Transmission Gully, linking Wellington to the north, cost about $1.25bn. Photo: Mark Coote
The Government has been handed a grim Treasury warning as it struggles with how to plan, manage and pay for billions of dollars worth of roads, hospitals, courthouses and water projects.
Treasury told Minister of Infrastructure Chris Bishop that many agencies lack understanding about planning large infrastructure projects, and this was "exacerbated by skills and capability gaps and poor asset planning and management".
New projects planning was fraught, and building them was fraught, and so were existing assets, it said.
"There are large gaps in our understanding of the state of the Crown's assets, as well as a lack of comprehensive planning to maintain, renew, replace or dispose of assets," Treasury also warned the government.
The result? Heightened risks, and possible logjams.
New indicators from Treasury "indicate that investment proposals are coming to us for approval before they are ready, and without sufficient evidence to support our decision-making," Bishop warned his Cabinet colleagues in September.
"This will ultimately slow the ability to deliver our infrastructure and investment priorities."
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Poor planning ups the pressure: agencies are now reporting costs pressures of $2.2 billion on projects, or 11 percent of budget, topped by NZTA and the Defence Force, the latest available report showed.
The warnings have emerged as Treasury brings in a range of new controls to try to force agencies to up their game.
"It's super-important, right," Bishop told Morning Report on Friday.
"Sounds boring, but super-important."
These huge projects had a "ginormous impact on the Crown books", he said.
The scale is huge: the Crown has 175 investments in planning with an estimated value of $79 billion and 198 investments already "in delivery" with approved budgets of $85 billion.
"Almost half of the delivery portfolio [is] experiencing delays," Treasury said.
One of its new measures - called "chief executive attestations" - had already exposed Health New Zealand and the police as well behind the game.
Health fell short in August on 11 out of 15 measures, including not telling Treasury or Cabinet enough about big spends coming up.
It indicated a fix might take four years - well beyond this term of government, reports show.
Bishop said he and Minister of Finance Nicola Willis were telling agencies to get serious. He was expected to release more details about his infrastructure work later on Friday.
He underscored the stakes by citing the big blowout at the $1.9 billion Dunedin Hospital build, where consultants were now being paid to unpick agreed designs.
"New Dunedin had red ratings all over it. And people just charged on."
A dump of official documents about Dunedin Hospital said the key weakness was a "mess" around oversight and governance for years.
Senior doctors have told RNZ they now worry Dunedin will swallow funding they need for regional rebuilds such as at Hawke's Bay and Palmerston North hospitals.
Proactively released papers show Bishop warned a Cabinet committee about the deep-seated problems with investment management in September.
"Treasury has started providing us with indicators to inform us about agency investment planning and delivery performance," he said.
"They indicate that investment proposals are coming to us for approval before they are ready, and without sufficient evidence to support our decision-making."
This suggested other major projects already in the delivery phase were on unsound planning foundations.
In large part, Bishop now is reliant on Treasury, which had oversight of the previous flawed system.
In turn, Treasury depends on oversight through a blurred lens across both new projects, and old assets; reports note how agencies tended to underinvest and "sweat assets for as long as possible".
"It is possible that there are unrealised financial pressures that are not reflected" in its quarterly investment report, it cautioned Bishop.
Treasury's new controls include a quarterly investment report - the first went to Cabinet in June - and new 'chief executive attestations', where the leaders attest whether their systems for planning, building, reporting back and asset management are up to scratch.
Police, too, were non-compliant across half the categories: an initial assessment in 2023 of their asset management had rated it "hovering a the basic/aware levels".
As for asset management decisions, "the lack of reliable, core asset data, and therefore inability to draw insights, impacts on the ability to make informed decisions that consider risk, cost and performance equally", the police CE's attestation said.
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