Queen City Law’s Managing Director Marcus Beveridge was recently interviewed by the Hosk on the Mike Hosking Breakfast radio programme. Marcus has been interviewed on the show many times, in this case it was as a lawyer specializing in foreign investment.

The following is a link to the at-times irreverent discussion: https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/marcus-beveridge-queen-city-law-managing-director-on-the-potential-for-singapore-to-invest-in-new-zealands-infrastructure/

The Coalition Government has been in power for over a year now. They have looked under the bonnet and advised that the Government is basically broke and has very limited funds available for New Zealand’s infrastructure.

Heaps of the water in Wellington literally goes down the drain, our roads have potholes, the underground railway in Auckland CBD is apparently one of the most expensive projects per kilometre the world has ever witnessed. This list is simply indicative and there are many other issues, large and small, that continue to plague us.

It’s a woeful state of affairs, really.

Like many jurisdictions, the diggers after World War 2 got stuck in, rolled up their sleeves and built things. In many cases, this infrastructure has been poorly maintained afterwards and long-term planning around infrastructure requirements is poorly executed.

Part of the problem is that governments do not win over voters by taxing them for things like infrastructure costs. You can liken this to, say, apartment owners having to contribute to leaky building issues and long-term maintenance programs. There will be resistance and part of it could be considered intergenerational.

Equally, and perhaps more damning, is that many government agencies are simply incompetent.

Recently, the Treasury has reported to the Ministry of Infrastructure that our public agencies do not understand how to plan for large infrastructure projects, how to plan and manage assets, and are held back by a lack of skill and capability. This is leading to an inability to make proper proposals for public projects, well before they’re ready, or before the agency can even prove the project is a good idea.

This poor planning has created cost pressures of $2.2 billion – which means 11% of the Budget is wasted on just trying to play catch up and fix mistakes. Treasury says that most of it’s portfolio is experiencing delays. Health New Zealand has just reported a $722 million deficit and keeps finding more things to cut to try and keep itself above-water.

Another example is the $1.9 billion budget blow out for a planned hospital in Dunedin.

Of course, the elephant in the room that everyone is thinking about is the City Rail Link project in Auckland. At $5.5 billion, it has already swelled to almost double the $2 to 3 billion planned for the project and taken several years longer than expected. It is a pity that we do not have our own Lee Kuan Yew or, say, Sir Barry Curtis as they could have brought stronger management or governance to such important projects. This project has seriously kicked the CBD in the guts.

Tax payers are not an infinite source of wealth for the public purse after all, at some point something has to give. It is not sustainable to keep pumping money into failing projects, especially as costs of living go up.

Construction executives from France are being flown into the country next month.

Treasury has introduced new controls to help curb this issue, but it is clear this is not a quick problem to fix. New Zealand will need to find new ways to inject capital to support out rotting support pillars while they’re being knocked out and replaced.

Other factors particular to New Zealand include our small population, our planning rules, supply chain considerations, and immigration rules around skilled and labour.

With reference to the population issue, for some companies to invest in, say, new roads with tolls, there needs to be so many vehicle movements per day to make it worthwhile from an investment return analysis within say a 5 or 10 or even a 20-year period.

Another consideration is that the Government is considering introducing some changes to how migrant investment would work, which could include fast-tracked applications based on factors like the amount of money invested and in which industries

A PPP (Public Private Partnership) is when a private company enters into a long-term contract to provide something to the Government, which makes it available to the public. For example, providing the finance to fund projects or constructing infrastructure. This helps lessen the burden on the public purse since the private company would be taking on those costs instead. A common process abroad is allowing a private company to construct roads and then collect the toll payments for a couple of decades. It’s certainly something worth considering, especially when you think about how slow construction on public projects tend to be, but it does raise some potential issues. For example, there’s always the risk of the private company prioritising short term profit and making something that’s “just good enough” while they’re holding onto it. It could mean higher maintenance or replacement costs in the future if infrastructure is shoddily made. There’s also going to be confusing issues around ownership and privatisation, and concerns that the private company will make their service expensive to use so that they can profit off it.

But wait, there’s hope. The interview above reflects Matua Shane Jones effectively touting for business in Singapore. Temasek is a state-owned investment firm of Singapore, and acts as its investment arm. As of last year, it holds assets worth USD $288 billion. This equates to almost NZD $500 billion, or five hundred thousand million Kiwi dollars.  Having even a fraction of this invested in New Zealand would be a significant boon to our economy.

These superannuation funds have enormous economic clout, and there should be economic benefits to New Zealand if they choose to invest here – but will they? And what could we do to influence them to do so?

Hats off to Shane Jones, Winston Peters, our Prime Minister, and others for having a go. Singapore heavily replies on the foreign market for food, more than 90% of the food they consume is imported. Singapore is an entrepot, a trading/port nation, and is always looking for new trade partners to help secure food. This is especially true after covid led to global lockdowns that significantly clamped down on international transportation and shipping. It’s well known that New Zealand exports a lot of agriculture and food-based items of high quality, so it should be a no brainer to target Singapore. They got the cash, we got the goods, why shouldn’t we try and work something out?

Of course, the opposite is true too. New Zealand is a small island nation at the bottom of the world after all, and there’s many resources we simply can’t get ourselves. This includes petroleum. As of 2022, New Zealand only produces about 12% of all oil we consume – or to put it another way, we have to import 88% of it. We’re hugely reliant on oil imports, there’s simply no way we can sustain ourselves on our own reserves as things stand. This is an issue of supply chain security, given that it is understood we have only about 2 weeks of petroleum in reserve. And would you look at that, Singapore is basically drowning in the stuff. It makes up a significant part of their GDP, to the point where they’re sometimes called “The oil hub of Asia”. They have it, we want it, let’s work something out.

In tandem, Auckland’s mayor Wayne Brown and the CEO of the Auckland Chamber of Commerce Simon Bridges, have recently spent some time in China looking for potential partners. Nations like China and Italy seem to be extremely good at building tunnels and bridges. Previous mayors like Len Brown have also led junkets to Shanghai and Beijing. To date, they do not seem to have brought home the bacon.

Could we utilize the Government’s investor immigration rules to assist against the fact that the Government currently does not have any money to spend? The answer is yes we could, and yes we can – but there is seemingly no current provision, plan, or motivation from our government to prioritise and/or incentivise such investment.

Is this short sighted and a waste of potential capital? Yes. For business immigrations coming into New Zealand, particularly from North Asia, investing in infrastructure even at a modest return would work because it is something they can see, touch, and feel – and therefore take some ownership and pride in what they have invested in (like my ancestors have, who arrived here in 1850). Before the last 2 years when the immigration investment settings were easier, we were attracting NZD $1 billion per year for a decade. Sure it is way under the figure of $100 billion the Deputy Prime Minister has published, but it could be tweaked to attract say $3 billion per annum. So that after a decade, we have captured say $30 billion in investment. How long such money would be invested and what returns (if any) there would be for business immigrants is another question altogether. There are, of course, a multitude of other economic and downstream benefits that a well-designed framework for immigration investment could yield.

The truth is, since the arrival of Kupe on our shores, New Zealand has been built on foreign investment. Currently, NZ is not on top of anyone’s list. Yes, we do need to get our mojo back. We need to keep trying to penetrate overseas markets and continue to build important international relationships. We need to embrace potential partners like Temasek and twist their arm and get them to take a position in our economy. Given some of the factors that have been set out above, including food supply and petroleum delivery, there are some compelling synergies that should be urgently explored and exploited. Many decades ago, the New Zealand navy ran the mean streets of Singapore. Bugis Street in particular.

Go hard Matua Jones and bring home the bacon!