INFRASTRUCTURE LOCAL GOVERNMENT • CONSTRUCTION • CITIES • ENERGY • ENVIRONMENT • TRANSPORT • WATER • COMMUNICATION
New Zealand Edition
WATERVIEW imagination, innovation, organisation and ...
October/ November 2014 VOL 4 NO. 5
... a touch of invention
Houses or homes • Pond aeration • Thinking big • Royalty rights • NZCID ideasfest
COMMENT >> Housing by Dr Joel Cayford
Myths, shaky statistics and housing policy The government should be investigating housing holistically rather than simply improving conditions for developers so they can be effectively subsidised to build relatively expensive and large homes
For most cities in the world, the starting point is not a freehold 200-square-metre floor area, three-bedroom house on 400 square metres of land. The starting point is a relatively inexpensive apartment typified by this alternative housing design in Denmark. The NUMBEO survey reports affordability of 90 square-metre apartments
eputy Prime Minister Bill English attacked councils for causing poverty by making housing expensive through not releasing rural land for development quickly enough. And claimed a house couldn’t be built in Auckland for less than $500,000. Maybe the incoming government has decided on a policy of shock and awe - fly lots of kites publicly, distract the media, excite the locals, and let cabinet and its advisers get on with the serious business of finalising a three-year strategy. Which will include a housing strategy, the implementation of which will be the responsibility of three ministers. To that extent the government appears to be taking housing seriously. So surely it is time for government ministers and ministries to be
investigating the housing economy holistically, rather than with its current narrow objective of creating more economic growth opportunities for the building and property development sector? Auckland’s housing problem is not all that it seems, it seems. Several issues arise because of the way the government and its favoured advisers choose to understand housing – particularly Auckland housing. For example, the price of housing in Auckland - as opposed to the price of houses - is falling, not rising. Recent reports indicate a shortfall in demand for rental properties. A report based on Trade Me data indicates that in central Auckland the supply of rentals was up five per cent on the previous year while demand was down two per cent and
Some recent feedback on Tender Proposals prepared by the Plan A Team Ross and Alec, Well done on the recent shortlisting notification and resultant presentation for next week. Go hard, we can get there. I know this is late, but it has taken me several days to review the submission folders. And I just finished. I just wanted to provide some feedback on the submission docs - I have never seen better. A high quality, professional submission well and cleverly written. Fabulous job, keep going! Regards, Andrew.
Hi Allison and Chris, I haven’t been in Auckland much so didn’t get a chance to say a goodbye to you both. Just wanted to say a big thank you for your efforts (and patience!) The bid submission looked fantastic and is a tribute to the huge effort from yourselves that made it what it is. Look forward to working with you in the future. Mike.
Hey Kathy and Rebecca, We have been awarded the Council contract with Dunedin City Council, cutting out (our larger competitors). We’ve been writing tenders for years and only achieved this because Jan and Rebecca wrote the bid. Game on, only way is forward. Plan A will write my tenders and the boys will do the work! Best wishes, Mark.
Hi Heather, We delivered the bid to NZTA today, a whole 65 minutes early. In my view it looked great and is one of the most specific and relevant NPAs we’ve ever put together. It was a great team effort and I know that the Plan A team put some long hours into putting it together, particularly over the last few days (or nights). Thank you all very much for your efforts and let’s hope for a successful outcome. Regards, Jon.
Caroline and Alec, It is with pleasure that I can now inform you that we are now the preferred vendor moving forward for the contract. A big thank you to you both for your efforts in enabling us to achieve this status – couldn’t have done it without you. We have not cracked a beer yet, I have to say but when we do you are more than welcome to participate and will keep you posted. Thanks guys. Cheers, Shane.
Need help on your tender bids? Want to boost your win rate? Time to call Plan A.
w: www.plana.co.nz e: email@example.com p: 0800 PLAN AA (752 622)
October/November • 2014
In some ways this survey is like Demographia’s – ie that it calculates a ratio of median prices to median family incomes. However, when analysing affordable homes (as opposed to all homes), then it is more useful to survey the types of homes that are generally purchased by young families and couples starting out on the housing ladder.
Houses - and especially the land that they sit on - fit the characteristics of financial assets to investors. And to buyers, houses in Auckland increasingly represent financial assets and decreasingly represent accommodation average asking rents declined by one percent. I accept there is a shortage of rental properties given rising levels of inequality and poverty, which means many people cannot easily afford these “low” market rents. Yet, as economist Keith Rankin notes, rapidly increasing Auckland house prices mean that something must be in short supply; that is, in excess demand. In his view that something is not houses but financial assets. Houses - and especially the land that they sit on - fit the characteristics of financial assets to investors. And to buyers, houses in Auckland increasingly represent financial assets and decreasingly represent accommodation. Investment incentive It doesn’t matter how many houses are built – provided it’s not a total crazy oversupply - there will always be buyers for them because at present Auckland houses are a great investment. But not because someone actually needs to live in them. This disconnect needs to be recognised, understood and addressed by public policy in New Zealand, as it has been in developed countries such as Germany and Japan. In those countries, if you want somewhere to live you rent a house or an apartment. That is modernity. Further, housing is priced essentially according to its rental yield. To their owners, rental houses and apartments are financial assets; but they are basic bread-and-butter assets priced by yields. They are not speculative assets, priced on the expectation of leveraged capital gains. The most misleading statistic is reliance on the Demographia survey for housing affordability which uses a very simplistic measure - the median house price to median gross household income ratio. This is a damned statistic and its unqualified use to compare housing affordability
between countries is almost a lie. Using gross household income is an inappropriate way to determine household spending power, because the spending power of a household is based on the amount of gross income remaining after costs are deducted for essentials such as taxes, food, transport and clothing. Differences in tax rates and costof-living pressures across various countries make a comparison of spending power based on gross income meaningless. Furthermore, there is no reason why a family on median wage income should feel entitled to be able to afford a median house, because houses are not purchased using wage income alone. Houses are purchased using wealth. A better measure of a household’s ability to afford property would be to consider household discretionary income and total wealth. But the worst part of Demographia’s data is that it fails to consider either dwelling size or housing type. Houses in New Zealand are, on average, the largest in the world, so when comparing median houses it is important to note that a median dwelling in New Zealand is much larger than a median dwelling in other countries. So on average a median dwelling in New Zealand, being bigger, will cost more to build and occupy more land than its median equivalent in many other OECD countries. Demographia data overstates median prices for New Zealand because it is largely based upon “house” prices, and does not take proper account of units and townhouses and other sorts of home accommodation units that are traded and which should count as homes – even if they are not average-sized “houses”. The alternative to shaky statistics Another major failing with the Demographia survey is its measure of median house price. The official median house price figures that Demographia use for
Australia are sourced from the Australian Bureau of Statistics (ABS). However these ABS figures only include freestanding houses. They don’t include units or townhouses, meaning that Demographia are overstating median house prices in Australia compared to the other countries assessed in their survey (countries where units and townhouses are included when calculating the median house price). The study that I have looked at closely and which seems to me far more useful when looking at what is happening in Auckland is the NUMBEO study (which can be found on the Web.) This is now one the largest and most data-rich sources of cost of living and housing price data in the world. NUMBEO uses Price to Income Ratio as the basic measure for apartment purchase affordability. It is the ratio of median apartment prices to median familial disposable income, expressed as years of income. NUMBEO’s affordable housing formula assumes and uses: • net disposable family income, as defined as 1.5x the average net salary • that the average apartment has 90 square metres • its price per square metre is the average price per square metre in the city centre and outside of city centre Other affordability statistics that are reported, by country, include Mortgage as Percentage of Income, which is the ratio of the actual monthly cost of the mortgage to take-home family income (average monthly salary used to estimate family income). It assumes a 100 percent mortgage is taken on 20 years for the house (or apartment) of 90 square metres where the price per square metre is the average of price in the city centre and outside of the city centre. This gives its Loan Affordability Index, which is an inverse of mortgage as percentage of income.
False start And for most cities in the world, the starting point is NOT a freehold 200-square-metre floor area, three-bedroom house on 400 square metres of land (and costing $500,000, according to Bill English). The starting point is a relatively inexpensive apartment. The NUMBEO survey reports affordability of 90 square-metre apartments. In 2013, according to this survey New Zealand ranked 21 (with a Price to Income Ratio of 6.40) while the US was 1 (Price to Income Ratio of 2.16), Germany, Canada and Ireland ranked 8, 9 and 10 respectively. Australia ranked 32. For the affordability index which considers the cost of a loan (assuming it is taken on for a 20-year period), which uses interest data from each country and such like, New Zealand ranks 24th in affordability (with 1 - the US - being most affordable), and places like Belarus and Ghana being least affordable and ranking 100 or more. It should be noted that in this survey countries like Sweden, Australia, Italy and Egypt rank as less affordable than New Zealand. In Auckland we need to be measuring and comparing data that helps us focus on change and on policies that will make a difference, rather than using discredited surveys that only exist to reinforce a particular party line that is all about removing development costs and improving conditions for developers so they can be effectively subsidised to build relatively expensive and large homes. We know that the average New Zealand home has been increasing in floor area for the past 20 years or more, and that the number of occupants/home has been decreasing on average. This is inconsistent with the policy objective of increasing the supply of affordable homes, because internationally affordable homes in urban environments are apartments. So come on Bill and John, please up your game and use credible data and adopt public policy settings that deal with the fundamental problem rather than adding more fuel to it. Dr Joel Cayford is a planning consultant, blogger and planning researcher/teacher at the University of Auckland, and a former city and regional councillor i
THIS ISSUE 6-7 National’s election win gives it a mandate to push through its proposed social housing reforms but this does not mean that the way ahead will be plain sailing say Content Partners Matt Yarnell and Josh Blackmore 8-9 Comment - The state of the housing market is a trending topic, Housing New Zealand Chief Executive Glen Sowry says and will result in a more competitive marketplace in which the country’s major provider plans to play a big role
project is designed to provide vital additional capacity for a major Auckland ring route is literally breaking new ground. Competitive alliance project procurement is becoming increasingly common worldwide as it offers several key advantages over conventional infrastructure procurement methods 23 Argentina-born Mercedes Santos - the woman driving one of New Zealand’s biggest roading projects in the Waikato has been named Project Manager of the Year
32 Comment – LGNZ Chief Executive Malcolm Alexander says there are three big issues the local government sector sees as priorities with the re-elected National government 33 Comment – Content Partner Leigh Auton says he is frequently amused but more often depressed around the rhetoric and actions of political and community leaders in their diagnosis of legislative issues associated with development processes in New Zealand 34 Comment - Cities place a huge amount of reliance on debt and development contributions to fund the required level of infrastructure needed to give them a future. It is not sustainable says Content Partner Connal Townsend 35 Regional councils marked World Rivers Day by releasing their latest river data on the Land, Air, Water website 36 Kapiti Coast District Council’s refurbished Civic Building has been awarded 4.5 stars out of 6 for energy performance under NABERSNZ, the energy rating scheme for office buildings 36 LGNZ has appointed a cross-sector working group to its LGNZ Local Government Funding Review, 37 Comment: The government’s response to the March 2013 Productivity Commission’s report “Towards Better Local Regulation” doesn’t go far enough according to LGNZ President Lawrence Yule 38-40 LGNZ’s recent forum ‘Royalty Payments – the case for a local share - highlighted the need for communities to have resilient economies in order for long-term social and economic success
Management & training
INFRASTRUCTURE 32 -40 Local Government
10-11 Workers exposed to high psychological job demands characterized by excessive workload and extreme time pressure have a two fold risk of major depression or generalised anxiety disorder says Content Partner Elizabeth Howells 31 It’s hard to avoid the skills shortages currently facing most businesses in the New Zealand construction and infrastructure sectors. Unemployment is at a low, with some regions such as Christchurch at four percent - skilled people are tough to find says infrastructure trainer Connexis
12 New Zealand can’t afford to forget the lessons learned from the Muldoon government’s failed Think Big programme says Content Partner Stephen Selwood. Public and private alignment is the key to mega-project benefits
7 A two-storey timber building soon to be constructed in Nelson will be the first in the world using a new timber flooring system designed by UC structural engineering experts 36 Kapiti Coast District Council’s refurbished Civic Building has been awarded 4.5 stars out of 6 for energy performance under NABERSNZ, the energy rating scheme for office buildings 45 New Zealanders will be able to find out more about the environmental impact of various building products following the launch of a new programme that provides Environmental Product Declarations
24-25 Pond based biological management is one of the most common wastewater treatment systems in New Zealand. Aeration is essential but can be expensive. Apex Environmental has added a high performance, economical Kiwi answer to pond aeration solutions. 26-27 Irrigation The devastating windstorm that wreaked havoc in Canterbury a year ago proved an exhausting exercise in disaster and crisis management and recovery for many of those involved 35 Regional councils marked World Rivers Day on 28 September by releasing their latest river data on the Land, Air, Water, Aotearoa (LAWA) website
Safety & Security
28-29 While New Zealand’s changeable weather can be testing at times, the country’s sudden cold snaps were behind the invention of the country’s first fire detector
SUPPORTERS 2-3 Comment - The government should be investigating housing holistically rather than simply improving conditions for developers so they can be effectively subsidised to build relatively expensive and large homes says Content Partner Joel Cayford
mediaSOLUTIONS Editor Geoff Picken 0212 507 559 geoff@ mediasolutions.net.nz Managing partner Phil Pilbrow 027 564 7778 firstname.lastname@example.org
October/November • 2014
13-22 Waterview – New Zealand’s biggest road project underwent extremely rigorous economic and risk assessment procedures before the final contracts were signed. The multi-faceted road
Apex Environmental P25, Aurecon P15, Beca P21, Chapman Tripp P23, Cancer Society P5, Connexis P31, Diveco P27, Electrix P48, Klip Tank P41 McConnell Dowell P17, NZCIDP 12 & 42, People Centric P11, Plan A P2, Red Cross P35, Styles Group P19, Vigilant P29, Voss Consulting P27, Xpo P47
Design & pre-press John Baanders 021 102 8646 email@example.com
Subscriptions firstname.lastname@example.org Rates: $30 incl GST and postage for 6 issues, plus digital editions to five email addresses. Overseas rates available on request.
Web development Neo Chen 021 507 318 email@example.com
www.infrastructurenews.co.nz Free access online to an interactive digital edition. Free access to the industry’s most comprehensive, key word searchable archives in key infrastructure categories: Local Government, Construction, Cities, Energy, Environment, Transport, Water, Communication. Free access to daily updated news with the AsiaPacific Infrastructure online carousel
Publisher Mike Bishara 027 564 7779 firstname.lastname@example.org
29 & 30 More than 80 percent of Kiwis who use the internet have experienced a cyber security breach but only 39 percent have changed their online behaviour, latest research shows. 37 Greater protection for subbies at last 41 Tracked elevating device enhances safety for heavy machinery and other tracked vehicles - maintenance of internal components can be fraught with extreme physical hazards, downtime and expense
46 Tait Communications wins Queensland Rail contract for the digital migration of its radio communications network and takes a big step in Latin America through the acquisition of long-time partner SGM Telecomunicacoes
42 The New Zealand Council for Infrastructure Development (NZCIC)â&#x20AC;&#x2122;s Building Nations symposium offered an impressive array of expert speakers and an in equally impressive selection of key topics. Jenny Pretorius reports.
Geoff Picken Editor of AsiaPacific Infrastructure
Josh Blackmore Page 6
Glen Sowry Page 8
Elizabeth Howells Page 10
Stephen Selwood Page 12
Malcolm Alexander Page 32
Leigh Auton Page 33
Connal Townsend Page 34
Any cancer. Any question.
