping projects is wasteful, unless of course, the projects were poor value in the first place (like Auckland Light Rail).  The presence of a long-term pipeline of economically viable project would be a good thing to help build a competitive industry and build capability.  A sector which sees commitments to projects appear and disappear depending on who is in power will charge more to manage that business risk.
4. Incremental growth in the costs of doing business. Part of it can be blamed on local government through the RMA, but it can be seen in the significantly higher amounts of planning, consultation and investigation work needed today compared to the 1990s. The process has become more complex, time consuming and seen a vast increase in the numbers of people involved in these projects. Some of this reflects increases in the cost of doing business, contracting and employment in the sector, due to incremental measures implemented by successive governments. However, the effects of this have been insufficiently appreciated (though this is also seen in construction more generally)
5. Rent-seeking behaviour by professional organisations in the sector. Competition has simply been insufficient. While there have been increased in construction costs, part of this has been opportunism for extracting greater profits from a sector that has been flush with money for some years. It has also been outrageous that the professionals involved in investigation and design work have increased their scope and fees at the same level, even though they don't face the increased input costs for construction.  On average it was always assumed that the pre-construction phases for major road projects were around 15% of the construction costs. Quite why these costs should increase at the same rate is unclear.
6. Higher labour costs for a shortage in professionals. There aren't enough technical experts to go around, and they are working in a global market for their experience. This is expensive for a country with a relatively low exchange rate, low GDP per capita, that is far away and has relatively high housing costs compared with say the United States.  However, having a steady stream of work for projects should help that over time.

The Infrastructure Commission notes:

The RoNS projects are expected to cost significantly more per kilometre than earlier New Zealand motorway and expressway projects, and significantly more than the OECD average. Indicative target cost ranges published by NZTA suggest costs should ideally be much lower. The Northwestern Busway is expected to cost much more than previous New Zealand busways, potentially exceeding the per-kilometre cost of many underground rail projects overseas. These cost increases constrain what can be delivered without displacing other needs.

The thing is, NZTA seems unable to fully understand why this is the case, let alone be able to contain these costs. 

Politicians have made the system worse

The entire system is not particularly well set up to challenge these, and since 1998 two major reforms have made it much worse:

• Creation of the New Zealand Transport Agency
• Almost complete politicisation of the National Land Transport Programme

In 1998, funding was decided by an arms-length independent funding agency called Transfund. It was small, nimble and focused on essentially buying the best value for money for maintenance and improvements to roads and public transport for motorists, who fully funded it through road user charges, fuel tax and motor vehicle registration and licensing fees. There was no Crown money from general taxation. The 1998 National Roading Programme was fully funded by road users, and money was allocated first to road maintenance, public transport subsidies and then whatever was left was available for capital improvements.  

The Clark Government merged it with the Land Transport Safety Authority in 2004 (then responsible for regulating drivers, vehicles and commercial vehicle operators, and managing the motor vehicle register and collecting road user charges).  Making the new agency - Land Transport New Zealand - a regulatory and funding agency. However it was in 2008 that it was merged with Transit New Zealand - the state highway manager - to make a land transport agency monolith - the NZTA. The National Land Transport Fund was now being allocated by the same agency which also is the largest spender of those funds.  No longer would the state highway manager have to be worried about convincing Transfund about what funding it needed, or on its performance, to justify funding it wanted.  NZTA funds itself.

That mistake would not have been quite so bad had the Clark Government not also all but destroyed the independence of NZTA through the Government Policy Statement (GPS) process of directing land transport funding. The GPS essentially politicised land transport funding, with the Minister of Transport able to simply direct how much money would go into whatever funding categories the Minister wanted.

That meant that three-yearly National Land Transport Programmes were politically directed.  From a system that rationed maintenance and focused on optimising maintenance so that capital spending could be maximised without degrading the road network, to a system whereby the whims of Ministers could redirect money where they saw fit.  Roads of National Significance,  public transport subsidies, rail projects, cycleways, whatever was wanted, could be funded. Furthermore, when Ministers or Governments changed, the whole programme was up for grabs. Projects might be cancelled and new ones started, with Ministers demanding to know "how soon" a project could be "shovel ready" to show progress, because once it started, it was hard to stop.

