Professor Robert MacCulloch: Lester Levy

Is Health NZ's Chair, Lester Levy, tied to the biggest cost blow outs incurred in this nation's history?

Many years ago I received a mail from the current Chair of Health NZ, Lester Levy, who is now charged with slashing costs across our health system. He was doing part-time teaching at Auckland University as an "adjunct" & asked me to speak at a Tonkin+Taylor conference. They're an engineering consultancy firm specializing in infrastructure. I was surprised to discover Mr Levy was Chairman of Tonkin+Taylor, since to my knowledge he'd not studied engineering. Of course, not being an expert in the core activity of the business is no barrier to corporate success in NZ (Tonkin+Taylor's new Chair is an accountant). Some years later, Mr Levy turned up as full Professor at Auckland University of Technology, which is now in financial difficulty.

I'd assumed (turns out wrongly) one required a PhD for that job. After all, it says on Levy's AUT home page he does "PhD student supervision" (though doesn't have the degree himself). I'd also assumed (turns out wrongly, again) one had to be a Lecturer, Senior Lecturer, then Associate Professor, to acquire the skills required to become a Professor (none of which Mr Levy has been). Anyhow, Mr Levy was Chair of Tonkin+Taylor for over a decade, from 2009 to 2020. So lets take a quick look at some projects his (former) firm worked, advised & consulted on, during the period of his tenure.

There's one called Auckland City Rail Link. It was originally going to cost about $3 billion, but now's hurtling toward $6 billion. Documents show the Rail Link will cost $220 million a year once it's (maybe) working in 2026. For Aucklanders, that means rates rises. I suppose the engineering consultants will blame the construction firms - and they will blame the consultants & government. The losers will be the taxpayers. 

Another project Tonkin+Taylor advised on under Mr Levy was the Puhoi to Warkworth Highway, whose costs exploded to over $1 billion for 18 kilometers of road. That put the cost per km at about $NZ 50 million, making it one of the more expensive highways in the world. Again, Tonkin+Taylor would likely blame Fletcher's and Fletcher's someone else. Last year it was reported that, "Transport Minister David Parker was expecting a briefing shortly on a landslide threatening the new .. Pūhoi to Warkworth motorway north of Auckland. Cracks have appeared in concrete barriers & an entire section may be moving under the motorway".

Tonkin+Taylor also worked on the Wellington Town Hall, whose costs have blown out, more than doubling to $320 million, dragging broken Wellington down with it. (All whilst Chateau Tongariro, a true NZ icon, is left to rot. I suppose the good citizens of Ruapehu District can't write blank cheques in favour of themselves, like Wellington can). Not that we're saying the cost blow out has anything to do with Tonkin+Taylor and Mr Levy. They just advised on "contaminated Land" and lent "geotechnical expertise including screw piles, basement, heritage and foundation work, and underpinning work for the structure". Tonkin+Taylor's website reports this as a "$135m value heritage project". They should update their abacus. 

Space is short, so let's finish with the PenLink Project, a road that will provide a short-cut to Whangaparoa Peninsula out of Auckland. I couldn't find reference to it on Tonkin+Taylor's website, but it has been reported, "NZ Transport Agency Waka Kotahi, HEB, Fulton Hogan, Aurecon and Tonkin+Taylor formed an alliance to construct that highway". The latest news is that this "new highway costing more than $800 million, which was meant to be finished in late 2026, has been delayed to 2028 due to complications with a novel bridge design".

On the promising side, one supposes that with such wide-reaching experience working on so many public projects that have seen some of the biggest cost and time blow-outs in NZ history during his time at Tonkin+Taylor, Mr Levy is well versed in how things can go pear-shaped. This knowledge may serve him well at Health NZ. Lets wish him the best in his endeavours, even though the National Health System in the UK runs the same model of health-care as ours, and its costs as a fraction of GDP are higher than NZ's. 

Which tells one that if you want to do better, one must find a new way of running health-care, like adopting one of the models proposed in our previous Blogs, which include a French or Singaporean-style system, with a far greater role for private delivery, but not payment, in NZ. Changing the deck chairs by flying in a new man whose background includes advice on City Rail Link, PenLink, Wellington Town Hall and Puhoi-to-Warkworth road, all of which are symbols of vast cost and time over-runs, to sort out NZ health-care doesn't wash.

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.