Matthew Yarnell Page 6
For cancer information and support phone the
Cancer Information Helpline 0800 CANCER (226 237)
INFRASTRUCTURE Printed by Crucial Colour 24 Fairfax Avenue, Penrose, Auckland +64 9 589 1550 Published by Media Solutions Ltd Level 2, 9 Anzac St, Takapuna PO Box 31397, Milford 0741 09 489 8663 Original material published online and in this magazine is copyright, but may be reproduced providing permission is obtained from the editor and acknowledgment given to Infrastructure. Opinions expressed are those of the authors and may not necessarily be those of Media Solutions Ltd. ISSN 2324-3163 (Print) ISSN 2324-3171 (Online)
H O U S I N G > > Comment by Matt Yarnell and Josh Blackmore
Government faces tough delivery challenges in social housing National’s election win gives it a mandate to push through its proposed social housing reforms without the need for compromise, but this does not mean that the way ahead will be plain sailing as there are serious rips and head winds to be navigated
he policy objective is clear - to ensure that the government’s immense investment in housing is directed toward those in greatest need, to encourage innovation in delivery and to entice in new capital from the so-called “third sector”, which includes non-profit organisations and, potentially, iwi. Much of the legislative framework was put in place last year with the passage of the Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Act 2013. This: • introduced a system of three yearly reviews for Housing New Zealand Corporation (HNZC) tenants, beginning this year with the review of around 800 state house tenancies where the households are paying at or near market rents • extended Income Related Rent Subsidies (IRRS) to community housing providers (CHPs) • transferred the housing needs assessment function from HNZC to the Ministry of Social Development, and • established the Community Housing Regulatory Authority which will be responsible for the registration and monitoring of private sector IRRS recipients. However the real challenge is to build the capacity of New Zealand’s community housing sector. Such has been the dominance over many years of Housing New Zealand in this market that not much has been able to grow in its shadow - and certainly not to a scale that has created anything close to a
October/November • 2014
multiple provider model. The numbers tell the story. HNZC owns or manages 69,000 houses. Local government has around 11,000 and the CHPs around 3,000. Also, most CHPs and potential CHPs have specific constituencies whose needs they are seeking to meet. And, with the possible exception of iwi, they tend to have relatively shallow capital bases which will restrict their ability to raise capital (be that equity or debt). This is especially given that the need to keep rents affordable will mean that the returns on investment will be small. HNZC’s return on equity in 2013-2014, for example, was only 1.4 percent. Progress so far has been slow. A Social Housing Fund was created in 2011 as an interim measure while the final institutional systems were put in place. It has received capital funding of around $140 million but that is now fully allocated so it is not accepting any further applications at this time. The bigger solution may lie in the government’s target of transferring 20 percent of HNZC’s portfolio to CHPs by 2020 but even achieving that is a far from straightforward proposition. To our knowledge, not a single house has so far been transferred. Much of HNZC’s stock is no longer fit for purpose. There are deferred maintenance costs across HNZC’s assets of between $1 billion and $1.5 billion, the average age of its properties is 41 years (which, by international standards, is old for social housing) and 37 percent are
less than fully utilised because of their location or their configuration – all this while 3,000 high-priority applicants sit on the waiting list. Other problems identified by Community Housing, an umbrella CHP organisation, in a paper earlier this year are: • the structural conflict of interest created for HNZC by the need to return solid dividends to the Crown • the commercial unreality of prices based on HNZC book value [and local authority rating values], relative to tenants’ ability to pay, and • linked to the last point, the fact that no CHP can afford to pay current market values in high-demand areas where the social need is greatest and then keep rents below market – “the deals simply don’t stack up”. Community Housing suggested that to get the stock transfers moving the government needed to appoint “a new negotiating partner not constrained by the requirements imposed on HNZC”. Such a new negotiating partner is now being designed by a special Treasury-led Establishment Unit comprising Treasury and Ministry of Business, Innovation and Employment officials working with Housing NZ. They are to report back in December this year on the creation of an Independent Transactions Unit (ITU) to be up and running in the first quarter of 2015. This entity is likely to be a special purpose vehicle with the single objective of developing the
Matt Yarnell social housing market. They are also to recommend a series of funding options and to assess the fiscal implications of progressing any particular option. Possible mechanisms include: • asset and tenant transfers out of HNZC • increased operational subsidies to CHPs (to cover the cost of capital or even to provide for a commercial return), and • models featuring a mix of both of the above, with the Crown taking an equity stake in a CHP in the early years while it becomes established. It is envisaged that CHPs would be required to reinvest surpluses into new housing supply rather than pay dividends to shareholders. Any and all of these levers have significant fiscal impacts for all stakeholders so the ITU will need a clear mandate and set of policies to guide how it operates, including governance, structural and operational arrangements. The social housing stock is a significant item on the Crown’s balance sheet. Any transactions devolving that stock which value existing social housing assets differently to their current carrying
Much of Housing New Zealand stock is no longer fit for purpose. There are deferred maintenance costs across HNZC’s assets of between $1 billion and $1.5 billion, the average age of its properties is 41 years and 37 percent are less than fully utilised because of their location or their configuration – all this while 3,000 high priority applicants sit on the waiting list value on the Crown’s books could have far-reaching implications for the government’s commitment to reach and maintain budget surpluses from the end of the 2014-2015 financial year. The Establishment Unit will be pursuing a rigorous policy design process but still there is considerable scope for development of the programme. In particular, it is difficult to see how the necessary influx of private sector capital will be achieved as the ability of the (current) third sector partici-
pants to contribute will always be constrained by (relatively) limited balance sheets. Even more fundamentally, in order to attract private sector capital, commercial returns must be generated from somewhere within the mix. It is not obvious how this will be delivered given the below market rents inherent in social housing. For all of these reasons, the risk that such a market might ultimately fail (or fail to deliver in a manner that meets the social
It is envisaged that Community Housing Providers would be required to reinvest surpluses into new housing supply rather than pay dividends to shareholders policy priorities) must be counted as high, which will pose its own problems. It is difficult to see how the government would be able to avoid an intervention to rescue a collapsing third sector participant and, if this is widely anticipated, the government will face the usual moral hazard concerns which arise in these situations.
Matt Yarnell and Josh Blackmore are both partners at Chapman Tripp. Each has a particular personal interest in this area and their areas of practice speciality are highly relevant to the issues in play around social housing options: Matt specialises in finance, property, and the contracting of special projects and Josh in corporate and commercial transactions i
New flooring system has huge potential for Christchurch A two-storey timber building soon to be constructed in Nelson will be the first in the world using a new timber flooring system designed by University of Canterbury structural engineering experts
3PT uses pre-stressed tendons for timber units which allows longer floor spans than traditional timber flooring systems and results in reduced weight.
he new university-designed flooring system, pre-stressed prefabricated panel in timber (3PT), consists of a combination of structural materials offering light engineered timber, cost-effective concrete anchorage and high strength pre-stressed or posttensioned reinforcement. The new design was conceived in 2010 during a conference in Nelson with world experts in timber engineering research and was invented by the University of
Canterbury’s Dr Alessandro Palermo and Professor Stefano Pampanin. The idea has shown proved to have huge commercial potential and Kiwinet, the Kiwi Innovation Network consortium of universities and crown entities, has funded the University of Canterbury project with a grant of more than $800,000. “What makes this flooring system unique is the concrete anchorage and the connectors. Prefabrication and pre-stressing are key aspects that make the product novel,”
Dr Palermo explains. “The costeffectiveness of the flooring system is it can be pre-stressed by using the same facilities used for pre-stressed concrete flooring systems.” A lighter flooring system means less seismic forces involved during earthquakes. “The flooring system has huge potential for Christchurch as designs are seeking to reduce the stresses in soil therefore minimise the foundation costs of buildings that can be quite considerable.’’ Professor Pampanin says several prototypes have already been tested and performed much better than traditional timber flooring systems. ``Often technology breakthroughs occur through a combination and cross-pollination of disciplines and knowledge,” he notes. “This flooring system intends to combine and exploit the complementary features
Stefano Pampanin of traditional as well as established materials such as concrete, timber and steel.” It also includes manufacturing processes, prefabrication and cast-in-situ, pre-stressing, post-tensioning and assembly of engineered wood elements. ``With the help of industry partners we hope this prestressed timber-concrete flooring system will soon become a widely adopted and well established, highperformance, cost-effective and exciting alternative solution in the Christchurch rebuild and throughout New Zealand,” Professor Pampanin i says.
>> by Glen Sowry
A change in the social housing market to effect future major centres New Zealand’s social housing is currently undergoing a major revamp that will result in a more competitive marketplace and the country’s major provider plans to play a major role
he state of the housing market is, in today’s parlance, a trending topic, Housing New Zealand Chief Executive Glen Sowry observes. “But while hands are wrung and heads are shaken around affordability and supply, what is largely going unnoticed is that we are in the midst of a major programme of social housing reform,” he observes. “Through this, the government is seeking to create a competitive marketplace for social housing provision.” Recent years have seen the huge impact of the Canterbury earthquakes, not just on the Christchurch region but nationwide through the focus these tragic events have brought to bear on building standards. Housing Accords have been introduced in the major centres to kickstart development through Special Housing Areas (SHAs) that will enable Housing New Zealand to explore intensification and mixed tenure developments in strategic locations. Most recently, there has come con-
firmation of the government’s intent to grow the Community Housing Sector as part of its Social Housing Reform programme, breaking up the Crown’s virtual monopoly on social housing provision and empowering registered organisations to take on extra responsibility. Through all of this, Mr Sowry says Housing New Zealand has had to be agile enough to remain focused on its core objective of providing fitfor-purpose homes for those in need – particularly in its major centres. As he notes, Housing New Zealand is essentially the country’s only social housing provider. “We own or manage over 68,000 properties nationwide, providing homes for more than 200,000 New Zealanders,” Mr Sowry explains. “To put that into perspective – we’ve as many tenants in our homes as there are people in Hamilton.” Powerful portfolio His organisation manages a portfolio worth $18.6 billion on
Glen Sowry behalf of the Crown. “That’s greater than the combined balance sheets of Genesis, Meridian and Mighty River Power,” Mr Sowry reveals. “And in Auckland, where we
Northern Glen Innes will be a fully integrated development: a mix of small and large Housing New Zealand homes will be interspersed amongst private dwellings. The project involves replacing old 1940’s housing stock. Image by Construkt/Creating Communities consortium
operate 45 percent of our tenancies, we own seven percent of the region’s total housing supply.” He is pragmatic about living through changing – not to mention challenging - times. “While changing this status quo may sound revolutionary, this will only serve to bring us into line with every other OECD country and, particularly having just seen a competitive system in operation in the UK, I wholeheartedly support this new direction,” he says. The changes are coming thick and fast: already this year the Social Housing Reform Act has seen the function of assessing eligibility for social housing assistance transferred from Housing New Zealand to the Ministry of Social Development (MSD). “This transfer of needs assessment to MSD means there is now an independent purchaser in place
An award winning design for redevelopment of Housing NZ stock in Parnell Auckland
October/November • 2014
whose role it is to allocate the housing of tenants, not only to us but also to other housing providers,” Mr Sowry explains. It is now proposed that an Independent Transaction Unit (ITU) be set up within Treasury, with an immediate goal to grow the community housing sector. “This could see Housing New Zealand’s portfolio size be reduced over the next few years by up to 20 percent.” To do this the ITU will consider a variety of tools - including the sale, lease or transfer of Housing New Zealand stock to registered Community Housing Providers. “The only constant for us through this reform is that we will remain at the epicentre of a growing ecosystem of social housing providers,” Mr Sowry believes. The changing landscape will place greater emphasis on the way Housing New Zealand manages its tenancies and assets. “Critical to our success will be the skills and expertise to forecast tenant demand and deliver the right properties - in the right places,” Mr Sowry admits. Imperfect balance Changing tenant profiles across the major centres, and a narrowing of eligibility criteria for social housing assistance, has created an imbalance between supply and demand which Housing New Zealand is working hard to address. The general shift away from the need for a three-bedroom family home to low-maintenance one- and two-bed properties doesn’t simply reflect a population bubble at both ends of the spectrum. The New Zealand that existed 50 years ago when the bulk of the country’s homes were built has changed dramatically – socially, economically and demographically. “Nationwide our most common household type is now one parent with one or more children, followed closely by a single, elderly tenant,” Mr Sowry notes. “Indeed over half of all applicants waiting for social housing want smaller one or two-bedroom, low-maintenance properties.” The government’s focus is now very much on providing assistance to those in greatest need, who seldom require a typical small family home – particularly in Wellington, where Housing New Zealand owns or manages over 2,000 properties and is looking to replace some of its earthquake-prone stock with smaller units to meet demand. Further afield, great progress is being made in Christchurch on the comprehensive Canterbury Earthquake Recovery Programme that will restore Housing New Zealand stock to pre-earthquake levels by the end of 2015 by repairing up to 5,000 earthquakedamaged homes and building new warm, dry, healthy homes.
“Conversely in Auckland, we’ve also got large families with many children, who need four, five, even six-bedroom homes to avoid overcrowding,” Mr Sowry observes. “None of these modern situations are exactly a great match for the traditional three-bedroom state house.” The Auckland focus therefore is firmly on better-utilising rather than increasing Housing New Zealand’s footprint, not only to help better meet tenant demand but also facilitate the development of more private and affordable housing and help the city achieve its vision of up to 70 percent growth in the existing metropolitan area. Better utilising doesn’t just mean intensifying land-use: many of Housing New Zealand’s existing old homes are expensive to maintain – not just for the organisation but also for its tenants. Maximising efficiency “Housing New Zealand’s single greatest asset is the inefficiency of its land and the ability to materially increase the amount of modern, well-designed housing stock on it,” Mr Sowry maintains. “Housing shortages - and the associated challenges of affordability and overcrowding - are amongst Auckland’s biggest problems.” Indeed in Glen Innes, where Housing New Zealand making a considerable investment, some of the homes it’s replacing are what’s known as Austrian Pre-cuts, properties built for returning servicemen and their families around the Second World War by Austrian builders with a design life of around 10 years. The iconic image of the old state house defines the social and architectural fabric of areas such as Glen Innes, and over half of the 5,000 homes in the wider Tamaki area are state houses. Through redevelopment and integration of private and affordable housing Housing New Zealand is looking to stimulate growth, create vibrant communities and provide improved opportunities for its tenants. Housing Accords – agreements between central and local governments – have already been created in the country’s three major centres to address the lack of housing supply and increasing unaffordability. The role of the Housing Accords is to kick-start development through a streamlined consenting process – in the case of Auckland through creating Special Housing Areas, or SHAs. In addition to Tamaki, Housing New Zealand will be gradually redeveloping SHA sites around the region: essentially areas where it has a few properties on large plots of land that could be reconfigured
The iconic image of the old state house defines the social and architectural fabric of areas such as Glen Innes, and over half of the 5,000 homes in the wider Tamaki area are state houses
to increase density and enhance their connection to the surrounding community. “Housing New Zealand fully supports Auckland’s vision to become the most liveable, compact city in the world, and we’re actively contributing to this goal through our own SHAs and other developments,” Mr Sowry says. “We are acutely interested in the Unitary Plan and the opportunities it will present to increase the supply of quality housing in Auckland.” The Housing Accord in Auckland is in many ways the event before the Unitary Plan, which will ultimately be the single most influential land use document since the Treaty of Waitangi and will shape the future of the country’s biggest city. Mayor Brown’s plan for Auckland talks of creating the world’s most liveable, compact city – a compelling vision that will require a major sea change when it comes to housing. “For a start we need to change the conversation and learn from other great world cities how to most effectively accommodate an extra million people over the next 30 years,” Mr Sowry maintains. “Success will require a collective courage: we must grow up - not just out.” The Unitary Plan in its proposed
form will allow Housing New Zealand to develop up to 19,000 additional dwellings over the next 50 years across its current Auckland land holdings. “By amending zoning and other residential provisions, we believe we can comfortably push this figure up to nearer 40, 000,” Mr Sowry says. However, he’s not advocating that these all should be Housing New Zealand properties. “We are only seeking to maintain our footprint,” he insists. “Any incremental capacity that we create through greater utilisation of our land can enable more affordable or private housing in a pressured marketplace.” Intensification does not mean sacrificing the tenets of community, nor should it be something to fear when done well, Mr Sowry maintains. “We have, over the last five years, seen areas of central Auckland, such as Britomart, Wynyard Quarter and Fort Street transformed through innovative urban design into pedestrianfriendly, safe, modern precincts – all while still deferring to the architecture on which the city was founded,” he observes. “Housing New Zealand’s future endeavours will be no different.” i
>> Stress by Elizabeth Howells
Psychologically healthy workplaces The Psychologically Healthy Workplace Program is an evidence-based initiative developed by the Australian Psychological Society that assesses workplace psychological health across key indicators and provides access to expert organisational psychology advice, resources and tools
Workers exposed to high psychological job demands characterized by excessive workload and extreme time pressures have a twofold risk of major depression or generalised anxiety disorder People are spending greater amounts of time at work, with heavier workloads, less job security, the threat of job loss or redundancy, workplace bullying, inadequate social support, poor leadership and conflicts with other workers or bosses
lobal statistics indicate increasing levels of workplace stress, painting a consistent picture of an international stress epidemic People are spending greater amounts of time at work, with heavier workloads, less job security, the threat of job loss or redundancy, workplace bullying, inadequate social support, poor leadership and conflicts with other workers or bosses. A 2014 study on working conditions reported in the International Journal of Occupational and Environmental Health found that factors related to job demands (workload and emotional repression), few opportunities for development, poor peer relationships (conflict, leadership quality, social support,
October/November • 2014
sense of community at work), violence (physical, discrimination and bullying) shift work, and poor promotion decisions were correlated with long-term sick leave. The impact goes beyond workplace costs to impacting the psychological health of individuals within and outside of work. A 2007 New Zealand study found that workers exposed to high psychological job demands (excessive workload, extreme time pressures) had a twofold risk of major depression or generalised anxiety disorder compared to those with low job demands. Teaching individuals to manage stress, whatever its source, is therefore a way of increasing wellbeing and limiting the cost of stress on the workplace.