Imagine the incentives that puts on the contracting sector, both to please NZTA by getting work started, and to not be concerned about cost inflation once a project has commenced. It also sent a signal about investment in capital and professional staff through a political cycle.

The Infrastructure Commission puts it politely:

NZTA acts as both funder and deliverer of projects – combining functions previously kept separate. Between 1997 and 2008, one Crown entity (Transfund, renamed Land Transport NZ in 2004) was charged with administering transport funding and making investment decisions. Transit New Zealand was responsible for state highways and had to bid for funding alongside local road controlling authorities. Maintenance took precedence over new capital works, and only the highest-value projects were funded.

The Government Policy Statement on Land Transport (GPS-LT) directs spending in the sector. Unlike other network providers that invest to meet demand, land transport investment is heavily influenced by the Government of the day’s objectives. The Minister of Transport determines funding ranges for expenditure categories through the GPS-LT, based on advice from the Ministry of Transport but without independent oversight. In recent years, Governments have also directed specific projects for delivery, leading providers to spend more than user revenues allow.

That was destroyed by the Clark Government, and the Key/English and Ardern/Hipkins Government did nothing to change this, but rather all doubled-down on growing the NZTA's role and functions, and demanding ever more money be spent on their "objectives".

So what next?

The 1998 warning was part of an announcement to radically reform how roads would be funded and managed. They would become businesses, like state owned enterprises. They would be paid by users, directly. They could borrow against that money for new projects. They would be subject to regulatory oversight, and it would have removed ratepayer funding for roads. There would have been maybe eight local road companies, and they would have been expected to make a profit and pay company tax. 

Obviously that didn't happen, and there is little sign of it being revived, but there does need to be a change... more on that to come...

UPDATE: Corrected earlier PT figure estimate which was too high.

Is racism worse than murder?

Ayn Rand described racism as “the lowest, most crudely primitive form of collectivism”. However, she wouldn’t and neither would most people with any measure of morality would describe a verbal expression of racism as being worse than murdering another.

A radical comedy today might parody modern “anti-racism” to a ridiculous absurdity, defending people from claims of racism over defending people from murder. 

Reality is not funny though.

British journalist Ed West wrote a few weeks ago on his Substack an article called “Moloch must be Fed”. 

He recalls the following instances…

Salman Abedi 

 “One evening in May 2017 a security guard in Manchester was alerted to something that didn’t look right: a man of Middle Eastern appearance with a rucksack was seen by a member of the public approaching a pop concert filled with teenage girls. The man looked ‘dodgy’, in the words of the 18-year-old guard, who later recalled his moment of agonising: ‘I felt unsure about what to do. It’s very difficult to define a terrorist. For all I knew he might well be an innocent Asian male. I did not want people to think I am stereotyping him because of his race. Concerned that he would be accused of racism, the young man went with his doubts and let the British-born Libyan Salman Abedi walk on. The rucksack was packed with homemade explosives, mixed with nuts and bolts to maximise the suffering they would inflict on human flesh, and fifteen minutes later Abedi pressed the detonator, killing 22 people, ten of them under 20 and the youngest aged just eight.”

Valdo Calocane

“had attacked his flatmate on one occasion, and assaulted strangers on others. He was clearly very dangerous, and while mental health professionals had been ‘leaning towards’ sectioning him, he was released after they ‘considered the research evidence that shows over-representation of young black males in detention’. Calocane went on to butcher three people in broad daylight, including two 19-year-old students from the same university”

Axel Rudakubana

“At the Acorns School in Ormskirk, headteacher Joanne Hodson said she felt a ‘visceral sense of dread.”.. about him, as he “had been caught bringing a knife into class in his previous school, and when Hodson asked him why, had replied coldly: ‘to use it’. When she raised the risk posed by the dread-inducing young male, mental health workers accused her of ‘racially stereotyping’ him as ‘a black boy with a knife’.”

