The backdown is all the more humiliating for the fact Bishop was clearly forced into it by the rest of his Cabinet and caucus. <\/p>\n
For those following along at home, that U-turned plan built on another U-turn on another Auckland intensification plan, the MDRS (don\u2019t ask), which itself followed on from the NPS-UD (don\u2019t ask), on which National also performed a semi-U-turned, only this time in the opposite direction \u2013 the party opposed the plan before Bishop twisted caucus\u2019 arm into supporting it. Got that? <\/p>\n
Bishop\u2019s next big challenge \u2013 the Government isn\u2019t calling it a \u201cU-turn\u201d \u2013 is what to do about the Government\u2019s Roads of National Significance (RoNS) programme. <\/p>\n
The 17 roads, promised on the 2023 campaign, were estimated by National to cost just $17.3 billion and begin construction this decade. <\/p>\n
They\u2019re now forecast to cost $44 to $54 billion. Something must be done.<\/p>\n
Housing Minister Chris Bishop orchestrated a U-turn on intensification plans. Cartoon \/ Daron Parton<\/p>\n
The Infrastructure Commission\u2019s scathing report on New Zealand\u2019s infrastructure predicament, published earlier this month<\/a>, not-so-subtly urged this Government to pull back on expensive mega projects like these.<\/p>\n The Government quietly agrees. <\/p>\n Delivering the RoNS in full over the next 20 years would cost $56 billion. <\/p>\n Funding this entirely from petrol tax would require a one-off 70% increase, equivalent to a 49c a litre increase in petrol tax \u2013 and that would only cover the building of the roads, not anything else like maintaining the rest of the network. <\/p>\n The government is preparing a backpedal and signalling it very loudly \u2013 in fact, those costings and fuel tax estimate came from Bishop himself in a speech delivered to the roading industry last year, in which he promised \u201chard choices\u201d<\/a>. <\/p>\n \u201cNot everyone is going to get what they want, exactly when they want it. Some roads won\u2019t be starting for many years. <\/p>\n This is not going to be easy. But it will be worth it,\u201d he said. <\/p>\n The backdown (although the Government will deny it\u2019s a backdown and focus on the \u201cphasing\u201d) will come before the Budget, a fact hinted at by Treasury Secretary Iain Rennie when he appeared before the Finance and Expenditure Select Committee this year.<\/p>\n The Government will reveal its detailed Major Transport Projects Pipeline, or MTPP, which in Bishop\u2019s words will be a \u201ccredible, long-term pipeline of transport projects with a variety of funding options and in a logical sequence\u201d.<\/p>\n \u201cIt includes the RoNS but also major public transport projects we need to advance as well,\u201d he said last year. <\/p>\n The pipeline will be ordered based on how soon projects can be started, their value, measured by the benefit-cost ratio, and corrected to ensure a fair spread of projects throughout the country. <\/p>\n The Government hopes the pipeline will provide certainty over who gets what and when, but it will also help justify the government\u2019s choices to the public. <\/p>\n But the most politically salient fact of the MTTP will be that it will show some roads are dropped so far down the pipeline they\u2019re effectively cancelled.<\/p>\n The challenge for the Government is that what it will present will clearly be very, very different to what it promised on the campaign, which is that these roads could be started within the decade. <\/p>\n Worse still, the cost overruns and delays were predicted by Labour and the Greens who, on the campaign, said the costings were \u201cbreathlessly misleading\u201d and that National was \u201cliterally billions of dollars short\u201d. A rare example of the word literally being used properly, as it turned out. <\/p>\n Both parties will have a glorious \u201cI told you so\u201d moment prior to the Budget. The politics are complex. <\/p>\n These roads are popular. Even if National\u2019s forced into a blushing backdown over their cost and timing, it\u2019s still the only major party to promise it\u2019ll actually deliver most of them (a promise that still stands \u2026 if the Government manages to survive a few decades). <\/p>\n But the projects could