Key to managing stress in the workplace is an environment that allows employees to raise problems at an early stage, which in turn requires managers who are approachable and open to employees experiencing stress in the workplace. It entails: • training managers and staff in how to identify stress in the workplace, the impact of stress and how to address it • having in place a policy and process for managing stress that de-stigmatises it in the workplace • being prepared to take action that will alleviate stress such as hiring additional staff to reduce workload, reallocation of tasks or clients, increasing flexibility, provision of counselling
• coaching managers and employees in resilience to better enable them to manage stressful situations. The latter include coaching in Acceptance Commitment Therapy which focuses on identifying negative thought patterns, their impact and how to “let them be”. Individualised mentoring, counselling and advice on the importance of a healthy lifestyle in terms of diet, exercise and sleep can also be effective. Healthy workplaces A psychologically healthy workplace fosters employee health and well-being while enhancing organisational performance and productivity. According to the American Psychological Association, the winners of the Psychologically Healthy Workplace awards benefited from reduced turnover, reduced stress, reduced intention to leave, increased recommendations as a good place to work, and increased satisfaction. A 2012 study of over 100 New Zealand organisations employing almost 100,000 employees, found that nine out of 10 enterprises considered improving employee wellbeing as either desirable or a priority: approximately a quarter considered improving employee well being as a top priority over the next 12 months. Larger organisations are more likely to have a wellness programme in place and almost two-thirds
Snorkeling should be something employees look forward to on vacations. Not what they need to do to survive at the office.
of organisations have some form of policy to deal with workplace stress. Psychologically healthy workplaces are identified as having: • supportive leadership and mentoring • supportive peer and team relationships • role clarity • staff engagement • development and growth • morale. Many organisations measure and have programmes in place for the physical considerations of people such as nutrition, exercise and workspace design as well as safety considerations like compliance, PPE, audits and risk identification – however very few know how to effectively understand the psychological health of their people. The Psychologically Healthy Workplace Program (PHWP) offered by PeopleCentric is an evidencebased initiative developed by the Australian Psychological Society that assesses workplace psychological health across key indicators and provides access to expert organisational psychology advice, resources and tools. The first programme of its kind to accurately and objectively assess the psychological health of New Zealand organisations as a whole, the PHWP takes a systematic and preventative approach and focuses on how organisations can create a positive organisational climate.
Employees have been shown to work more effectively and are more productive in positive, supportive and engaging work environments, or in other words, psychologically healthy workplaces. The PHWP assesses businesses across six key indicators of psychological health that have been consistently shown to impact on employee stress, health and well-being – supportive leadership, role clarity, staff engagement, development and growth, morale and workplace stress. Following the assessment, participating organisations are provided with a report detailing the results of the PHWP assessment, recommendations and advice about how the organisation can best use this information to enhance the psychological health of its workplace and a range of resources to help support the continued improvement of the workplace climate. The PHWP identifies workplaces as ‘psychologically healthy’ and recognises their success in promoting positive employee health and wellbeing in the workplace. Elizabeth Howells is a director of PeopleCentric, a team of industrial and organisational psychologists who work with a variety of organisations to maximise employee potential and promote the value of psychology in driving business performance. i
Neglecting psychological health and wellbeing in the workplace costs Australian businesses $10.9 billion and New Zealand businesses over $2 billion a year. What is it costing you?
VAcciNAte AgAiNst the cost of work stress contact Peoplecentric today to foster employee health and wellbeing while enhancing performance and productivity.
+64 9 963 5020 www.peoplecentric.co.nz
>> Infrastructure by Stephen Selwood
Public and private alignment key to mega-project benefits New Zealand can’t afford to forget the lessons learned from the Muldoon government’s failed Think Big programme
The most developed mega-project is the well-underway $1.4 billion Waterview Connection. As the long overdue final link in the Western Ring Route, this project has benefitted from the most detailed analysis and that looks to have paid off
n the 1970s, rising oil prices combined with declining terms of trade and the loss of access to the European market that we were geared to supply left New Zealand facing economic disaster. In response, the Muldoon government initiated a radical investment programme infamously named ‘Think Big’. The objective of the programme was to turn New Zealand’s rapidly declining economic fortunes around with a series of large economic development projects. New Zealand would shift dependency from frozen meat, butter and wool to steel and energy. Dams, synthetic fuel plants and refineries would be built and expanded, and the country’s plummeting competitiveness given a thick coat of lipstick. Unfortunately, the plan was not as successful as it was ambitious. The country accrued massive international liabilities, many of the projects overshot their budgets and their timeframes, and in the end the programme failed to transform the economy. In fairness, Think Big was probably not as bad as the two decades
of infrastructure neglect and a permanent aversion to public economic investment that followed, but New Zealanders nevertheless retained the message that it’s best not to let the government go large. This was in many respects an understandable lesson, but unfortunately not the right one. It was not the scale of spending which doomed Think Big, it was the government’s singular approach to investment in the absence of coordinated public and private sector support. As dominant as the Muldoon government was, it was not powerful enough to define global economic needs and it could not dictate how the national economy should operate when the market was pulling in the opposite direction. What we learned was that the government should not go big; what we should have learned was that the government should not go it alone. As the hangover from Think Big finally subsides and the nation building attributes of mega-project delivery are again acknowledged, it is critical that the public and private
new zealand council for infrastructure development Advancing best practice in the development of world class infrastructure for the benefit of all New Zealanders. www.nzcid.org.nz
October/November • 2014
The Muldoon government’s Think Big programme was probably not as bad as the two decades of infrastructure neglect and a permanent aversion to public economic investment that followed sectors work collaboratively and cooperatively to maximise near and long term investment benefits. Are the investment programmes of all local and central government agencies aligned and sequenced to maximise benefits? Are planning regulations flexible enough to support transformational impacts? Is the market ready to deliver and respond to mega-project investment and is there really demand for the service? A quick survey of the largest investments currently proposed suggests we still have work to do. The most developed megaproject is the well-underway $1.4 billion Waterview Connection. As the long overdue final link in the Western Ring Route, this project has benefitted from the most detailed analysis and that looks to have paid off. The project is consistent with existing land use and transport patterns, is supported with a large ancillary programme to leverage new accessibility and has passed through rigorous economic assessment. But can the same be said for the other major proposed transport projects, including the near billion
dollar Transmission Gully, Puhoi to Warkworth and Hamilton Bypass Roads of National Significance, the $2.5 billion City Rail Link and the $4 billion Auckland harbour tunnel? Tainui’s exciting Ruakura development will complement the Waikato Expressway, but what other private sector developments are being planned to leverage RoNS investments there and elsewhere? The Auckland Council has permitted very significant growth in Warkworth to maximise the Puhoi project, but in the CBD is there equivalent flexibility around rail stations to maximise the City Rail Link? What is the opportunity created by the proposed $4bn Auckland harbour tunnel and does the market understand this opportunity, or is this just an expensive road widening project? What is the integrated transport and urban growth master plan for the Auckland CBD and will planned major infrastructure investment lead to a more liveable accessible city centre? Is the $1 billion Kiwirail Turnaround Plan integrated into a national freight plan which leverages the comparative strengths of road, rail, sea and air? And are the billions committed by the Christchurch City Council and government to rebuilding the CBD maximising private sector innovation, skills and investment? The answers to several of these questions remain underwhelming. Think Big told us that building a nation is much more than just building. Let’s make sure that lesson is not lost. Stephen Selwood is Chief Executive of the New Zealand Council for Infrastructure Development
FOCUS >> The Waterview Connection
A tale of two tunnels that is setting new best-practice standards New Zealand’s biggest road project underwent extremely rigorous economic and risk assessment procedures before the final contracts were signed, Jenny Pretorius reports
he NZ$1.4 billion Waterview Connection project currently being built by the WellConnected Alliance provided a series of unique uncertainties, risks and challenges for the project’s owner, the NZ Transport Agency. The usual construction and peripheral pressures associated with large-scale construction work such as building a major inner-city road were compounded by a variety of other factors not often seen in local projects. These included the project’s complex underground tunnel construction component, the length of the tunnels that required specialised fire and life-safety features and the fact that construction was taking place in a built-up urban area with major traffic issues and a sensitive cultural, physical, and social environment. The competitive alliance procurement method offered the best option to minimise the risks, achieve complete certainty with respect to outcomes and optimise value for money, according to one of the key experts involved in the tender selection process. Managing risk NZ Transport Agency Chief Advisor Engineering Assurance Peter Spies says the success or failure of a project such as this can often be traced back to decisions made prior to and during the procurement of the contractor when the potential consequences of these decisions are not well understood. “Effective risk management
Artist’s impression of appearance of junction on south end Images courtesy of NZ Transport Agency, Well-Connected Alliance
decision making is key to ensuring the selection of an appropriate procurement model while also ensuring that all relevant information is sourced and shared to ensure a common understanding of residual risks through the construction phase,” he explains. These risks can then be managed using appropriate processes managed by the right people. “However there always remains the danger that commercial pressures can lead to decisions that elevate construction risk profiles,” Mr Spies notes.
From left, Aurecon’s Tom Ireland with NZTA Chief Advisor Engineering Assurance Peter Spies
“The commercial model and alliance principles inherent in an alliance agreement, while not substitutes for effective risk management practices, are considered to be effective catalysts in ensuring project risks are managed in accordance with the ‘as low as reasonably practicable’ (ALARP) best-practice principle.” The increasing importance placed on risk management in this context was largely due to the losses suffered by tunnel insurers over the last decade as various projects such as Boston’s Big Dig and the Highway 99 tunnel under downtown Seattle encountered huge, unexpected, and expensive failure problems while under construction. Moreover, the insurance industry noted a general trend towards high-risk type construction methods, often delivered using design-and-build contracts with one-sided contract conditions in an environment of fierce competition. There was, therefore, an acknowledgement that risk management practices need to be instigated well in advance of commercial phases so that commercial competition didn’t lead to a significant elevation of project risk.
Sharing risks and rewards The cost of transferring risk is prohibitive but the alliance model not only provides for risk sharing but also allows the project solution to be progressively refined and developed to reflect emerging risk, leading the Transport Agency to conclude that this collective approach to assessing and managing risk produces better outcomes. In addition, the risk-sharing element required the tenderers to combine a target outturn cost (TOC) of the design and construction phase with a TOC for the 10-year operate-andmaintain phase. “The operating costs of tunnels are high,” Mr Spies notes. “This allowed optimal decision-making by the tenderers that would be informed by a whole-of-life approach across the two phases, and that would ensure operational efficiency would not be compromised to achieve a competitive initial price.” But risk sharing is only part of the success recipe: the commercial arrangements in the alliance model strongly incentivise tenderers to achieve value for money. The competitive element of the alliance model then further drives innovation to achieve a lower initial TOC; as has been demonstrated across a number
View of construction work on the north end of projects in Australia and New Zealand. In addition, the alliance model allows the combination of the skills of all parties to be applied to the collective outcome by maximising the full integration of the traditional roles of client, constructor and designer. As an added bonus, the Transport Agency had already acquired the skills and capacity to influence or participate in the development and delivery of the project through previous road infrastructure projects delivered via the alliance model. The agency went a step further to ensure an excellent outcome by not only integrating key staff within the Well-Connected Alliance but also introducing an Owner Interface Manager (OIM) accountable for
the delivery of Western Ring Route (WRR) projects and delegated to making project decisions on behalf of the client. The OIM in turn was supported by the Agency’s Owner Verifier (OV), Aurecon’s Tom Ireland, who also acted as the technical advisor and provided independent technical advice on behalf of the Transport Agency during procurement . Another Transport Agency innovation that served to manage risk and provide value for money was its policy of reimbursing tenderers a fixed sum of expected tendering costs, in this instance equivalent to 60 per cent. The $18 million pool allocated for the Waterview Connection tender gave the agency ownership of the intellectual property generated by
Aerial view of Big Alice prior to starting work on the south end
October/November • 2014
both original project contenders, including all tender design material and risk mitigation methods. The tender IP ensured that the project risk and cost could be further reduced by incorporating good ideas from the losing tender, including alternative designs for the ventilation fans and lighting that generated savings greater than the tender cost imbursement to the losing tenderer. Special case There was however a kink in the cable – the project had to start as fast as possible to provide a stimulus for the New Zealand economy following the 2008 recession. There were only 24 months following confirmation of the tunnel option in December 2009 for environmental assessments, planning
approval – the road corridor was not in place and therefore the planning process also needed to include the designation of the motorway corridor – and the contract award. This was a very short timeframe so the agency took the unusual approach of running the procurement and consenting processes concurrently along with obtaining planning approval through an Environmental Protection Authority Board of Inquiry (BoI) rather than through the resource consents process using the local authority, saving 12 months on the pre-contract phase programme and two years-plus in the project development programme. The competitive tender design and procurement pricing phase began in November 2010 with tender
submission scheduled for early June 2011, so when the competitive phase of the tender commenced the planning process had already been running for two months. The parallel programmes were aligned so that the tender would not close until the final consent conditions were available, as the Transport Agency considered that the competitive pricing would be compromised without finalised consent conditions that formed part of the requirements to be met by the alliance. Tight connections The NZ Transport Agency used a three-stage procurement process over a 19-month period to appoint the alliance, placing advertisements in July 2010 seeking Registrations of Interest (ROIs) from appropriately experienced consortia to deliver the Waterview Connection project, including the Waterview Connection Tunnels and Great North Road Interchange project. Three consortia registered interest and an inception meeting on 4 August 2010 explained the Transport Agency’s procurement process and requirements to the applicants and issued Statement of Interest and Ability (SIA) documents. One specific identified risk was the low, 9m cover to the arterial road at the northern end of the
The tunnel’s progress – breakthrough of the first tunnel at the end of September tunnel, and tenderers had to comply with the consent conditions that included prescriptive requirements for monitoring and management of settlement effects. Several additional minimum requirements were also included by the Transport Agency within the tender documentation in order to mitigate the risks associated with third-party impacts. These refinements to the
procurement documentation ensured compliance with the Code of Practice for Risk Management of Tunnel Works (TCoP) prepared by the International Tunnel Insurance Group in 2006, and other international best-practice and home-grown risk mitigation measures were also included to ensure successful procurement. The principle of shared risk in an alliance incentivises the common
understanding of project risks prior to finalising the alliance agreement, Mr Spies explains. “This ensures superior risk management through construction and beyond,” he says. “As best-practice risk management is a primary objective of TCoP this procurement method was beneficial to all concerned. “In particular the practice of gaining commercial advantage by taking on a potentially unmanageable level of
Keeping Delivering value to NZ moving transformational infrastructure projects across New Zealand Waterview Connection: Lead Technical Advisor to client, NZTA Auckland City Rail Link: Principal Technical Advisor to client, Auckland Transport Southern Corridor Improvements: Consultant to client, NZTA
TRA_Advert_2014-10-14_Infrastructure news NZ.indd 2
17/10/2014 2:49:58 PM
The tunnel’s southern end at the beginning of the project in May 2013
The southern end showing the tunnel portal of the first of the twin tunnels: the 14-metre diameter art work Te Haerenga Hou, meaning New Journey, that was designed especially for the Waterview Connection project by Auckland artist Graham Tipene guards the northbound tunnel’s planned opening. risk – which has seen other similar projects across the globe fall into serious difficulties – is an outcome that can be avoided by the use of the TCoP,” Mr Spies adds. The TCoP risk management procedure formally documents the identification, evaluation and allocation of risks, with three significant sections addressing pre-design activities – including definition of the client role and responsibilities, project development requirements and contract procurement stages. The three consortia that submitted SIAs were further assisted by two interactive meetings with the threemember Tender Evaluation Team (TET) held separately with each applicant before submissions closed on 4 October 2010. The TET reviewed the submissions and met to complete their assessment, resulting in the WellConnected Alliance and Tuhono being selected to proceed to the next Request for Proposals (RFP) stage. The Transport Agency put significant effort into optimising
October/November • 2014
the RFP documentation and the interactive tendering process, leading to close of tenders in July 2011. “This effort was focused on what the Agency’s project team referred to as the three Ps – product, process, and people – as it was recognised early on that to successfully procure a proponent that would be working with the Transport Agency to deliver the project, we needed to ensure that we were being offered and could build the right product through a robust process delivered by the right people,” Mr Spies comments. In addition to the technical and procurement expertise within the project team, a check sheet was developed to ensure that TCoP recommendations were either addressed as part of the procurement process or that appropriate steps had been taken to ensure that the successful proponent would be able to address these in the delivery phase. This resulted in a seven-month interactive tender process that was a critical aspect of the risk reduction
sought by the TCoP, as procurement methodologies used on previous projects internationally have led to the elevation of project risk. The interactive component comprised a combination of alignment workshops and technical consent meetings held separately with each proponent that focused on technical matters such as the Requirements and Minimum standards (MRs), which the Transport Agency attempted to keep as generic as possible to encourage innovation, as well as any proposed departures from these standards. In addition, the Transport Agency adopted the “Certificate A” concept from its Design and Construct procurement process, which saw each proponent submit their preliminary conceptual design reports eight weeks before close of tender for review by the project team and appropriate feedback. The Transport Agency placed high value on design and construction mitigation measures proposed in order to address ground risks, developing an Alliance Geotechnical Baseline Report
(AGBR) process to ensure alignment on the level of geotechnical risks. The AGBR provided a comprehensive discussion of geotechnical risks and posed a series of detailed questions of the proponents’ design and construction methodologies to discover how they would address all geotechnical risks. It used commonly agreed wording to provide definitive statements about the nature, form, composition and structure of the ground, both artificial and natural, and groundwater; together with geotechnical properties. The AGBR also set out the contractual definitions of ground conditions where the Transport Agency would accept a variation to the agreed TOC, with the agency covering only the direct cost of additional work, while allowing the contractor to receive reasonable and fair direct costs but not to profit from a baseline geotechnical risk that was well received by the two bidders at the time of the tender. The use of a variation benchmarking register and associated workshop exercises ensured that the
Work gets underway Great North Road interchange proponents fully understood what could or could not be considered a variation in an alliance contract. A further refinement to its typical conditions insurance saw professional indemnity and public liability and contract works set as a provisional sum, with the Transport Agency carrying the full cost of obtaining insurance rather than it becoming an item that proponents would attempt to price in the bid phase. The agency recognised that obtaining insurances for tunnelling projects is a complex matter, and
that marketing was best done at the conclusion of the procurement process when the alliance was established, the conceptual design developed, and a detailed understanding of the construction methodology and associated risks sufficiently demonstrated. Ready, steady, go Evaluation was undertaken in accordance with Transport Agency procedures, which use a twoenvelope system, with one envelope containing price information and the
The northern end showing ramps as at June 2014 other non-price information. The second category included the detailed conceptual design and associated information such as construction methodology, the risk register, and the requested further 10-year operations and maintenance plan. The Well-Connected consortium comprising Fletcher Construction, McConnell Dowell Constructors, Parsons Brinckerhoff, Beca Infrastructure, Tonkin and Taylor, and Japanese construction company Obayashi Corporation was announced as the preferred
candidate on 18 August. Pre-award activities were successfully concluded in late November 2011, and the contract awarded to the Well-Connected consortium for a TOC of $1,100m-plus to complete the project by March 2017, followed by a 10-year operation and maintenance period. â&#x20AC;&#x153;The alliance process ensured that the Transport Agency was able to award a project within budget that fully met functionality requirements with a high degree of certainty that the project will be delivered within the agreed TOC,â&#x20AC;? Mr Spies concludes.