Rudakubana went on to murder three girls, aged nine, seven and six at a dance workshop for girls aged six to eleven in Southport.

The story about Henry Nowak is giving cause for concern among many in the UK about the priorities of policing. The criminal justice system’s first priority should be to protect the public from violence.  The Daily Telegraph has published the sentencing notes for Nowak's murderer and the background to the case.

Nowak called out to Vikrum Digwa, and asked if he was a “bad man”, and filmed Digwa on his phone. Digwa, a Sikh, alleges his turban was knocked off by Nowak.  Digwa stabbed Nowak four times and his face was slashed.  One of the stabbings proved fatal. Digwa and his brother filmed Nowak escaping, scaling a fence before landing on a car and falling to the ground, where he bled to death. By then the Hampshire and Isle of Wight Constabulary had arrived. Digwa’s father was helping keep Nowak upright, but Digwa had told the police that Nowak had racially abused him. 

The teenager is then heard shouting in a hoarse voice “I’ve been stabbed, I can’t breathe, call an ambulance”.

Officers can then be heard asking Digwa for his version of events, before dragging Henry across the gravel while saying: “Let’s get you out of there, shall we?”

When the university student again told them he had been stabbed, the officer responded: “I don’t think you have, mate.”

Henry is then placed in handcuffs while repeatedly telling officers: “I can’t breathe.”

With the teenager in handcuffs, a female officer asks Henry, “where do you think you’ve been stabbed?” before saying to her colleague, “we have to check, don’t we”.

The near-three-minute footage ends with the arresting officer asking for Henry’s name, before reading him his rights.

At this point, the female officer seems to realise his deteriorating condition and calls an ambulance, noting that “his pupils aren’t even reacting”.

Nowak bled to death in handcuffs, because police were more concerned about Digwa’s claim of racism, than Nowak actually having been stabbed. 

Nowak calling “I can’t breathe” has shades of another event we all know, although there are multiple differences in the contexts, the primary point remained – the Hampshire and Isle of Wight Constabulary prioritised “anti-racism” over a murder.

Of course, the police were, in fact racist. It prioritised the feelings of one man who was hardly scratched over another bleeding to death, because of racism.

Many on the left in particular wonder why politicians they deem “far right” are getting popular appeal. I can’t imagine how blind they might be when these instances are happening, time and time again. The people who want to protect others, like the security guard, the teacher and most police, mean to do well.  They are undermined by a philosophy, which is advanced by academia, accepted by much of the media, absorbed by gateway professional associations and implemented by “professionals” and it is all facilitated by politicians.  

It’s a repeat story that could be a parody of a lunatic political philosophy if put into practice, if it weren’t a parody and hadn’t been put into practice. It is the application of today’s melding of various post-modernist philosophical movements into politics and into law and social/cultural practice. It combines Constructivism (which posits that there is no such thing as “objective truth” but rather reality is constructed by people as part of social processes, interests and beliefs), Structuralism (which posits that human behaviour can be understood through structures and systems within which they operate, rather than the specific behaviour itself and Critical Theory (which posits that injustice exists in current power structures which exist primarily to benefit and sustain those with power, who are deemed to be members of groups that created or succeed the most in those structures).

As with most philosophical movements, there is some truth in all of them in different contexts. However, the culmination of all of this applied consistently is that identical behaviour by two separate people is interpreted differently according to each person’s background and deemed level of privilege or disadvantage within the “system” they are living. Critical theory has little time for Common Law justice systems which treat individuals as free agents (unless proven otherwise) who, if they act to infringe upon the basic rights of other free agents, should be subject to judgment and punishment according to what they did and the harm they caused.  For example, while there may be mitigating circumstances in specific situations (e.g. self-defence), murder is murder. 