also show National is no better at managing cost overruns than Labour, which had terrible trouble managing blowouts the last time it was in government. <\/p>\n It\u2019ll be a big set-piece for Bishop, who must also be wondering what will come of the Transport portfolio in Luxon\u2019s forthcoming reshuffle. <\/p>\n Everyone thinks he\u2019ll lose something (he\u2019s even said it publicly), but what? Transport, a popular portfolio in National, or perhaps Housing, to signal a change in approach after Bishop\u2019s controversial approach to reducing prices? <\/p>\n Labour has its own costly headache. The release this week of the report from the People\u2019s Select Committee on Pay Equity <\/a>once again shed light on the unfairness of low pay rates in vital, woman-dominated professions; it showed the cruelty of the coalition in concocting its reversal in secret, then springing it upon an unsuspecting Parliament and passing it under urgency. <\/p>\n The report also shone light on how Labour which has pledged to restore the old regime, hasn\u2019t any plan to pay for it. <\/p>\n Most of Labour\u2019s MPs know restoring the old regime will be expensive, very few have an idea of how expensive it would be. <\/p>\n For some perspective, at $12.8b over four years, or about $3.2b a year, reinstating the policy as it was would cost 50% more than the total operating allowance (to be spent on cost pressures across all government spending) of the Key-English Government\u2019s largest Budget.<\/p>\n It\u2019s even larger than Grant Robertson\u2019s first operating allowance<\/a>. <\/p>\n It would be one of the largest single operating promises made during an election by one of the two major parties, behind only Labour and National\u2019s joint multi-year cost pressure funding for the health system in 2023. <\/p>\n It would cost four-and-a-half times money more than Labour\u2019s promised capital gains tax (CGT) would raise (a moot point, as CGT money has already been allocated). <\/p>\n In fact, at about 0.7% of GDP, restoring the old regime would require almost the same share of national income as the Budget of Nasa at the height of the Apollo lunar programme in 1966 (about 0.79% falling to 0.5% by the end of the decade).<\/p>\n The challenge, in other words, isn\u2019t just that Labour, or indeed anyone, hasn\u2019t any plan to pay for this \u2013 it\u2019s that few, if any, MPs have twigged to just how insurmountable a fiscal obstacle the policy is. <\/p>\n The \u201chow will they pay for it?\u201d question is therefore the wrong one. <\/p>\n It\u2019s not that you can\u2019t afford to reinstate the old regime \u2014 you can, it\u2019s just that the trade-offs in tax rises and spending cuts are so immense, and have so little political upside, it\u2019s very difficult to see the current \u201csmall target\u201d Labour Party making them. <\/p>\n Even if Labour had the chops to raise taxes and cut spending to the extent it could reinstate the old regime, it would still have to find yet more money to promise anything else in areas like health and education.<\/p>\n The real question is what will Labour do to make pay equity more affordable, and do its MPs have the political and economic fluency to justify the changes.<\/p>\n There are some changes Labour can make. The party\u2019s clearly laying the groundwork for scrapping or curtailing the $6.6b Investment Boost tax credit. <\/p>\n That gets you halfway there, but it still leaves you two CGTs away from the sum required. <\/p>\n There are some tax hikes Labour is looking at. Hipkins has heavily hinted at bringing back a digital services tax on tech companies worth $479m at last count<\/a>, and this week on Ryan Bridge TODAY, he hinted at some specifics regarding a rumoured plan to bring back the ban on interest deductions for residential landlords. <\/p>\n Hipkins said after \u201cfeedback from landlords\u201d that \u201cremoving 100% of interest deductibility was \u2026 something that we\u2019re unlikely to do in that same way again\u201d.<\/p>\n His remarks suggested restoring a 50% ban, a level favoured by the architect of the original ban, David Parker.<\/p>\nTransmission Gully a Road of National Significance. Photo \/ Mark Mitchell<\/p>\n
Protestors marching for pay equity along. Photo \/ Evie Thorne.<\/p>\n