DRIVING PROGRESS IN
TRANSPORT INFRASTRUCTURE McConnell Dowell builds better communities through safe, smart, efficient infrastructure.
Creative connection closing the commuting circle The multi-faceted road project that is designed to provide vital additional capacity for a major Auckland ring route is literally breaking new ground The NZ $1.4bn Waterview Connection in Auckland that will complete Auckland’s Western Ring Route (WRR) is on track to hit its early 2017 completion target. One of New Zealand’s seven Roads of National Significance, the Waterview Connection will deliver a massive increase in the capacity of the Auckland motorway network by providing a 47km motorway alternative to Auckland’s central motorway congestion. Bypassing the city to the west, the connection will link Manukau, Auckland, Waitakere, and North Shore regional centres via State Highways 20 (the South-western Motorway), 16 (the North-western Motorway) and 18. The enormous project that is the largest of the five that comprise the WWR features a new 1.7km motorway interchange built at the northern end to create free-flow links for all traffic movements between the motorways while also maintaining connectivity for the local interchange. The heart of the project, however, is the twin 2.4km, three-lane, 13.1m diamater motorway tunnels that will pass up to 45m under a built-up residential area and a major local arterial road carrying
An artist’s impression of Hendon footbridge
October/November • 2014
An artist’s image of the complete project with the ramps on the north end over 50,000 vehicles per day in Avondale to link the two ends. They are being built by an earth pressure balance tunnel boring machine (TBM) affectionately known as Alice, which is now halfway through her underground journey from the southern tunnel portal located just off SH20 in Owairaka to the northern portal in Waterview, and back. Since breaking ground in November 2013 she has bored the tunnel that will carry southbound traffic while simultaneously installing the two metre-wide concrete rings that line and support the structure. Now at the Waterview portal, the TBM is being unhitched from her trailing gantries and moved onto a
heavy-duty steel cradle. The TBM is being moved sideways, turned 180 degrees using hydraulic jacks and pushed up against the entry portal of the northern tunnel. The first of the two trailing gantries will then be retrieved from the completed tunnel and moved into position behind the TBM. Together they will be re-launched in December to bore 300 metres of the new tunnel, far enough for the other trailing gantries and the culvert gantry to take their positions behind them. The full drive south will resume in March and the final breakthrough at Owairaka is expected before October 2015. Progressing apace
Inside the tunnel boring machine - Alice’s wonderland
Work is continuing apace at both ends of the tunnel, with the northern end of the project focusing on a five-hectare area parallel to Great North Road, incorporating part of the former Waterview Reserve and Cowley Street. The northern approach trench has been built using diaphragm wall methodology to support the trench wall, with bentonite from an on-site plant used to condition the sandy soil. From the northern portal, the motorway will rise up in the form of a 1.7km-long interchange comprising four ramps that will link the Northwestern SH16 and South-western SH20 motorways and effectively complete the Western Ring Route.
Segment delivery to the TBM by means of a special trailer They require the construction of 53 bridge spans comprising 54 columns founded on bored piles, 44 crossheads, three table tops, and 279 Super-T beams each up to 36 m long, the latter being placed by a purposebuilt, 100m-long, self-launching girder known to its operators as Dennis. Much of the work on the southern end of the project has been completed including: • the construction of the motorway alignment linking the tunnels and SH20 • the construction of a motorway overpass to take Richardson Road
over the motorway • the construction of the spoil handling facility • the construction of an overpass above Oakley Creek (Auckland’s longest freshwater creek) • realignment and improvement of other sections of Oakley Creek • relocation of a major Watercare sewer away from the motorway alignment • and construction of storm water treatment ponds. The interchange at Sh16/20 will provide direct motorway connection between the Auckland CBD and
Segment erection on the TBM: the Waterview tunnels will be completely lined by 24,040 pre-fabricated tunnel lining concrete segments installed by an erector that picks up the segments that enter the TBM via a gantry and installs them one at a time Auckland International Airport with the developing areas in the southwest and northwest, cutting travelling time between the CDB and airport. More than roads The NZ Transport Agency says the Waterview Connection project is not simply about roads, but about connecting people. “It’s not just a tunnel, but a complete urban development project focused on improving outcomes for all, for the communities involved as well as for the whole of New Zealand,” a spokesperson says.
Not all the work will be for the unique benefit of motorway users: the Waterview Connection project will integrate road bridges, cycle ways, and pedestrian bridges within a suite of urban design, landscaping, and environmental enhancements. The inclusion of these elements will be complemented by on-going community involvement, as the Transport Agency commits to delivering its biggest project with maximum benefit and minimum disruption to the local community. Areas of Oakley Creek Te Auanga have now been designed to replicate
In our field reputation is everything
• Specialists in measurement, prediction and assessment of environmental noise and vibration • Acoustic design and assessments for resource consent and district plan preparation, peer reviews, and compliance monitoring • Best practical advice in the industry when it comes to noise and vibration solutions for construction methods, plant and machinery. • Avoid delays on projects by proactively managing noise and vibration before it becomes an issue • Project experience with Waterview, Project Hobson, Central Motorway Junction, Hamilton Ring Road, SH20, Hunua #4, Mackays to Pekapeka, Victoria Park Tunnel, Eden Park and much more
www.stylesgroup.co.nz Email: email@example.com
The culvert is being progressively backfilled with a road bed consisting of a 2.2m high culvert in the centre with sides filled with 40mm road base material to culvert level before a 1.2m high second stage backfill is placed on top the flow of a more naturalised stream and better accommodate flood flows while gentle battered slopes leading down to the stream will provide access for bird, fish and
insect life. The green areas next to the creek have been planted exclusively with native plants and will be open to the public as a new reserve when the
The Waterview tunnel running from SH20 in a northern direction, showing the sheer beauty of the new construction Waterview Connection is completed in early 2017, providing footpaths, shared-use cycle ways, and footbridges crossing the creek and the motorway.
Other community additions include a shared foot and cycle bridge across the motorway in the south and a shared path connecting Waterview and Mt Albert that will effectively link the city’s Northwestern cycleway along SH16 and South-western cycleway with connections to the airport. The Waterview Connection project will thus provide a major boost to New Zealand’s biggest city and the economic gateway through which 61 percent of the country’s imports and 32 percent of its exports pass, not only in terms of greater economic efficiency but enhanced quality of life for Auckland citizens.
Competitive alliance the coming concept?
The 3.7m wide and 2.2m high culvert on the floor of the main tunnel will run below the completed motorway and carry the services required to operate the tunnel, including the ventilation, communication, fire detection and lighting systems
October/November • 2014
Competitive alliance project procurement is becoming increasingly common worldwide as it offers several key advantages over conventional infrastructure procurement methods. The concept sees the project owner or client work collaboratively with its suppliers under the core alliance philosophy – all parties win or all lose. The owner forms an alliance with one or more service providers – for instance the designer, constructor and supplier – for the purpose of delivering outstanding results on a specific project. Performance obligations and risk sharing are collective – participants commit to work together in good faith to achieve the successful delivery of the work, wearing the hat of the alliance, or virtual new company. The alliance is paid 100 percent of direct expenditure on the work,
including project-specific overheads and a fixed lump sum fee to cover corporate overheads and profit. There are also provisions for an equitable sharing of gain and pain depending on how actual outcomes compare with pre-agreed targets in cost and non-cost performance areas. The project is governed by a project alliance board (PAB) with representatives from all parties who carry full authority to take decisions that bind the alliance but must make unanimous decisions. An alliance management team (AMT) with members assigned on a best-for-project basis without regard to their employer handles day-to-day management of the project. There is an express commitment to resolve issues within the alliance without recourse to litigation except in the case of wilful default. The alliance participants develop and commit to work within an agreed set of alliance principles. The key difference between a pure alliance and competitive alliance is found in the procurement stage prior to the signing of the project alliance agreement (PAA). In a competitive alliance the tenderers, or proponents, compete with each other to deliver best and most predictable outcomes and best value for money. The competitive element drives them to innovate – with an acute
The 68m-long culvert gantry before installation in the tunnel regard for risk minimisation – to achieve a lower initial target outturn cost than the participants in a pure alliance. The winner is then selected through a process that involves an assessment of both price and non-price attributes, with the final PAA representing the “lowest evaluation net total target outturn cost”. First used in the UK oil and gas infrastructure procurement sector in the early 1990s and widely found in Australia, project alliancing
isn’t used extensively in the rest of the world – though interest in the concept is growing. Locally, the NZ Transport Agency used the model in 2000 to procure the Grafton Gully project, a major connection between the Auckland Port and State Highway 1, since when eight State Highway projects have been successfully delivered or are being delivered as alliances. The Waterview Connection project is a NZ Transport Agency project, and is being delivered by the Well-
Connected Alliance comprising the Agency, Fletcher Construction, McConnell Dowell Constructors, Parsons Brinckerhoff, Beca Infrastructure, Tonkin and Taylor, and Japanese construction company Obayashi Corporation. The Well-Connected Alliance has formed further partnerships with New Zealand precast concrete suppliers Wilson Tunnelling to manage the construction of the tunnel lining and SICE to manage the long-term maintenance and operation.
Waterview tunnelling machine has a healthy appetite The $55 million, 3,600 tonne tunnel boring machine affectionately known as Alice consists of a shield and a train of three cars, or gantries, which sit behind the shield. The shield contains the cutting head that removes the soil to create the tunnel – the tunnelling phase – and the equipment that installs prefabricated concrete panels that form the walls of the tunnel – the ring-building phase. An earth pressure balance machine such as Alice balances the shield cutting head pressure to that of the surrounding area, stopping the ground from caving in until it can be supported properly by using pre-cast segments and bolting them together. Hydraulic thrust cylinders that apply pressure of up to 22,800 tonnes to push the thick steel cutting wheel against the tunnel face during the tunnelling phase rotate at speeds up to 1.9 revolutions per minute as Alice grates the earth. Twenty four electric motors with 8400kW of usable power generating 82,546kNm of torque power the cutting wheel via the main drive, enabling the high-strength cutter to remove soil conditioned using a foaming agent injected with water and compressed air into the cutting area through pipes in the rotary cutting head. These pipes are connected to injection nozzles at the front of the head, which spray the conditioning mixture on to the cutting face and condition the soil till it becomes pliable to ensure it doesn’t clump
and stick to the cutting head and can be easily removed from the cutting chamber. The spoil enters the excavation chamber through openings in the cutting wheel and mixes with soil mush that has already been removed; the pressure bulkhead transfers the thrust cylinder force to the soil mush to balance the earth pressure. Excavated spoil is removed from behind the shield via a screw conveyor as hydraulic cylinders around the shield circumference relentlessly drive the cutting head forward by pushing against the concrete wall linings Alice leaves in her wake. Ten concrete lining segments that enter the machine via a gantry make up a tunnel ring, with each of the 2m-long, 450mm-thick segments being picked up by an erector that installs them under atmospheric pressure and then bolts them into place. Cement grout is continuously forced into the remaining gap between the segment’s outer side and the soil through injection openings in the tail skin to ensure there are no gaps between the excavated earth and the tunnel-lining rings and thus maintain the stability of the 24,040 prefabricated tunnel-lining concrete segments that will eventually completely line the Waterview tunnels. The tunnel segments are produced in a new production facility about 26km from the tunnel site. The factory produces 21,726 segments, 2418 invert culverts and 279 Super-T beams for the Great North Rd interchange. Segments are transported to the site and stored in a yard with capacity for enough segments for 2.5 days of TBM production. Special multi service vehicles transport the segments to the TBM. Tunnelling spoil is offloaded onto a 1.2m-wide strengthened rubber conveyor system built progressively in Alice’s wake that runs at 3.5m per second and can ship up to 3,500
6 7 5
1. Tunnel face 2. Cutting wheel 3. Excavation chamber 4. Pressure bulkhead 5. Thrust cylinder 6. Screw conveyor 7. Concrete lining segments
October/November • 2014
Alice’s shield can withstand the pressure 45m underground
tonnes of spoil per hour. The conveyor structure, inside a soundproof casing that allows round-the-clock operation, elevates from about 4.8m in the tunnel portal to 14m high at the spoil-handling building entrance. Alice produces 330 cubic m of spoil for every two m she progresses and will eventually remove some 835,000 cubic m of ground – enough to fill 320 Olympic-size pools. The 170m-long spoil-handing building that contains eight individual bins with a total capacity of 13,000 cubic m is also acoustically lined to allow round-the-clock loading of the spoil, which remains in the bins for 24 hours to dewater and is then trucked to a quarry in Wiri, South Auckland.