Objectivists, rationalists, classical liberals and other modernists regard racism as a pre-modernist view of humanity. The idea that human beings should be judged based on their inherited characteristics rather than their behaviour, is a legacy of pre-modernity. Race or ethnicity is not determinative of unjust behaviour, and especially not determinative of justifying injustice against that person. Awareness of this grew enormously in the aftermath of World War Two, the Holocaust, the legacy of Japanese militarism and subsequently decolonisation of much of the world, and the Civil Rights movement in the USA have made people aware of the need to treat people as they are, not for what they are.

In almost all societies deliberately killing another person, especially a child, is seen as the most morally depraved and injust act that can be committed. Yet in the UK today, there is a growing number of incidents whereby people, when judging whether to act to protect others from murder, have chosen to act based on another concern – is my action going to be seen as racist?

I'm reluctant to grant any politicians in the UK a shade of belief in their ability to confront this philosophical cancer.  Keir Starmer or those willing to replace him in the Labour Party have no remote interest in confronting this - for they are the ones who have facilitated this ideology. The Liberal Democrats and the Islamist adjacent Greens are even worse. Nigel Farage is an opportunist, and in calling for a "cold rage" he is showing his irresponsibility, and the emptiness of his thinking.  However, it is unsurprising he has popularity when for so long the Conservatives held no principle other than to retain power (when they were in power for a wasted 14 years). 

There is a chance, just a chance, that Conservative leader and Leader of the Opposition Kemi Badenoch, could, if only because she is the only party leader who can confront the issue of racism with a background that befuddles the "anti-racist" racists.  She has said:

What Nigel Farage is doing is reinforcing the difference. I have said that we need to find what we have in common, not what separates us. I don’t want to hear about Black Lives Matter. I don’t want to hear about White Lives Matter. We all matter.

“Enough of this nonsense, where we keep separating everybody and splitting people into different groups. We are descending into tribalism. I do not want that. It is why I say that we should be a multiracial country, not a multicultural country. Let’s have one shared culture, British culture. How the police treat everyone should not matter, depending on the colour of their skin, and we shouldn’t pretend that racism is something that only happens to ethnic minorities, it happens to everybody, black or white"

I hope it is not too little, too late, to avoid the anger and violence which comes from people who think, not only is there a fundamental problem with the philosophy behind how so much of the state and the institutions of power function, but who think it is all fundamentally antagonistic to them, their family and their community - and are willing to burn the whole lot down, by handing power to those who literally have no coherent answers.

UPDATE: Spiked's Brendon O'Neill puts it perfectly following the publication of the bodycam footage of Nowak's death:

For me, the most chilling thing in the bodycam footage of Henry Nowak’s last moments of life is the cops’ cruel presumption that he is lying. As he writhes in terror and agony and cries out ‘I’ve been stabbed!’, a voice in the background – presumably that of the lowlife who murdered him, Vickrum Digwa – says: ‘He hasn’t been stabbed.’ 

A female officer responds. ‘I know’, she says. ‘But we have to check, don’t we?’

I know. It is delivered with dry, bureaucratic indifference. Henry is heard moaning, begging, ‘I can’t breathe’, yet here is a representative of the state seeming to agree with his knife-wielding tormentor that he is making it up. That cold, cavalier utterance – I know – will have cemented dying Henry’s great dread: that the police were taking the side of his killer rather than him....

...  Try to take in the Kafkaesque moral madness on display here. They learn the lessons of a black man killed while saying ‘I can’t breathe’, only to see their own cops horribly mistreat a white boy who said ‘I can’t breathe’. The very ‘anti-racism’ they imbibed in response to an African-American man dying with a cop’s knee on his neck leads to a situation where their officers drag and cuff a dying white kid. It is undeniable now: the state’s overcompensation for past acts of racism has unleashed new horrors. It is now official ‘anti-racism’ that nurtures injustice, unequal treatment and barbaric state behaviour. It is now ‘anti-racism’ that dehumanises the citizenry, dividing us into ‘the oppressed’ and ‘the oppressors’, and gifting or denying us moral worth accordingly. The horror on that driveway was more than a police screw-up – it was the metaphorical boot of wokeness on the neck of a young man, and a whole nation.

