Saturday, May 11, 2024

Dr Oliver Hartwich: A shovel-ready autopsy

Cast your mind back to mid-December. A new Prime Minister had just been sworn in, the new Government started its 100-day programme, and Christmas was only days away.

Amid all the haste, a report landed that would have deserved our attention.

I am talking about the Auditor-General’s damning exposé on the previous government’s “Shovel-Ready” and New Zealand Upgrade infrastructure programmes.

In forensic detail, it exposed myriad failures of process and governance that saw billions of taxpayer dollars shovelled into projects with little regard for cost, quality or value.

Predictably, the report sank with barely a ripple, lost in the pre-Christmas frenzy. We owe a debt of gratitude to the Finance and Expenditure Committee for thrusting it back under the public spotlight.

By inviting submissions on the Auditor-General’s findings, the Committee has given us a golden opportunity to learn from past mistakes and chart a saner course for the future.

At The New Zealand Initiative, we were unsurprised, if still dismayed, by the Auditor-General’s findings. For years, we have warned that a lack of rigorous cost-benefit analysis would cost us dearly as a nation.

Sadly, those fears were realised in the Ardern Government’s infrastructure programmes. Decision-making was opaque and inconsistent. Cost-benefit analysis was piecemeal at best. Haste and political expediency triumphed over rational economic calculation.

The question now is not who is to blame, but how we can learn from this debacle. The answers are writ large in the Auditor-General’s recommendations. We strongly support them in our submission to the Committee.

Furthermore, our submission recommends the establishment of an independent Office of Parliament to scrutinise government spending and fiscal prudence.

Regular public reporting on the progress and performance of major investments is a must. Treasury should seek feedback on its guidance for expedited decision-making. Minimum standards for contestable funding processes should be established. These simple measures would strengthen accountability and improve future infrastructure decisions.

Crucially though, we need a different culture of ministerial decision-making. Ministers must follow established processes, not circumvent them for political gain. They must prioritise value for money over ribbon-cutting photo ops. And they must have the patience to wait for rigorous cost-benefit analysis and business cases before reaching for the cheque book.

For the new government, the path forward is clear. Heed the Auditor-General, reaffirm the primacy of prudence over politics, and restore confidence in our infrastructure regime. Transparency, accountability and robust cost-benefit analysis must be at the heart of all future investment decisions.

What matters is not how many shovels you wield but how wisely you dig.

Read the Initiative’s submission to the Finance and Expenditure Committee, prepared by Nick Clark and Dr Matthew Birchall, here.

Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank. This article was first published HERE.


Anonymous said...

Of course you’re right Dr, but do you really think all of these good moves will occur, given the thoroughly rotten state of our political and bureaucratic systems? I fear a return to integrity is only likely after a total social collapse, not before.

Anonymous said...

I take a similar view Anon but suggest we simply have much less of the Govt spending thus limiting what is always present with centralized spending waste.

Anonymous said...

When will A-G report on the extraordinary amount of taxpayer money spent and ipso facto wasted, on all the so - called Maori stuff?

Anonymous said...

Thanks for highlighting this report. It can be found on the OAG website with a web search "making infrastructure investment decisions quickly"

I’ve had a quick scan of the “Auditor-General’s overview” in the report, which makes interesting reading. A few things struck me:
– State institutions, such as the Treasury, did alert the government of the time to the financial risks involved and the need for robust due process;
– State institutions were struggling with capacity issues owing to the COVID emergency, likely resulting in diminished oversight;
– The Treasury has since this time produced guidance on funding infrastructure projects when rapid decision-making is required;
– The Auditor-General has made three recommendations suggesting further efforts to bolster due process in these situations;
– The ultimate responsibility for decision-making lies with the government of the day, but nonetheless transparency to Parliament and the general public is a valid expectation and a necessity.

I am heartened by this response to past government actions by our public institutions. I’m also hopeful that the current government at least will a take much more businesslike approach to public finance.