Following closely behind Alice, a special 68m-long lifting gantry installs a 3.7m-wide and 2.2m-high culvert that sits on the floor of the main tunnel and will carry the services required to operate the tunnel. The culvert will run below the completed motorway and carry the cables for the ventilation, communication, fire detection, and lighting systems required to operate the tunnels after they open to traffic in early 2017. Built by Herrenknecht in Germany and China, transported in pieces and arriving in July 2013, Alice took three months to put together again using a 600 tonne Terex-Demag CC2800-1 crane brought to site to lift the TBM components into the trench. i
FAST FACTS • Alice’s working depth: 15 to 45m below ground • Weight: 3600t, or about the same weight as 750 elephants • Cut diameter: 14.46m • Shield diameter: 14.41m • Number of electric motors installed: 24 pieces • Motor power: 350kW • Total installed power: 8400kW • Maximum torque: 82,546kNm • Maximum rotation speed: 1.9rpm • Cooling system: 2600L/min 25˚C • Propulsion: 9.5rpm • No of cylinders: 56 • Propulsion stroke: 3000mm • Max rate of cylinder extension: 85mm/min • Total thrust force: 228,000kN • Length of tunnelling machine shield: 12m • Maximum length of back-up car or gantry: 28m • Top speed: 85 mm/min • How long Alice would take to drill to the centre of the earth? 2,655 years
TRANSPORT >> Mercedes Santos
NZTA employee named 2014 Project Manager of the Year The woman driving one of New Zealand’s biggest roading projects has been named Project Manager of the Year
rgentina-born Mercedes Santos has been a member of the Project Services team for more than three years and has managed the Ngaruawahia, Hamilton and Huntly sections of the Waikato Expressway. The $200 million Ngaruawahia section opened on time and under budget late last year. Ms Santos has also successfully overseen major alterations to the designation for the $420 million Huntly section and managed to get the project ready for tender – another major undertaking. “The award was a huge surprise for me, and I’m so pleased to get this recognition,” Ms Santos says. She adds that the Transport Agency is a team and big projects like the Ngaruawahia section aren’t built by one person. “So I’d like to thank all those people I have been working with – inside the Transport Agency and outside, including stakeholders and our consultants and contractors. Ms Santos has a Bachelor of Engineering (Civil) degree from Buenos Aires and a Masters of Engineering Management (Hons) from Auckland University. She is a Chartered Professional Engineer with both the Institute of Professional Engineers NZ and Engineers Australia and holds a PMP certification. She started her career in the water/ wastewater sector 11 years ago in Buenos Aires, moved to New Zealand eight years ago and was involved with design and construction of water and wastewater pipelines and pump stations and became increas-
Ms Santos has managed the Ngaruawahia, Hamilton and Huntly sections of the Waikato Expressway. The $200 million Ngaruawahia section opened on time and under budget late last year and she has also successfully overseen major alterations to the designation for the $420 million Huntly section.
ingly more involved with project and contract management. Ms Santos has been working for the Transport Agency since early 2011 and last year completed an Emerging Leaders programme within the agency. The Transport Agency’s Waikato Project Services manager, Peter Simcock, says Ms Santos thoroughly deserved the award and he praised her for her commitment and outstanding achievements in managing major projects. “She has shown a high degree of professionalism throughout, putting her sound knowledge of project management skills and techniques into practice, and combining this with her natural talents in the area
NZ Transport Agency Senior Project Manager Mercedes Santos is the Project Management Institute of New Zealand Project Manager of the Year of communications and stakeholder engagement and management.’’ The judges at the Project Management Institute described Ms Santos as a “true team player” “… and has proved herself to be
a capable leader and a very highly competent professional who has successfully delivered projects through all phases, receiving very positive feedback from clients, customers and colleagues.’’ i
Building relationships Any successful construction project relies on expert and timely legal advice. From the early stages of your project, our team of construction and major projects lawyers will work with you to secure the best outcomes. Visit www.chapmantripp.com/construction www.infrastructurenews.co.nz
WATER >>Wastewater management by Matt Savage
The Apex of cost and performance in wastewater pond aeration Pond based biological management is one of the most common wastewater treatment systems in New Zealand. Aeration is essential but can be expensive. Apex Environmental has added a high performance, economical Kiwi answer to pond aeration solutions float is punctured, the buoyancy of the unit is maintained. An additional benefit of local, lean manufacturing is that the aerators can be produced at around 20 percent lower cost than even the most competitive comparable imported products.
A wide range of surface aerators installed on an industrial wastewater treatment pond – New Zealand made Apex 45kW aerator in foreground, imported 45kW model behind
rowing a microbial population in a wastewater pond is a widely utilised treatment - microbes eat the pollution entering the pond and turn it into carbon dioxide, water and more bugs. The bacteria that do the work require oxygen provided by mechanical aeration to breathe and effectively metabolise the contaminants. In tough economic times the capital and operating cost of aerators are putting both municipal and industrial budgets under strain. Lower capital cost solutions for pond aeration to facilitate the process is prominent among the range of conflicting drivers being sought to improve performance. In many cases, a lack of access to ready capital or cash flow constraints has increased the demand for surface rather than submerged aeration. In other instances, the use of shallow ponds minimises the benefits of submerged aeration and makes surface aeration the best choice for the project. Traditional surface aeration solutions in New Zealand typically involve imported products. As units larger than about 45kW in capacity are usually oversize for internation-
October/November • 2014
New Zealand made Apex Surface Aerator al shipping, which adds significant cost to the end user. Due to an inability to source high efficiency, reasonably priced units within acceptable timeframes from existing suppliers, Apex Environmental invested in the development of a local solution to this local problem. A local solution The combination of decades of local expertise, lean manufacturing and detailed hydraulic design has resulted in a low cost, high
efficiency solution manufactured in New Zealand, that can be delivered in as little as a fifth of the time of most imported options. The locally produced aerators are provided with a foam filled Kevlar® float to provide extremely robust and reliable flotation. Kevlar is about five times stronger than steel on a weight for weight basis - it is also used to make bullet proof vests. The closed cell foam filling ensures that even in the extremely unlikely event that the Kevlar®
Existing pond upgrades One of the key issues identified for existing wastewater treatment plants, as opposed to new installations, is that the need for upgrades or an increase in aeration capacity usually require a very rapid response. This is not consistent with the four to six month delivery time usually required to obtain an imported aerator. A common example is when a wastewater treatment plant operator experiences peak loading events that require an urgent increase in aeration capacity in order to avoid breach of discharge consent or release of objectionable odour, only to find that the equipment required to increase their oxygen transfer capacity will take months to deliver. By manufacturing locally and tooling up for a high level of production from the start, Apex Environmental is able to offer a typical delivery time of only four weeks for most sizes of aerator. For select models, the longest lead time components are held in stock enabling a unit to be assembled to order in an even shorter time frame to provide a very rapid response. The alternative for many operators can be significant legal action due to environmental non-compliance. Success story In one recent such case where the site was already operating at the absolute limit of their available power capacity, two 45kW Apex surface aerators were installed to replace two existing lower efficiency surface aerators of the same size. With no change to the power consumption of the plant (as no more was available to use), the oxygen transfer rate was about double from what the previous aerators were providing.
Floating manifold of a submerged aeration system installed in a wastewater treatment pond
Apex is able to offer a typical delivery time of only four weeks for most sizes of surface aerator The very real risk of release of offensive odours from the wastewater treatment plant was largely mitigated due to the subsequently raised oxygen levels in the treatment pond.
The drive to maximise efficiency For treatment plant owners who are able to commit the additional capital up front and take a long-term
view, submerged pond aeration is a sensible investment due to the significantly reduced on-going operating costs associated with the higher efficiency of such a system. Payback on installing the more efficient submerged aeration option is generally less than three years. In order to minimise power consumption of wastewater treatment plants, Apex Environmental has been a champion of installing submerged fine bubble aeration in aerobic wastewater treatment ponds. Because the amount of oxygen that can be transferred into the water is proportional to the depth at which the air and water come into contact,
this has clear advantages over traditional surface aeration systems. In a submerged pond aeration system, a blower is installed on the shore of the pond (typically in a small shed or building) and air is blown down a floating manifold into fine bubble diffusers installed in the bottom of the pond. The diffusers, which are one of the key components of this system, are configured in such a way that they can be easily removed from the pond for maintenance and cleaning. Although significant power is required to blow the air into the bottom of a deep pond, at depths of 3 â&#x20AC;&#x201C; 10m this is more than overcome by the additional oxygen transfer that
occurs at this increased depth. Whilst surface aeration systems typically transfer 0.5-1.5kg of oxygen into the water per kW of electricity used, submerged aeration systems are capable of achieving efficiencies of 2-4kg of oxygen transferred per kW of power used depending on pond depth and the type of membranes used. Dr Matt Savage is a chartered chemical engineer with a PhD in the design of equipment for industrial wastewater treatment. He has nearly 20 years international experience in the development, commercialisation and manufacture of wastewater treatment plant and i equipment.
Industry leaders in wastewater treatment Apex Surface Aerators are manufactured in New Zealand which means lower costs and faster delivery Check our website for full details www.apexenvironmental.co.nz P 03 929 2675 E firstname.lastname@example.org
Windstorm provides learning opportunity for irrigation industry The devastating windstorm that wreaked havoc in Canterbury a year ago proved an exhausting exercise in disaster and crisis management and recovery for many of those involved
In preparation for another wind event, FMG Rural Insurance and Irrigation New Zealand are working together to release updated recommendations which advise how to protect irrigation infrastructure during a windstorm
ny storm that blows cars off roads and cuts power to more than 40,000 homes is obviously a major disaster, but rural communities were especially hard-hit. Fencing, farm sheds and machinery were the obvious casualties, but for many farmers the immediate concern was damage inflicted to irrigators – particularly as the irrigation season was about to get underway. Initial reports estimated more than 800 irrigators were broken or destroyed in record wind gusts on 10 September 2013, many of which were centre pivot systems within central Canterbury. As Irrigation New Zealand chief executive Andrew Curtis said at the time: “The extent of damage to centre pivots and other irrigators across the region is unprecedented.” Staff from the industry body worked with industry and immigration to facilitate the quick entry of experienced crews into New Zealand to help with repairs and the rebuild of irrigation infrastructure. FMG Rural Insurance, which looks after the majority of New Zealand irrigators, sent staff to Canterbury within days of the event to inspect damage.
October/November • 2014
FMG’s General Manager Products and Services Mike Lange says it was immediately obvious the wind event had caused significant damage. “We knew that these wind storms were going to heavily impact on our clients in the region, particularly those with irrigators, so we made sure our assessors were on the ground as soon as possible,” he recalls. The two wind storms resulted in FMG receiving 260 claims from irrigator damage with a total cost of around $7million. “We’re pleased to say that 98 percent of these claims are now settled,” Mr Lange adds. Paul Donaldson, Manager and Director of leading irrigation company WaterForce, says both farmers and insurance companies were extremely good to deal with throughout the event and their understanding of the situation and patience was appreciated. “We found that a large portion of clients were under- insured for this type of event,” he notes. “Often the farmer had insurance for the irrigator value only and had not included the construction cost and in some cases the clients had only insured half the value of the irrigator.” WaterForce staff worked until
The two wind storms resulted in FMG receiving 260 claims from irrigator damage with a total cost of around $7 million
after midnight to complete product repair lists for insurance companies and build crews and technicians working additional hours, weekends and public holidays. “We also organised a USA construction team to travel to New Zealand and assist with the repairs and take a little bit of pressure off our people.” Mr Donaldson says Waterforce holds large stocks of spare parts, including complete pivot irrigators, and this stock holding assisted greatly as repair work could begin immediately. “Approximately 80 per cent of all the components required for the repair work were supplied from our New Zealand stock holding,” he observes. “The remaining 20 per cent of components were air freighted, with the exception of larger specialised components that were too large to fit in a plane – these were sea freighted.” WaterForce contacted Valley pivots manufacturer Valmont Industries USA on the day of the storm to advise them of the situation. “They responded immediately, assisting us to facilitate the urgent airfreight of some 35+ tons of required components,” Mr Donaldson adds. “Valmont were also able to utilise multiple factories and had container product dispatched within 10 days of the wind event.”
A number of irrigators were damaged due to factors other than the wind flipping them – e.g. trees falling on them, silos/ tanks hitting them, pivots catching on fallen trees as clients moved them after the wind. “We also found that cropping farmers were very supportive of their fellow pastoral farmers,” Mr Donaldson says. “We had cropping farmer who were prepared to delay their rebuild in favour of us focusing on a pastoral farmer who was in a worst position.” Among the lessons Waterforce learnt were the importance of identifying a known ‘park’ location for irrigators – or indeed any other major equipment. “This location should be included in your on-farm Health and Safety manual to assist with managing the irrigator as a hazard and also assist with protecting your machine from high winds.” Irrigators that were parked directly into the wind or down-wind suffered less or no damage, and technology can be used to help farmers remotely monitor prevailing wind direction and speed in relation to irrigator positions. In preparation for another wind event, FMG Rural Insurance and Irrigation New Zealand are working together to release
updated recommendations which advise how to protect irrigation infrastructure during a windstorm. “To better support farmers and growers, we wanted to proactively
understand the impact these storms had and how farmers can best protect their machines,” says Mike Lange from FMG. FMG has partnered with Lincoln University’s research team to
investigate how farmers protected their irrigators during the storms. “We hope to generate a wider discussion on best practice around irrigation system protection and provide further practical advice
to farmers around reducing the impact of future storms,” Mr Lange says. “A full summary of the findings from this research will be published on our website from i October.”
Chance to progress water infrastructure N
ational’s re-election is an opportunity to develop the infrastructure New Zealand needs to provide surety of water for agriculture, town drinking water supply, waterways, recreational use and to future proof the country from climate change, says Andrew Curtis, CEO of IrrigationNZ. The RMA reforms proposed by National will allow irrigation schemes including Ruataniwha in the Hawke’s Bay, Hurunui in North Canterbury, Hunter Downs in South Canterbury and the Wairarapa to get up and running without further delay, adds Irrigation NZ Acting Chair Nicky Hyslop. “This is not about opening the floodgates to massive dairy conversions,” says Mrs Hyslop. “This is about progressing the nation as a whole and carefully balancing environmental
imperatives with the needs of a growing population and economy.” Sensible, well designed water infrastructure is one of the most viable ways New Zealand can add value to its economy, she maintains. “In most parts of the world, irrigation and water storage are recognised as socio-economic development tools.” IrrigationNZ also believes that National’s re-election provides an opportunity to review current nutrient management policy, but reiterates that farmers still need to operate within strict limits. “As we have said before, the future of irrigation in New Zealand is about using SMART practice,” says Mr Curtis. “I would like to make clear that irrigation development does not mean a free for all; farmers will still need to work within Farm Environment
CCTV and Digital Photographic Surveys Marine Salvage and Recovery Pipeline Construction and Assembly Underwater Cutting and Welding Specialised Diver Operated Dredging and De-Watering • Concrete cutting, Drilling and Coring • Potable and Waste Water Diving
• • • • •
Total Inwater Construction Solutions
Plans and will be under pressure to manage their environmental footprint.” But at the same time, in terms of nutrient management, he says the country can’t expect its farming community to run before they can walk. “With this election result, we have an opportunity to revisit existing nutrient policy,” Mr Curtis believes. “There is an urgent need to come up with a nationally consistent and robust approach which would give irrigating-farmers more certainty going forward.” IrrigationNZ also believes that as the New Zealand public increasingly realises the importance of water infrastructure development, that there should be public contribution to the cost, “just like in other developed nations like Tasmania (Australia) and Alberta (Canada),” says Mr Curtis. i
There is an urgent need to come up with a nationally consistent and robust approach which would give irrigatingfarmers more certainty going forward, says IrrigationNZ Chief Executive Andrew Curtis
Voss Infrastructure Consulting Ltd Voss Infrastructure is a specialist water resources and water supply infrastructure consultancy. Our experience lies in water resources evaluation, groundwater development, water treatment design, process optimisation and infrastructure planning. We aim to develop and maintain a safe, sustainable supply of potable water - with our specialist areas.
12/08/13 1:55 PM
o Water Quality o Groundwater o Irrigation o Resource Consents o Impact
o Contaminated sites Assesment o Clean up management o Waste water treatment
o Treatment plant design o Reticulation water quality o Water mains cleaning o Reticulation modeling o Treatment process optimimisation
Contact Details Phone: + 64 6 323 9046 Mobile: + 64 21 399 255 Fax: + 64 6 323 9047 Email: email@example.com www.vossconsult.co.nz
SECURITY >> Special feature Sponsored Article
VIGILANT fire detection technology through the ages While New Zealand’s changeable weather can be testing at times, the country’s sudden cold snaps were behind the invention of the country’s first fire detector, David Prosser recalls
he VIGILANT Thermostat Fire Detector was patented by Matthew Maloney back in August 1914, exactly a century ago this year. It was on a hot balmy day in Christchurch that Mr Maloney, an electrical engineer working for the New Zealand postal services, rode out to assess why the telephone lines were sporadically not working. He noticed the copper telephone lines were sagging and making contact with the iron electrical wires, but they would suddenly jerk taut again whenever a cold southerly wind blew. This fateful observation would be the precursor to what was hailed at the time as “one of the most remarkable and accurate fire alarms that has ever been put on the market ”. His observations prompted him to invent and patent his VIGILANT Thermostat Fire Detector that responded to heat – based on the principles he observed. Experiments on the effect of heat and cold on copper wire, and the desire to make something that would reliably distinguish a fire from the sun’s heat, led to his fire alarm invention
VIGILANT Generation 6 Detectors are attractive multi-coloured detectors available in a stylish suite of Pantone colours and the rest is history. Today, VIGILANT fire detectors still use the same basic technology that was developed 100 years ago, which relies on the expansion of different metals using a bimetallic strip that converts temperature changes into mechanical displacement (similar to how the mechanical thermostat is used in a heater). The original VIGILANT Thermostat Fire Detector was a long metal tube enclosing a solid metal bar
that is touching a small lever. Under sudden heat, the outer tube expands immediately, but the inner bar does not. This causes the inner bar to be slightly withdrawn, releasing the lever. When the electrical contact is made it rings the alarm. While today’s VIGILANT fire detection products are more compact, and with electronic latching, this easy, highly reliable, mechanical technology is still going strong after 100 years.