Our political class is in for the mother of all awakenings if it fails to recognise the anger this case has caused. Keir Starmer’s belated statement on the Nowak horror was horrendously perfunctory, yapping on about the ‘cycle of tragedy’ caused by ‘knife crime’. All the knee-bending passion he felt after George Floyd’s death seems to have evaporated into the cursory, fleeting angst of the impassive lawyer. Millions are clocking this. That he doesn’t know that is a tragedy – for him.

The next Mega-Ministry is coming and it is going to disappoint

Notwithstanding the histrionics from the Greens and other hard-left activists, the Ministry for the Environment isn't being shut-down, it's being merged with two other Ministries and part of a Department to create the Ministry for Cities, Environment, Regions and Transport (MCERT). 

I opposed this when it was floated nearly a year ago, and I still oppose it.  Not because of the claims that it will risk MfE's work programme (if only!), but because bigger bureaucracies are NOT more cost efficient, and they are certainly not more dynamic, nor do they result in integrated and co-ordinated thinking.

I've worked in both large and small government agencies, but it's not just that experience that informs my opinion, it's the experience seen elsewhere. The views on savings are largely from the perspective of accountants, who typically measure "X-efficiency" which is about minimising wasted resources. In the context of government it is really around the number of managers vs. output, which given the outputs are highly subjective, is hard to assess without a close understanding of the detail of those outputs. It's not goods sold or customers satisfied.  It might consider productive efficiency based on numbers of people relative to outputs, although the "productivity" of policy agencies ought to reflect the quality of output, which I'd be astonished if the Public Service Commission could identify at more than a rudimentary level. 

What definitely isn't measured is dynamic efficiency (how responsive organisations are to innovations and technology), nor do they measure allocative efficiency (allocating resources to meet most specifically what is desired - in this case by Ministers).  

From experience, large Ministries can be awfully inefficient and slow to be responsive. For example, I half wonder if I still have a live "on demand" employment contract with MBIE, even though I left its predecessor permanently 26 years ago, although I did work casually for it for a subsequent 2 years. I never received any communications terminating it.  However I digress. 

One of my favourite administrative failures of MBIE's predecessor - MED - was how it spent three years developing an all of Ministry centralised Document Management System, which was designed primarily for "security". There were full time staff dedicated to this project, who were bewildered when one senior advisor pointed out that every single document created in this system was copied onto individual PC hard drives, which were accessible to anyone who logged onto the PCs. It took another year for the system to be implemented, by which time it was already obsolete.  

As much as there are efforts to try to bring together people in a single Ministry to be co-ordinated across sectors, the record of doing so successfully, without bringing other activities to a snail's pace is not particularly inspiring. By and large, MED and its predecessor the Ministry of Commerce, largely operated in silos.  The idea there was some commonality between how energy, telecommunications, land planning (RMA) and industrial/trade policy was fanciful. Electricity was heavily regulated and resulted in structural separation, telecommunications was very lightly regulated, land use planning was largely about tinkering with the RMA (and monitoring the impacts of its implementation), industrial/trade policy focused on tariff removal and supporting MFAT on trade negotiations.  Throughout the five years I had there, the proportion of effort of the Secretary/Chief Executive in telecommunications, broadcasting, postal and IT policy as a share of activity was <5%.  In other words, mega-Ministries struggle to get their senior management across everything they do.  Small ones don't have that problem.  Of course that can be an advantage for divisions/directorates/units led by managers who want to get on with their jobs without micro-management at a more senior level, but it is hardly amenable to accountability.  Of course what it does mean is that there are multiple Ministers for the Ministry to report to, over the head of the Secretary/Chief Executive (otherwise the Secretary would spent all of her/his time at every Minister's office). 

What mega-Ministries DO implement is a rather significant in-house administrative function, which inevitably justifies more staff to perform functions across IT, HR, finance and information management. 