Early fire detectors (1914 – 1947) Over the next four decades following the invention of the VIGILANT Thermostat Fire Detector, Vigilant, as a company, installed approximately 200 fire detection products in public buildings. However, the demand for fire detection products was only moderate due to a lack of public appreciation of their benefits, and for this reason innovation during this time was slow. While there were many different fire detectors and control panels designed, patented and marketed, progress was hampered by the need for fire detection products to be stringently tested for reliability. Vigilant undertook exhaustive trials and progress was made when the New Zealand government installed the alarm system in many government buildings which electrically sounded the alarms to the fire brigade station. This helped the fire brigades to deal with the danger of fire before it took complete hold. It wasn’t until the disastrous Ballantynes Department Store fire in Christchurch on 18 November 1947, which claimed 41 lives, that a new attitude towards fire protection developed and people began to
Smart cyber security skills sadly lacking, latest research reveals More than 80 percent of Kiwis who use the internet have experienced a cyber security breach but only 39 percent have then changed their online behaviour, latest research shows
ommissioned by the National Cyber Policy Office (NCPO) to coincide with the start of the recent Connect Smart Week initiative designed to raise the awareness of cybersecurity, the research found 35 percent of online Kiwis hardly ever change their passwords and 34 percent don’t have passwords on their smartphones – despite the high risk of devices being misplaced or stolen. Despite understanding that cyber security attacks are a real threat, 26 percent of Kiwis don’t actually believe they are at risk. “We hear about horror stories all the time but even so, it’s clear a lot of us aren’t taking basic measures to protect ourselves online,” National
October/November • 2014
Cyber Policy Office director Paul Ash says. Improving cyber security doesn’t have to be expensive or complicated, he says. “Taking basic steps like using strong passwords and ensuring your software is always up to date can help to protect you and your personal information,” Mr Ash explains. “Making yourself less vulnerable has a knock-on effect of helping protect all your contacts – your friends, your family and your business relationships.” A Connect Smart website launched to coincide with Connect Smart Week is aimed at giving Kiwis advice on how to protect themselves online and features an interactive quiz to learn more about cyber security.
The initiative is backed by the police, who say it’s vital people become aware of the threat a digital security breach can pose. “In the same way that people lock their cars and take care of their handbag or wallet, people need to ensure they take similar precautions online,” Assistant
Commissioner Malcolm Burgess says. It was just as important to secure a smartphone as a tablet and PC, he says. “Today, smartphones can contain more sensitive information than your computer -- or your wallet -- and often have minimal, if any security measures.” i
Sobering cyber security statistics • 83 percent – of Kiwis have experienced a cyber security breach • 61 percent – who experienced a security breach have not then changed their online behaviour • 26 percent – don’t believe they’re personally at risk of cyber attacks, despite understanding they attacks are a real threat • 35 percent – hardly ever change their passwords • 34 percent – don’t have passwords on their personal smartphone • 48 percent – don’t have passwords on their work smartphone • 49 percent – would only use a transactional website if it looked professional and not dodgy • 67 percent – would check a website had a secure payment platform before using it
VIGILANT fire detectors today still use the same basic technology that was developed and used in this thermostat fire detector 100 years ago demand fire detection equipment. Different detectors were experimented with over the years. While based on the same basic VIGILANT technology, detectors with different approaches, styles, shapes, and even a different mechanism that relied on a eutectic metal (a solder metal alloy that melts at a certain temperature) were developed. The eutectic detector was very effective, however its use was limited as it was a one-use product, contrasting with today’s detectors which can be reset and used again. The biggest change to date has been in the look and size of the detector. Mr Maloney’s design was large, with a long probe to allow it to collect a lot of heat mass, while today’s compact circular detectors have a perforated heat collector collar to collect the heat out of the air, and the bimetallic element is a very small and lightweight disc which operates very rapidly. New fire detection innovation The last two decades have seen new technology emerge, including the introduction of Analogue Addressable systems. Much advanced from original fire detection technology that just signalled if there was a fire, analogue technology provides a continuous reading about how much smoke there is and the temperature in an affected area. Addressable technology uniquely allows you to identify a particular detector in a particular place, and to identify which room is being affected. In 1914, original technology wasn’t that sophisticated and required a physical search for the fire. Microprocessor technology is also driving innovation in the fire detection industry. The VIGILANT MX1 is a second-generation analogue addressable panel that uses very advanced microprocessor electronics. Internet Protocol (IP) Networking has driven widespread change across
the industry with technology that allows computer-style communication between fire detection panels and to alarm annunciators. This facilitates communication across large scale venues and premises where, for reliability, dedicated fire detection networks are typically run separately to other networks. This industrial-style technology is readily scalable and is particularly useful for the likes of hospitals and university campuses.
safety technology that goes beyond the traditional fire protection solutions to provide wider benefits for mass evacuation in order to assist in securing and lockdown of premises, as well as in the communication with occupants, is becoming a reality. VIGILANT continues to innovate Over the years, Vigilant has built an invaluable bank of specialist expertise
that is world class and highly innovative. Now, as a Tyco company, Vigilant is recognised for its understanding of the life safety requirements on handling the complexity of building systems throughout the ANZ region. The R&D plays a critical role in the development of new products. Its cutting-edge range of fire detection and voice evacuation solutions is commonly acquired in various core markets, including commercial, governmental, transportation, healthcare, hospitality, defence, mining, industrial, energy, petroleum oil and gas. The research and development team behind VIGILANT has been in continuous operation for 100 years and, since becoming a part of Tyco Fire Protection Products, has benefited from close collaboration with R&D teams from around the world allowing it to harness global expertise and innovative thinking. For further information about VIGILANT fire detection products, call 1300 725 688 (In Australia) or +64 9 635 0760 (In New Zealand) or visit www.tycosafetyproducts-anz.com. David Prosser is Senior Product Manager at Tyco Fire Protection Products
Looking forward to future advancements in technology In November, Tyco will release its VIGILANT Generation 6 range of fire detection products, which is a refinement of all other fire detection technologies that have come before it. What is unique about VIGILANT Generation 6 technology is that it allows a service technician to stand underneath and verify its operation. They no longer need to climb up ladders or use long poles to physically make contact to test it, saving the installing contractor time and improving safety for the service technicians. Other emerging trends in the fire detection industry include fibre optic, array-based, video-enabled, and wireless fire detection technologies, plus enhanced mass notification solutions. This latter is an area where VIGILANT leads in the ANZ region, particularly with voice notification, emergency intercommunication, and Voice over IP (VoIP) technology. As codes, standards, and regulations change, Tyco is well placed to respond to and lead with world class solutions under the VIGILANT brand. The demand for products that can facilitate an orderly evacuation of large premises, and technology to help communicate with building occupants in a large scale emergency, is becoming increasingly important, especially with the escalating risk of terrorism. Life
SECURITY >> Online neglect
Online security a shared responsibility minister maintains Businesses – especially small and medium businesses – can do more to make themselves secure says Minister of Communications and Information Technology Amy Adams
here is no doubt that IT systems have transformed the way businesses operate, and they have become essential tools for innovation and growth, enabling them to be more nimble, efficient, and to increase productivity, she observes. “To that end, we should be focused on ways to ensure that businesses are able to maximise the gains from internet connectivity, while minimising losses incurred through poor online security,” Ms Adams says. Her ministry has taken the initiative and launched a cybersecurity toolkit for Small and Medium businesses that has been informed by a group drawn from Connect Smart partners. It offers business owners the simple but effective tools they need to improve their online security. Ms Adams notes that cyber domain threats are real, sophisticated and growing, originate from a variety of sources, and encompass widely differing agendas and aims. “Use of the cloud, for example, has offered us new and exciting opportunities, but we would be naive to ignore its associated security challenges.” The common thread that unites cyber threats is their capacity to cause damage - ranging in scale from the distress experienced by an individual who has had their identity hacked, to the economic damage that sustained industrial cyber espionage can cause to a country. Focusing on one aspect of this problem, Go-Gulf’s Cyber Crime statistics and trends makes for interesting reading - current estimates for the annual global cost of cybercrime put the figure at about $100 billion. “But measuring the costs of cybercrime is difficult – not all incidents are reported and some losses, such as intellectual property theft or the loss of business secrets, are hard to quantify in the short term,” Ms Adams adds. Globally, cybercrime accounts for 556 million known victims every year – an average of 18 people a second. “The methods used by criminals to deceive their victims are increasingly sophisticated and often capitalise on people’s lack of cyber security awareness.” For example, on a global basis one in 10 social network users have admitted to falling victim to a scam or a fake link. “At the higher end of the spectrum, the recent attack on e-Bay
October/November • 2014
Cyber domain threats are real, sophisticated and growing, originate from a variety of sources and encompass widely differing agendas says Minister of Communications and Information Technology Amy Adams has resulted in the compromise of a database containing the personal data of up to 128 million users – rich pickings for criminals,” Ms Adams notes. “While there is debate among the IT community about the most appropriate course of action for individuals to take in response to this sort of threat, there appears to be a consensus that higher levels of cybersecurity awareness are a good place to start.” But it’s not all bad news, as the recent action taken against the Gameover Zeus botnet illustrates. “This botnet, which had succeeded in harvesting about $118.32m by accessing people’s bank log-in details, was shut down by US, UK and other government law enforcement agencies, working in concert with global technology companies and internet service providers,” Ms Adams explains. “This is an excellent example of multi-national cooperation against a highly complex criminal action.” She maintains that everyone has “a shared responsibility” when it comes to raising the standard of cyber security in New Zealand. “Every step taken by individuals, the private sector and government agencies that advances cybersecurity benefits us all,” Ms Adams insists. “This is a shared problem that requires an approach entrenched in partnerships.” Towards this end, New Zealand’s Cyber Security Strategy has three priorities: • to raise cyber security awareness amongst individuals and small businesses
• to improve cyber security across Government • to build strategic relationships to improve cyber security for critical national infrastructure and other businesses. Raising cyber security awareness among New Zealanders is therefore at the heart of the recent Connect Smart Week promotion. “This initiative will empower individuals and business owners to take simple, practical steps to improve their online security.” “Our government website – connectsmart.govt.nz – directly addresses the main barrier to people taking steps to improve their cyber security: confusion over what or who to trust,” Ms Adams says. “Our aim is to provide reliable, straightforward information designed for a nontechnical audience and tailored to individual needs.” Hand in hand with this initiative, government is continuing to develop and implement ever higher standards of cyber security. “A range of departments are involved – from those at the front end, such as Police, Department of Internal Affairs, and the National Cyber Security Centre, through to those grappling with the policy implications of cyber security, led by the National Cyber Policy Office.” This year, the NCPO will be working on a number of major policy initiatives: • a refreshed and comprehensive national Cyber Security Strategy to make sure we are coordinated and resourced across government to address this challenge • a targeted inter-agency cybercrime plan • an assessment of the economic balance of cyberspace for New Zealand • testing the government’s response to a significant cyber incident • consideration of the options for a national cyber mechanism to improve the coordination, effectiveness and efficiency of the government’s response to cyber incidents. There is plenty to be optimistic about in the cyber world, but there are challenges that will have to be tackled along the way Ms Adams believes. “Our responses to those challenges will need to be agile and innovative,” she says. “That will be best achieved by working together, as partners.”
Toolkit offers top tips for safety online The Connect Smart for Business SME toolkit suggests timely reminders of internet security precautions for businesses of all shapes and sizes. The toolkit offers a simple four-step Cyber Security WOF to achieving better online security: • assess the cyber security of the business • develop a cyber security policy • establish an incident management plan • regularly review and update network security systems. It also stresses the importance of basic IT security controls, including: • installing security software that includes a firewall, anti-virus and anti-spyware and ensuring that it is updated automatically • developing a backup strategy for critical data: a good strategy includes daily backups, an additional weekly or monthly backup, and offsite storage of at least the weekly back-up media. Test that you can recover materialswith back-up data • assigning at least one person to be responsible for network security (password, backups, AV updates) if the organisation doesn’t have a dedicated IT manager • use software from reputable sources and keep software patches up-to-date • use spam filters to reduce the amount of spam that the business receives, know how to manage the spam that gets through and ensure staff know how to recognise scam and hoax emails and to avoid clicking on links or opening attachments from suspicious emails • keep informed about the latest online safety and security risks and subscribe to email notification services that keep organisations informed about the latest online safety and security risks and i solutions.
TRAINING >> Special Feature Sponsored Article
Connexis is the ITO for the infrastructure sector It’s hard to avoid the skills shortages currently facing most businesses in the New Zealand construction and infrastructure sectors. Unemployment is at a low, with some regions such as Christchurch at four percent - skilled people are tough to find
e are currently in a boom cycle where commercial and residential building is at a peak, and where our infrastructure spend over the next 10 years, is at its highest ever. On top of that our sector is competing with other industries for an ever diminishing pool of young people whose expectations of an employment situation are different from our parents and grandparents. Added to this is an every increasing aging workforce, which is steadily leaving a substantial gap in the supervisor/foreman space. There is a current climate in the market where organisations compete against each other for the most skilled people when they are awarded a contract – a ‘just in time’ recruitment practice that is becoming more difficult to sustain in such an employment market. Smart
businesses understand that planning ahead and investing in people pays dividends at times like this. This means implementing a long term strategy of training and skills development right across the organisation – providing career pathways for your team and succession planning for your business. Connexis is the ITO for the infrastructure sector and currently enables training to New Zealand Qualifications in the civil construction, water, utilities, road marking, surveying, asset and procurement, pavement surfacing, rural contracting, electricity supply and telecommunications areas. Our aim is to be a the centre of training for these industries; to be the invaluable partners to organisations providing training solutions, knowledge and support to ensure their people grow and learn new
Top trainees for 2014 A n electricity generation trainee has won the overall award as trainee of the year in electricity supply sector of the infrastructure industry. Anita Hope of Contact Energy was announced as the winner at the Annual Connection Excellence Awards organised by industry training organisation Connexis. In making the award the judges described Anita as a courageous ambitious young women with a strong desire to succeed. The judges said she is a natural ambassador for the industry and is very encouraging of women to apply for trade and
technical roles within the industry. This is the 13th year of the Annual Connection industry event. Connexis Board chair Frances Hague says Anita’s success is particularly pleasing given the effort that has been put into recruiting more women into the industry in recent years through the Ultimit project. “Not only is Anita an outstanding role model for women entering our industry but she is a great example of how trainees can succeed. There is no question that the electricity supply industry will be better off with people like her.” Anita has managed significant
skills, which in turns benefits the business, leading to a more productive and profitable NZ Inc. This organisation, along with Civil Contractors NZ and key industry partners, has been working to introduce a Trade Certificate regime which will attract more young people into the sector, providing them with planned career development, ultimately culminating in the achievement of the status of a valuable civil construction professional. The pathway includes the development of both practical skills and knowledge, linked to time on the job. To qualify for Trade Certificate the trainee will have completed two to three New Zealand Certificates, a substantial time in industry, will be required to apply to the Board with written support from their employer, before commitments outside of her work and studies as a member of the 2012 junior blacksticks and the National Hockey League. Other winners from the Annual Connection Excellence Awards are: • Business Support/Retail Trainee of the Year - Jade Leslie, Meridian Energy • Distribution Trainee of the Year Derryn Cooper, Northpower • Transmission Trainee of the Year David Sullivan, Transfield Services • Telecommunications Trainee of the Year - Raera Taua-Templeton, Downer • Advanced Trainee of the Year Tammie Riddle, Electrix • Contribution to Industry Training - Mark Keller, Electricity Supply Apprentice Programme i
being awarded Trade Certificate. We know from experience that a culture of training pervades when others see people achieve and succeed. Once a supervisor or foreman undertakes the process of achievement of a qualification, they quickly recognise the value the same process will have for their crew. Support and mentoring from others in the organisation, alongside the regular coaching provided by the Training Advisor of Connexis, works to ensure completion. Investment is rewarded by loyalty to the business, and retention rates increase markedly, accidents and incidents reduce, and productivity increases as staff are able to work unsupervised. There really is no better time than now to rethink the role and importance of training and qualifications within your business. i
Board chair Frances Haque
COMMENT >> by Malcolm Alexander
Three infrastructure issues are top priorities for local government There are three big issues the local government sector sees as priorities in the infrastructure space and in respect of which it plans to work collaboratively with the re-elected National-led government
There is no silver bullet to the issue of housing affordability - it’s a complex problem which requires a mix of interventions to correct it
here is much alignment between local and central government on these matters. The government has a strong mandate to move forward after gaining such a strong majority of votes, so we expect a lot of action in these areas during the three years ahead. Transport Ensuring that sufficient roading investment continues is vital for roads of national significance but also in rural and provincial areas to ensure infrastructure meets our communities’ needs. While the volume of traffic is clearly higher in the metropolitan areas, the primary industry products that generate the bulk of this country’s wealth are generated in provincial New Zealand and these products get to market by travelling on local roads and state highways. Related at the micro level are the upcoming final decisions on the Financial Assistance Rates review and the finalisation of the Government Policy Statement on Land Transport Funding. Resolution of both matters will give certainty and confidence to local government as a co-investor in New Zealand’s road network. We’ve got a very good relationship with the Ministry of Transport, and the NZ Transport Agency, and we look forward to fostering that with the Minister of Transport once he or she is appointed. Housing LGNZ accepts without question that there are clearly housing affordability issues in parts of New Zealand. This is not a problem everywhere, but it clearly is in parts of New Zealand. Generally growth areas are most
October/November • 2014
affected, especially Auckland but also, for example, Tauranga and Queenstown-Lakes. There is no silver bullet to the issue of housing affordability, and it is not a problem that is unique to New Zealand – you’ll see it in Sydney, London and other cities. It’s a complex problem which requires a mix of interventions to correct it. Some of that toolkit of solutions sits in the hands of local government while others, like the high cost of building materials, are outside our control. Housing Accords are proving successful in Auckland and now other regions, including Wellington, have signed up. These speed up the planning requirements around the
The primary industry products that generate the bulk of this country’s wealth are generated in provincial New Zealand and get to market by travelling on local roads and state highways
consenting and zoning of new developments. We support them. Having said that, the thing that people have to remember is that local government is about local democracy, and one person’s legitimate development and intensification may be another person’s infringement of rights and property values. A balance has to be struck between the needs of a growing community; the needs of young people and families wanting to get into the housing market; and the rights of people already in place. It’s a tricky issue and the answers or solutions are never simple. Part of the solution does lie in a less complex and costly resource management regime, and for this reason LGNZ firmly supports much of the government’s Resource Management Act reform package. In doing that, however, it is important that the local aspect of resource management law is retained. If local communities were unable to input in a meaningful manner into decisions then a risk arises that decisions could prove to be very contentious and so be less durable in the long-run. A more efficient building consenting regime also is a priority for local government. Building consenting is delegated to territorial authorities and the system generally meets the needs of the market well. However, in areas experiencing growth the demand is much higher and this places stresses on the system. Part of that stress arises because of the need to balance speed against risk. If the consenting and inspection process goes wrong, ratepayers may be exposed to costly litigation. Even where fault lies elsewhere, councils
are often looked upon as having deep pockets by the justice system. This is driven by New Zealand’s present joint and several liability regime. LGNZ has argued for a move to proportionate liability. Under that system councils would only be liable for fault attributable to their actions, not the actions of others such as builders. This would be a fairer regime and go some way to reducing the strong incentives to reduce legal risk through slower, more cautious practices.