I've pointed out that MBIE and DIA, both large Ministries have not displayed much capability in delivering innovative reforms over recent years. MfE of course delivered an abject disaster with Labour's proposed RMA replacement with two pieces of legislation imposing greater costs on property owners and more complication through centralisation of power.  This is primarily because MfE's culture is antithetical to economic growth, development and private property rights (you can still see in the new Planning Bill which is far more diluted and modest than what is needed to address the sclerosis in development). This was so apparent when in 2023, Vicky Robertson departed as MfE Chief Executive and stated:

In her presentation she pointed to the programmes that will have a profound and lasting positive impact on our environment.

She spoke about how reforming the resource management system has been the Ministry’s key priority and remains our single biggest deliverable for a system that is future-focused, adaptable, and encourages decisions that are good for our long-term wellbeing.

I'm not sure whose wellbeing she meant, certainly not taxpayers...

“People still say what they love about the Ministry is how people care about each other. They still say that now, as they did when I started. It’s pretty incredible how we’ve gone from 320 people to 1200 and held onto our culture. I’m proud we’ve been able to do that,” she says" 

Being proud of more than trebling staff numbers says all you need to know about bureaucratic culture.  Now that is being merged with the local government arm of DIA (which spent decades responsible for the statis of water policy), the Ministry of Housing and Urban Development (which was established in 2018 and presided over the country's most rapid increase in housing prices) and Transport (which itself has seen a more than doubling of staff numbers over 25 years). 

Another example. 

In 2004, Transfund New Zealand was merged with the Land Transport Safety Authority to become Land Transport New Zealand.  That entity was merged with Transit New Zealand in 2008 to form the NZ Transport Agency. The end result has been to create a bureaucratic monster.  In 2004, the three separate agencices had a combined total of around 700 staff.  In the 2023/24 financial year, NZTA had 2,769 permanent employees.

In 2007 announcing the merger, then Transport Minister Annette King said:

“Combining the functions of Land Transport New Zealand and Transit New Zealand will create one organisation accountable to one board, ensuring improved focus on value for money for land transport activities and an appropriate balance of land transport activities".

Value for money?

In Australia, a mega-Department I've previously done work for had a total of six project leads for a single project I was involved in as a contractor, over five years.  Each time the new lead had to be brought up to speed and learn again.  The reason why was because the mega-Department kept poaching anyone talented to work on other projects in other areas.  One comment I heard from a different agency was "this is the Department you send projects to so they die". That's a bit unfair, but isn't entirely untrue. Quite simply there are five layers of management on top of each project or activity, so it is easy for them to get lost.

So I'm not optimistic. I'm not sure a single entity co-ordinates better than separate entities, because the bigger the organisation the more sluggish it is to work as an integrated whole. Moreover, so much of what these agencies do is not across other portfolios. I doubt aviation policy has ever paid much regard to housing policy, local government or the environment, but I am sure there are people in a couple of those who would keen to get involved - which would slow it down.  A mega-Ministry has great potential for sclerosis.

I hope I'm wrong, but I've seen multiple mega-agencies in several countries over 30 years.  I'd love to see the example that, by an objective external measure, has delivered serious innovative reforms that have released productivity, growth and dare I say "wellbeing" for taxpayers and the public.

Is New Zealand a capitalist command economy?

Head of Lifestyle Economics at the UK's Institute of Economic Affairs (IEA), a free-market thinktank, has written an excellent piece at The Critic called "On Britain as a capitalist command economy". 

The central hypothesis is that the UK is both far removed from being a free-market economy with a small state and light-handed regulation, and from being a state-owned economy run by bureaucratic, politically driven trading departments.  It is worth reading in whole!  

He describes the conundrum of how to describe the UK economy...

The left call it neoliberal but neoliberals have had no meaningful influence on British governments for thirty years. The right call it socialist but neither the Tories nor Labour have shown much interest in seizing the means of production. Keir Starmer’s government is more left-wing than he wants you to believe, but even if he renationalises the rail and water companies, it will be a nostalgic gesture rather than a heartfelt effort to control the heights of industry. Only on the fringes of the left is there any desire to return to the days when British Airways, Jaguar and Thomas Cook were under “democratic control”.