Water LGNZ’s 3 Waters Project links to housing because there are costs associated with water connections. The 3 Waters Project is examining the state of our water infrastructure and the possible operational and investment challenges that may exist looking into the future. In October LGNZ is planning to publish an issues paper based on the comprehensive data set the project has collected to date. We will be seeking input on whether we have identified the right issues as a precursor to examining what approaches may be best suited to ensuring that New Zealand continues to enjoy a first-world water infrastructure network When it comes to infrastructure, local and central government are pretty well-aligned. Both tiers of government desire a strong nation, a growing economy and an environment we can all be proud of. We look forward to working constructively and collaboratively with the new government on these matters. Malcolm Alexander is Chief Executive of Local Government New Zealand i
The 3 Waters Project is examining the state of our water infrastructure and the possible operational and investment challenges that may exist looking into the future
COMMENT >> by Leigh Auton
Leadership versus legislative tinkering I am frequently amused but more often depressed around the rhetoric and actions of political and community leaders in their diagnosis of legislative issues associated with development processes in this country
Maybe the policy makers should spend more time focusing on leadership if we are to solve the issues issue of development and environmental practice, the provision of land for houses and jobs, and the infrastructure to maintain our economy No amount of legislation, or more especially changes to legislation, will necessarily deliver better economic or environmental outcomes for communities
t is frustrating that so few leaders, and commentators, have any experience of how it works, or should work. Let me explain. Firstly, I don’t want to sound like a dinosaur from the past, living a time long gone. Nor do I want to sound like a practitioner living out the days of some glorious past. However, and as in the world of Maori, it is sometimes useful to understand the learnings of the past to go forward. My second and major point is that no amount of legislation, or more especially changes to legislation, will necessarily deliver better economic or environmental outcomes for communities. I am referring to the Resource Management Act in particular, which is about to have its annual makeover from a freshly elected government. The legislative changes will be good for politics, the media and for the industries that are sustained by submissions, seminars and implementation of the new law, but unlikely to be of much benefit to general society. Arguably this sounds fairly cynical, which I would concede. However, I do believe the real answers to effective development and environmental outcomes lie elsewhere. Let me go back in time to explain. Nearly 40 years ago, when I began work as an assistant planner in the
then Manukau City Council I was struck almost immediately with its sense of leadership and purpose. Both the political and executive leadership understood their role in leading a city with enormous growth. They understood the need to balance social, economic, cultural and environmental issues, how to express their views in an integrated manner through values and organisational design. They had an organisation passionate to deliver on a coherent vision. In its nearly 50 years of existence, the former Manukau City Council had extraordinary leadership stability. Four mayors and three chief executives - the strategic framework to build communities for a huge number of people, with jobs, through community development principles that never wavered. The city grew from 70,000 people to around 360,000 on amalgamation in 2010. It developed three of New Zealand’s largest industrial precincts in that time – East Tamaki, Wiri and Auckland Airport. It created infrastructure such as roading and water and waste water to support this growth. And it created an extraordinarily strong balance sheet based on good commercial and property acumen, with the lowest average residential
The legislative changes will be good for politics, the media and for the industries that are sustained by submissions, seminars and implementation of the new law, but unlikely to be of much benefit to general society and business rates in Auckland. So how was this achieved? Not through reliance on tinkering with legislation every year. This development occurred under the planning legislation of 1953, 1977 and 1991, and under the various permutations of local government legislation. Rather, it achieved the housing of
large numbers of people and the provision of employment through effective leadership, coherent and integrated vision and strategy, an organisation designed to deliver, and a passionate workforce linked to its communities. While the legislation was a necessary framework to work within, or alongside, the city and council didn’t rely on it to deliver its outcomes. It relied on the factors that make great businesses and organisations, those cited in Jim Collins book ‘Good to Great’ – have the right people in the right place, develop strategy, create coherent and disciplined policy and process and critically develop a compelling culture. These factors are more important than constantly changing our legislation. Maybe the policy makers should spend more time focusing on leadership if we are to solve the issues of development and environmental practice, the provision of land for houses and jobs, and the infrastructure to maintain our economy. Not easy, but likely much more productive. Leigh Auton is a Director of Auton & Associates and has 35 years’ local government experience. He is a chairman/director/trustee on several boards and provides consulting advice to public and private sector companies i
C O M M E N T > > b y C o n n a l To w n s e n d
Local government must change its infrastructure funding habits Infrastructure-related issues are too often technical and confusing for most people but they cannot be avoided
here are a lot of hard and nasty realities facing New Zealand at the moment; big and small. Cities place a huge amount of reliance on debt and development contributions to fund the required level of infrastructure needed to give them a future. It is just not sustainable. New Zealand cannot rely on debt and development contributions to do the job. The need for infrastructure greatly outstrips the country’s ability to earn money. Under the status quo, developers contribute to infrastructure in two different ways. Firstly, by directly funding the construction of roads and water systems within their subdivisions before vesting the infrastructure in the local authority, which owns and maintains it over time using rates. Secondly, they pay development contributions to the council at the time of subdivision towards the cost of providing the infrastructure needed to serve multiple developments. These costs are ultimately passed on to the purchasers and are reflected in section and building prices Recently Property Council Bay of Plenty Branch held a joint event with the Western Bay of Plenty SmartGrowth Partnership to explore different ways for the provision and funding the necessary infrastructure to service the region’s growth. The workshop identified eight key areas: • demographics is a constantly changing factor: as the population grows so do the pressures on the existing infrastructure systems, which also means the size of the rating base available to pay for infrastructure is changing • technology and sophistication in infrastructure delivery and management is increasing and how this demand is managed is shifting • communities have much higher expectations of available infrastructure • the costs of renewing or upgrading existing infrastructure are significant • council balance sheets and the long-term nature of growth related debt: this limits the ability to borrow for other non-growth-related infrastructure services
October/November • 2014
The time has come for a major paradigm shift in the way local government uses its balance sheets and its assets
• local government’s volatile revenue streams, which drop significantly in times of slow economic activity • legislative change such as RMA reforms, the Housing Accords and the Building Act all add to council responsibilities • pressure by political lobbyists and ratepayers to keep rates and development contributions, alongside the three-year political cycle, make it difficult to adopt a strategic long-term approach to address funding gaps Stakeholders in this debate must adopt a collegial approach where the private and public sectors joining together to develop a much longer-term planning approach and a clear plan. This plan must include an integrated strategy for provision of infrastructure and the funding mechanisms that will go hand in hand with it. Key benefits Stated simply, this approach confers four key benefits: • increased clarity with a long-term view of what needs to be done • provides a single long-term planning template for a large area which integrates funding requirements • promoting the staging of development and associated public investment in a logical and sequential
manner which is more efficient and cost-effective • optimising existing infrastructure investment, ensuring that development is staged so that new settlements only start when existing settlements have reached their capacity and that new infrastructure is delivered on a just-in-time basis. The SmartGrowth initiative in the Bay of Plenty provides the type of strategic leadership on infrastructure issues that the whole country should be following. Property Council has also been in a dialogue with public policy consultants McKinlay Douglas on infrastructure-related issues. Their executive director Peter McKinlay observes “ratepayers are
Cities place a huge amount of reliance on debt and development contributions to fund the required level of infrastructure needed to give them a future. It is just not sustainable
Local government actually has a much smaller ratio of debt to assets compared with central government, therefore it is unlikely that central government will be coming to the rescue – Peter McKinlay probably going to need a dose of reality in terms of the likelihood of the central government actually stepping in and providing assistance.” Mr McKinlay points out that local government actually has a much smaller ratio of debt to assets compared with central government, therefore it is unlikely that central government will be coming to the rescue. This is particularly true as central government has more responsibilities and pressures with its expenditure. Mr McKinlay further states that “in the near future, central government will be directing communities to better utilise their wealth. So the choice is whether communities wish to wait for this to be imposed on them or embrace the change now.” Property Council strongly supports this observation. The time has come for a major paradigm shift in the way local government uses its balance sheets and its assets. Mr McKinlay is on the mark with the inevitability of local government’s readjustment of how it funds one of the country’s most vital needs, and the sooner this is embraced, the faster New Zealand can progress. Connal Townsend is Chief Executive of the Property Council NZ, which represents the interests of the commercial property investment industry – including commercial, industrial, retail and property funds i
WATER >> Rivers
World-first for World Rivers Day Regional councils marked World Rivers Day on 28 September by releasing their latest river data on the Land, Air, Water, Aotearoa (LAWA) website at www.lawa.org.nz, a world-first in reporting nation-wide water quality results in one place
ocal Government New Zealand developed LAWA to ensure that the public could access all the water quality results in one place. “Working in partnership with the Ministry for the Environment and the Cawthron Institute as independent validators of the data, we hope LAWA will create greater understanding of the state of waterways and help people make good choices about how they use them,” says Fran Wilde, chair of the regional sector group Visitors to LAWA will be able to access state and trend data from 2004 to 2013 for New Zealand rivers at a regional, catchment and site level in keeping with the World Rivers Day ethos, which highlights the many values placed on rivers, and strives to increase public awareness and improved stewardship of rivers around the world.
Ms Wilde says that while the majority of the sites show no evidence of a trend, 17 percent of sites showed decreases in the levels of total nitrogen with increases observed at 22 percent of sites. “The spotlight needs to remain on this indicator,” she advises. On the other hand, the most significant improvements were in levels of phosphorus, with 45 percent of sites showing total phosphorus has reduced and 41 percent showing a reduction in dissolved reactive phosphorus. When phosphorus or nitrogen levels are too high, there is likely to be rapid weed growth or algal blooms which can choke aquatic life and cause long-term damage to the health of a water body. Much of the phosphorus in New Zealand rivers is a result of erosion and fertiliser use, while other sources
Work is currently underway on other environmental indicators for LAWA, beginning with recreational beach monitoring which will be available on LAWA this summer include dairy factories, freezing works and sewage treatment plants. “Although there is obviously still much work to be done, the phosphorus trends are encouraging, reflecting hard work by local government,
communities and land owners,” Ms Wilde says. A number of regional councils have reduced phosphorus entering rivers by working with landowners and the government to stabilise erodible land through tree planting or land retirement. Many wastewater treatment plants have also been upgraded by local councils, thereby reducing or removing phosphorus from their discharges. Work is currently underway on other environmental indicators for LAWA, beginning with recreational beach monitoring which will be available on LAWA this summer. The regional council information that is used on the LAWA website will also contribute to a new national environmental reporting regime being designed by the Ministry for the Environment and Statistics New Zealand. i
NEWS >> Energy stars
Kapiti Civic Building achieves ‘excellent’ energy rating Kapiti Coast District Council’s refurbished Civic Building has been awarded 4.5 stars out of 6 for energy performance under NABERSNZ, the energy rating scheme for office buildings
overing the whole building’s energy use, the score denotes ‘excellent’ energy efficiency and makes it the second council building in New Zealand to obtain a NABERSNZ rating after Auckland Council achieved 3.5 stars for one of its buildings last year. Providing ratings from one to six stars, NABERSNZ is the industry standard for benchmarking and improving office building energy performance in New Zealand. Kapiti Mayor Ross Church says the council had worked hard to improve its own efficiency and carbon emissions, as demonstrated by its recent wins in the 2014 Energy Efficiency and Conservation Authority (EECA) Awards. “The NABERSNZ rating is ‘real world’ proof that its civic building operated efficiently and confirms the effectiveness of council’s response to climate change, which is one of the most significant challenges facing New Zealand,” he says. “We are committed to reducing our own impact as well as inspiring change and resilience, both in our local community and for other communities in New Zealand.” The two-level Civic Building that is home to the council chambers, customer services and operational staff was extensively rebuilt and refurbished in 2012 with an atrium
The two-level Civic Building was extensively rebuilt and refurbished in 2012 with an atrium for natural light, external shading on north windows and highly efficient air conditioning and ventilation. for natural light, external shading on north windows and highly efficient air conditioning and ventilation. The building will eventually form part of a ‘civic precinct’ and town centre for Paraparaumu. EECA Chief Executive Mike Underhill says NABERSNZ helped owners and tenants easily understand energy use information, providing a benchmark to compare and improve energy performance. Kapiti Coast District Council is showing real leadership – both to business in the region, and to the local government sector, he believes. “For public sector bodies, NABERSNZ is a way to help reduce energy waste and ensure public funds are being managed well,” Mr
Underhill maintains. “Energy savings of around 25 percent are achievable for most office buildings and tenancies. This scheme helps simplify the process – getting and improving a NABERSNZ rating is the best way to make these savings.” New Zealand Green Building Council Chief Executive Alex Cutler said local government had a strong role to play as an advocate, as well as a client for NABERSNZ. “Councils aren’t huge owners of commercial property, but they can show strong local leadership and promote smart energy use – which is exactly what Kapiti is doing. NABERSNZ creates a market value for good energy management,
reducing costs for tenants and improving capital value for building owners.” A NABERSNZ Rating covers one year of energy use data, taking into account equipment used, staff numbers and occupancy hours. A whole building rating such as that for the Kapiti Civic Building examines energy used by occupants such as lighting and IT, as well as base building services like air conditioning. NABERSNZ is based on the National Australian Built Environment Rating System, a scheme that has rated building energy performance for more than a decade. The scheme is licensed to the EECA and is administered by the New Zealand Green Building Council. i
Funding Review appointments L
GNZ has appointed a cross-sector working group to its LGNZ Local Government Funding Review, which seeks to determine a sustainable future model for funding of local infrastructure and services. The Review was launched in April because the sustainability of local government funding has become an increasingly important policy issue in the face of rapid demographic and economic changes. It recognises that New Zealand councils have a high reliance on property taxes, which is unusual by international standards. The working group appointed to investigate complementary funding alternatives is chaired by LGNZ National Council member and
October/November • 2014
Auckland Council Councillor Penny Webster. Other members of the working group are: • Auckland Chamber of Commerce Chief Executive and Local Government Forum Chair Michael Barnett • Auckland Council Chief of Staff, Office of the Mayor, Phil Wilson • Auckland Council Treasurer and Local Government Funding Agency Chief Executive designate, Mark Butcher • Cameron Partners Partner Rob Cameron • Christchurch City Council Councillor and Chair of Finance Committee, Raf Manji • Federated Farmers Manager
General Policy, Nick Clark • New Zealand Council for Infrastructure Development Chief Executive, Stephen Selwood • New Zealand Initiative Executive Director, Dr Oliver Hartwich • Otago Regional Council Chief Executive, Peter Bodeker • Queenstown District Council Chief Executive Adam Feeley • Victoria University Professor of Public Policy Prof Claudia Scott • Waitomo District Council Chief Executive, Chris Ryan. The working group will explore funding options and alternatives and review funding mechanisms for appropriateness in a New Zealand context, with a focus on developing a strategy and model that is sustainable
Review Chair penny Webster for New Zealand communities in the long term. Its initial consultation report is expected in November. i
POLICY >> Government
Stronger response is needed to fix regulatory issues Good regulatory practice must be institutionalised and not left to the discretion of individual ministers and their departments
he government’s response to the March 2013 Productivity Commission’s report “Towards Better Local Regulation” doesn’t go far enough according to LGNZ President Lawrence Yule says that the proposed action plan is unlikely to make a material difference in the quality of local regulations, nor does the government’s response appear to do justice to the rigour and depth of the Productivity Commission’s work. “We need a close working relationship with government agencies when new regulations are being developed, one where local and central government sit at the policy setting table and consider effective regulation and implementation together at the earliest
opportunity,” says Mr Yule. “In particular, we’re disappointed that the government has not implemented the development of a “partners in regulation” protocol and a forum to ensure both spheres of government agree and understand intended regulatory outcomes” as recommended by the Commission.” Local government is pleased to see the announcement of the Rules Reduction Taskforce and also asks that a joint central local government taskforce be established to review the framework of statutes and regulations impacting on local authorities to remove unintended consequences and unnecessary regulatory costs. In its comprehensive report the
Productivity Commission highlighted the problems caused by poorly designed legislation which sets out processes that councils must comply with when putting in place local regulations. The result is that local regulation is often seen as inefficient and unresponsive, and creates unnecessary compliance costs for communities. The Productivity Commission wanted to see real change in the way government departments go about developing and evaluating legislation which gives councils regulatory responsibilities and to ensure local government is closely involved in the design of such legislation – a key area where the government’s response i falls short.