Arguably New Zealand isn't much different.  Of course the Greens, TPM and parts of Labour will say the country is under the oppressive yoke of neo-liberalism, their latest scapegoat "billionaires" and "foreign capital", and of course people like me will rail against the "commie kids" on the left in Parliament, and in local government, but there's little real evidence of NZ embarking on Douglas/Richardson Mk. 2 or becoming the DDR under the last government.

Jim Bolger put the brakes on free-market liberalisation and shrinking of government after the 1993 election, although the direction of travel largely remained the same until 1999 when the Clark Government starting turning things back - notably by passing legislation to cancel the contracts of private ACC employer account providers to return ACC to a state monopoly insurer.  Clark followed by renationalising Air NZ and the Railways, setting up a state retail bank (Kiwibank) raising income taxes and vastly expanding the welfare state with "Working for Families". The Key Government did little to change this trajectory, and the Ardern/Hipkins Government doubled down, with significant spending increases (even leaving aside the Covid response), and increasing both the size of the public sector and scale of regulatory intervention in the private sector.

On the face of it, the post-Thatcher settlement has held, but there is nothing Thatcherite about this government, nor the ones that preceded it. 

Likewise in NZ. It's not to say the Douglas/Richardson (note it isn't the PMs noted for these reforms) reforms have been unwound. New Zealand isn't returning to rampant protectionism, nor has Labour embarked on vast renationalisation (the Government isn't going to get a national bus company, shipping company, hotel network or life insurance company), but what has happened is an accretion of central command and control.  The UK of course has long had it with the Town and Country Planning Act, the single biggest act constraining housing supply and enabling local government to be the greatest NIMBYs in the UK's history. It was passed in 1947!  New Zealand has only had the Resource Management Act since 1991 (passed during the height of Ruth Richardson's reforms, but inherited from Labour led by Geoffrey Palmer - which speaks volumes), but it too had kneecapped housing supply, inflated the cost of infrastructure and is only now with a chance of being replaced with something a bit less worse.

Snowdon writes about price caps introduced in the UK on energy, the Starmer Government's ban on "no-fault evictions" of tenants and enabling legal challenges on rent increases. 

He highlights the nonsense of the Equality Act in the UK, which is being used to impose "pay equity" claims of the sort Brooke Van Velden has put a stop to, much to the chagrin of retired former politicians. 

the Equality Act ... stipulates that men and women should be paid the same salary if they do work of “equal value”. Grotesquely over-interpreted by activist judges, this led to the bankruptcy of Birmingham City Council and 16 months of strikes after it was ruled illegal for (mostly male) dustmen and gravediggers to be awarded bonuses when (mostly female) cleaners and carers were not. ..

In the Next case, it was revealed that the company offered its 25,000 retail staff a chance to work in the warehouse but only seven took up the offer (three of whom walked out within a year). Despite one of the claimants admitting that she didn’t find the prospect of working in a noisy warehouse appealing but would have considered it if she was offered a lot more money, the company still lost.

The process used to determine what was "equal value" is what Snowdon describes as "that looks like something from a Marxist professor’s fever dream to decide the value of an employee’s labour."  This diagram is the basis for a bureaucratic central planner's view of how people's pay should be set, which bears zero reference at all to how many people want to do the job for the pay offered.  Have you seen a single politician or journalist in New Zealand outline how ridiculous this is? This is exactly the outcome of the philosophy of the capitalist command economy.

Snowdon describes it as essentially the application of activist state seeking to remould capitalism to meet centrally determined goals:

An activist state is systematically coercing the private sector in the pursuit of a range of social engineering goals, all of which are implicitly assumed to be more important than the economy. It is a form of central planning, albeit with a patchwork of different plans rather than one overarching goal.

Following on from my previous post, this is exactly what you can see from the Opportunity Party, whose leader "stepped into the world of... purpose-driven business". The purpose you can be sure is not why people and other businesses risked capital in the business, it's a purpose that is mostly about signalling virtue, and just chips away at its competitiveness, its resources to respond to consumers and competitors (especially in economies that don't have this sort of regulatory impost).

It's commonplace for people to refer to the People's Republic of China as a "communist" country. While it is led by the Communist Party, and has a great deal of central command and control, in many aspects it lets private enterprise run rip and be competitive, especially when exporting and seeking to win against foreign rivals. While it has plenty of state owned enterprises it directs and controls, it is less interventionist in the private sector.  You see China actually cares about economic growth and development, because it works.

In the UK and across much of the developed world, governments are far more concerned about social engineering goals. Snowdon notes Net Zero (regardless of cost) which in the UK sees car retailers fined for selling too many cars that people want (petrol or diesel powered) relative to cars fewer people want (EVs).  The market doesn't price goods the politicians want people to buy cheaply enough, and the public don't want to pay more for them, so the politicians penalise companies selling people what they want.  The Ardern Government did this more softly by taxing the cars people wanted to subsidise the ones the government wanted people to buy. It did it by implementing US style government procurement rules to preference responses to tenders that included Maori enterprises, just because of their ownership, regardless of the value the enterprises offered to taxpayers relative to others. 

Snowdon notes how far the public health lobby has gone in the UK (and it's obvious the same lobby in NZ wants similar steps):

Supermarkets have already been banned from offering multi-buy price discounts on “less healthy” food and are prohibited from displaying these products in certain parts of their shops. Wes Streeting plans to go even further and start fining supermarkets for selling too many calories.

I don't think New Zealand is quite so bad. A cursory look at economic statistics indicates:

- State spending as a proportion of GDP is 41% in NZ, 44% in the UK

- Tax as a proportion of GDP is 27% in NZ, 35% in the UK

- Public debt as a proportion of GDP is 41% in NZ, 98% in the UK.

It's notable that many of the command and control steps in the UK haven't been followed in NZ, although some of these were stopped with the removal of the Hipkins Government.

However, the approach of regulatory control of the private sector remains at the heart of what the Wellington bureaucracy advances to meet social goals, and it has widespread support in academia.  Some elements of the capitalist command economy remain very much in place.

Even with its replacement, the Resource Management Act will still not put private property rights first, and will still mean local government very much is in command.  

The electricity industry remains a weird blend of a market economy, with significant state investment, constrained by the planning system, which neither resembles a free market (given how difficult it is to build new generating capacity, and the state majority owning three quarters of the sector), nor a socialist system (as there is not a monopoly state provider). The previous ban on new oil and gas production (which in the current environment seems absurd) was purely an exercise in social engineering and virtue signalling, to show off a commitment to "Net Zero" even though it made virtually no impact on such targets (and no impact on climate change).  However it certainly scared off new investment in the sector, fearing a change in government could ban its industry once again.

While supermarket competition is not what some would wish, this is largely due to the planning system, although there remain calls to split up the industry in ways unheard of in other countries, with even the Finance Minister having floated it, and it still being a "live" policy with some political parties.  The fact this was even considered by a purportedly centre-right government indicates how far from the 1980s and 1990s NZ has gone. 

New Zealand lacks the compulsory centralised pay bargaining seen in Australia, which bears the cost of it because the wealth generated from mining is so significant, the loss in productivity is diluted.  However, it was only a change in government in 2023 that stopped it being implemented in NZ. 

So I'd say New Zealand isn't quite as far down the path of regulatory sclerosis as the UK, but that is not because of a lack of will to continue down that path. You can see it in Labour, the Greens and the Opportunity Party, as well as within the glance of part of the National Party and NZ First to seek to add "just another" regulation to make business have "purpose" to meet the politicians' goals.

The fascists of the 1930s (actual fascists, not David Seymour) didn't advance communist style nationalisation of the economy because they preferred to use regulation and state control over business and industry to meet their goals. The word is vastly overused by the far-left, but its approach philosophically is not a million miles away from the bureaucratic command and control state regulating capitalism to meet the lofty ambitions of politicians.

One thing is for sure, it sure isn't a free-market capitalist economy.