We need a close working relationship with government agencies when new regulations are being developed says President Lawrence Yule
Greater protection for subbies Sub-contractors have welcomed a recent decision by the government to change the law to provide them with greater protection from the collapse of construction companies
uilding and Construction Minister Nick Smith says the government will introduce changes to the practice of construction firms withholding payments, known as retentions, from firms working on projects. Sub-contractors lost over $18 million in retention payments owed to them following the collapse of Mainzeal last year. The retention system allows the main contractor to hold up to 10 per cent of the sum due to a contractor, interest free, for up to two years as a guarantee of the quality of the work. Since the Mainzeal collapse, the Specialist Trade Contractors Federation (STCF) has been pressing the government to change the law to ensure the retention is held in trust for the sub-contractor. “We hope these changes will help prevent a repeat of the losses sustained by many sub-contractors working on Mainzeal projects,” says Graham Burke, President of the STCF, which represents more than 5,700 local contracting firms. “It will mean retentions cannot be scooped up by the bank or receiver if the principal
Building and Construction Minister Nick Smith says the government will introduce changes to the practice of construction firms withholding payments, known as retentions, from firms working on projects runs into financial trouble.” The federation has been working closely with the government on a pragmatic and reasonable solution to address this problem and subcontractors across New Zealand will be overjoyed to hear of the changes, Mr Burke says. “It will not only offer certainty for sub-contractors, but also
their employees and families.” He says the change is “long overdue” and was pleased the government has acted. “The timing is also important because of the surge in construction activity, especially in Auckland and Christchurch.” During economic upswings, firms often grow rapidly to meet demand
and may over-extend themselves, Mr Burke notes. “If the bank refuses to loan them money, then there is the opportunity to use the retention payments they are holding as working capital,” he explains. “If the company fails, then those retentions will be used to pay secured creditors such as the bank or IRD.” i
DEVELOPMENT >> Royalty payments
Creating resilient communities key to long-term social and economic success LGNZ’s recent forum ‘Royalty Payments – the case for a local share’ highlighted the need for communities to have resilient economies in order for long-term social and economic success
ocal government leaders, industry and community heard LGNZ advocate for a policy change for the distribution of a share of royalties from mineral, oil and gas extraction to the communities where the activity takes place as this is one factor that would contribute to economic resilience. In the wider sense, economic resilience means looking at sustainable funding, planning ahead for the economic cycle and making regions business-friendly – which ties directly into LGNZ’s key strategic policy priorities. Shared national approach to growth The first is a shared national approach to addressing regional development and growth across all of New Zealand. New Zealand currently faces uneven economic growth with some regions growing faster than others and some regions attracting population and others losing population. Auckland continues to develop into an international city and Christchurch rebuilds itself from devastating earthquake damage in 2010 and 2011. However, while Auckland and Christchurch are both critical to New Zealand’s success, the country’s economic growth strategy needs to consider the nation as a whole and the needs of its regions. LGNZ is committed to enabling and supporting economic growth across the whole country. LGNZ wants to develop a shared national approach as local and central government need to work together to reduce regional inequalities across all of New Zealand. We need to find ways to develop our regional centres into environments which offer opportunities in education, employment and business; as places where skilled locals want to stay and set up business, and where skilled migrants want to settle. Local government is actively exploring and embracing options to simulate our local economies including investment in economic
October/November • 2014
development and regional tourism organisations. Wider than this, we need central government to partner with us on a shared approach to deliver growth that will provide benefits to all regions of New Zealand. Sustainable funding The second LGNZ strategic policy priority that ties into economic and community resilience is developing a sustainable funding model for local government. The sustainability of local government funding has become an increasingly important policy issue in the face of demographic and economic change. In response, LGNZ is undertaking a review of local government funding to identify new funding options and alternatives that can complement councils’ current funding tools. It will consider demographic trends, infrastructure needs and environmental risks that are likely to affect the resource base of local government and the life of existing infrastructure. The Review’s Working Group’s first draft consultation paper is due to be published in November. Business-friendly regions change demographic trends Declining and ageing populations are a concern in demographic trends. Areas with flat population numbers are only likely to increase in future according to The Royal Society of New Zealand’s publication Our Futures Te Pae Tawhiti. However, attracting investment to regions can impact positively on demographic trends, making regions appealing to people seeking employment. The success of things like the Port of Tauranga, the wine industry in the Hawke’s Bay and dairying in Southland have transformed regions and created jobs in recent years. In order to become more business-friendly, regions can follow the Business Friendly Councils guidelines that LGNZ produced with Ministry for Business, Innovation and Employment. The Business Friendly Councils
Plans for an active drilling programme in the Taranaki region stretch well into the future. Constructing an extraction plant may create work for 1000 people, but operating it once it is complete can employ fewer than 40 people working with a lot of technology says South Taranaki Chief Executive Craig Stevenson
guidelines identify six key principles that are intended to reduce the regulatory and nonregulatory barriers, costs, risks and uncertainties in all forms of commercial activity to stimulate and support local business growth, local business retention and the attraction of new business to the local area. The key principles are: • build excellent relationships and partnerships – at the heart of a business friendly council • context matters – identify local challenges and local business needs • provide certainty and clarity for business decision-making • make every interaction with business count • be proactive and look for opportunities to support businesses • and respond rapidly and flexibly to business after major emergencies Planning ahead for economic cycles Communities suffer when downturns hit and companies cut jobs in regions. This has the flow-on effect of making it difficult for a region to create and retain a vibrant community in the long term.
One type of business that has a strong impact on communities is extraction. For example, in Waihi, if gold mining were to cease, a number of jobs and more than a quarter of the region’s GDP would be directly impacted. This is one of the reasons LGNZ is advocating for royalties to be shared, and the LGNZ Local Government Funding Review will look at ways for sustainable long term funding for the benefit of communities. How the extraction industry impacts regional economies Industries can have a significant impact on communities. When business is good, companies that hire large numbers of local people contribute strongly to a region’s economy. However, when business suffers, communities struggle as well. Good engagement with communities is important during both boom and bust phases of the economic cycle. Taranaki There are about 20 oil and gas fields currently in production in Taranaki and plans for an active drilling programme in the region stretching into the future.
South Taranaki District Council Chief Executive Craig Stevenson says more than five and a half thousand jobs are related to extraction in the region, including downstream positions related indirectly to extraction such as light engineering, processing and production jobs. There are wider impacts on the region from the extraction workforce, he says, especially from seasonal production shutdowns. “Every year, hundreds of workers fill hotels and restaurants, but there are also some downsides. It’s great for the hotel owner but not if you’re a trying to organise accommodation for a visiting sports team or family reunion. Rental spikes from demand are great if you’re a property owner, not if you’re renting. This kind of boom/bust type cycle is very difficult to plan for,” Mr Stevenson says. Some of the workforce is transient. Constructing an extraction plant may create work for 1,000 people, but operating it once it is complete can employ fewer than 40 people working with a lot of technology. This has social implications as communities need people who invest in where they live, contributing to volunteering efforts and taking appointments on sports committees or boards of trustees. “Some of the workforce these days has little social investment. They don’t have the same sense of place in the social fabric of our region,” Mr Stevenson says. “We need to maintain a healthy community… including future-proofing for long term resilience.” Buller Buller District Council Chief Executive Paul Wylie says that when he arrived in Westport in late 2011, the Buller district economy was booming, hotels were booked out and few rental properties available. For the local council, this presented the risk of future speed wobbles
The whole of the West Coast only has 33,000 people but we produce three percent of the exports that pay our way in the world. Keeping the West Coast healthy and working makes good sense for all of New Zealand says Buller Chief Executive Paul Wylie
– how would the community cope with another 400 direct and indirect jobs when Bathurst opened its planned mines? However, an economic downturn came and the “boom” became a “bust” as cycles of redundancies struck. Hundreds of jobs have vanished since Mr Wylie relocated there. “The jobs have gone and more will follow. Our other major employer, Holcim Cement, leaves in two years and we lose another 80-plus direct jobs. Unless there is a miracle recovery in coal prices Holcim’s departure also means the end of our port as a viable entity. We are taking a battering,” Mr Wylie says. “The whole of the West Coast only has 33,000 people but we produce three percent of the exports that pay our way in the world. Keeping the West Coast healthy and working makes good sense for all of New Zealand.” For Buller, the importance of planning ahead for a resilient community is obvious. Mr Wylie says that economic diversification is the only long-term answer. “If that can be done on the back of mining without imposing additional burdens, everyone stands to gain.” Waihi Gold mining in Waihi contributes 26 percent of GDP. Local resident Anne-Marie Spicer says Waihi has always been a mining town apart from a brief gap in the 1950s-70s. Living in Waihi East with three children enrolled at schools in the region, she is heavily invested in the community with hands-on roles such as treasurer for Waihi Junior Rugby Club. She is also a member of the Waihi Community Forum, which was established to administer money that mining company Newmont Waihi Gold contributes to the community as part of a voluntary scheme. With mining under residential homes soon to start in Waihi East, it
The Waihi Community Forum was established to administer money that mining company Newmont Waihi Gold contributes to the community as part of a voluntary scheme. “There was a lot of community buy-in from the start. The forum’s purpose is to contribute towards a thriving and sustainable community for residents living in an area affected by mining,” says member Anne-Marie Spicer was important that locals, Hauraki District Council and Newmont Waihi Gold had a forum where they could communicate regularly about extraction-related matters impacting the community. Its duties includes administering a $4 million property purchasing fund, and the Streets Ahead Scheme aimed at improving area effected by mining to protect property prices. Mrs Spicer says the community supports the forum, with more than 1000 people voting in an election for local representatives in the forum. “There was a lot of community buy-in from the start,” she notes. [The forum’s] purpose is to contribute towards a thriving and sustainable community for residents living in an area affected by mining. “We’re currently working on a green space in the area. However, this is a voluntary scheme, and it’s already been halved (to $100,000 per annum) since consent was granted.” While Waihi receives money from extraction industries, this is voluntary and uncommon. In order to help these communities LGNZ is advocating for the distribution of a share of royalties from mineral, oil and gas extraction to the communities where the activity takes place. The government receives hundreds of millions of dollars in royalty payments for oil, gas, coal and mineral extraction: in the five years to 2012, $1.69 billion was paid to the Crown in royalties from petroleum production and $49.85 million was paid in royalties from mineral production including coal. The regions where the extraction occurs do not receive a direct share of these funds. Instead local authorities are required to pay for the local roads, services and amenities that enable extraction
and support these industries, and to build a future for the region beyond the end of mining. LGNZ President Lawrence Yule says local authorities also face environmental management costs for consenting, compliance, stateof-the-environment monitoring and plan-making. “This is an important policy matter for our regions and their economies,” he insists. “ The development of a ‘local share’ programme would support communities and regions, similar to the way the successful Royalties for Regions local share initiative in Western Australia has recognised the growth and pressure extractive industries place on a region.” Royalties for Regions In Western Australia, Royalties for Regions distributes funds from extraction royalties into communities. The money goes towards improving things such as hospitals; schools, education and training; community assets such as town centre, parks and sports pavilions; community programs; infrastructure; housing; water and agriculture initiatives. Mr Yule says something similar could work well in New Zealand. “The development of a ‘local share’ programme would support communities and regions, similar to the way the successful Royalties for Regions local share initiative in Western Australia has recognised the growth and pressure extractive industries place on a region.” Royalties for Regions was launched in 2008. The AUD$6.5 billion program has a long-term focus on regional development has been supported by state-wide investments using Royalties for Regions funding. With the reinvestment of 25
In Western Australia, Royalties for Regions distributes funds from extraction royalties into communities. With the reinvestment of 25 percent of mining and onshore petroleum royalties into regional WA each year, it is achieving its goal of building strong and vibrant regional communities that are desirable places to live percent of mining and onshore petroleum royalties into regional WA each year, it is achieving its goal of building strong and vibrant regional communities that are desirable places to live. This additional investment is channelled into projects that help build regional communities and all decisions are underpinned by six principles: • building capacity in regional communities • retaining benefits in regional communities • improving services to regional communities • attaining sustainability • expanding opportunity • and growing prosperity. It has funded early literacy programmes, regional schools, water and natural resource management, marine parks management, tourist attractions and more. Three specific funds The Country Local Government Fund is is administered by a Regional Development Council that consists of the chairs of nine Regional Development Commissions and two local government representatives. The Country Local Government fund supports local governments in nine regions of Western Australia for the provision and renewal of infrastructure. It can’t be used for employing staff, paying debt or hiring consultants but goes towards roads, parks, footpaths, airports, sewerage, drainage, bridges and cycleways.
The Regional Community Services Fund aims to improve access to services that enhance the quality of life for residents and make access to services and infrastructure easier. It has gone towards a Country Age Pension Fuel Card, community resource centres, ambulance services and health services. The Regional Infrastructure and Headworks Fund is designed for large-scale regional infrastructure of strategic importance. It has gone towards hospitals, regional airports, town centre revitalisation, a gas pipeline and upgrading West Pilbara’s water services. Regional development seminar The need for regional economic growth across all of New Zealand is a key priority for LGNZ, which staged a major issues seminar on regional economic development in August that saw President Lawrence Yule, Economic Development Minister Steven Joyce, Labour’s Economic Development Spokesperson Grant Robertson and New Zealand Institute of Economic Research Principal Economist Shamubeel Eaqub all address this topic. While the speakers had some differing views, the overall message that came through was the importance of central and local government working together on this, with communities, industry and iwi. Mr Yule says that the local government sector – which represents all communities across
The development of a share programme would support communities and regions, similar to the successful Royalties for initiative in Western Australia, says LGNZ president Lawrence Yule. Other speakers including Economic Development Minister Steven Joyce, Labour’s Economic Development Spokesperson Grant Robertson and New Zealand Institute of Economic Research Principal Economist Shamubeel Eaqub offered their views on how the issues would be best solved
October/November • 2014
New Zealand – recognises the need for economic growth to occur across all of the country. This was in the spotlight at LGNZ’s 2014 Conference in July, where the theme was ‘powering local economies, building vibrant communities.’ “What is clear to us is that in the medium term, there are clouds over the future of provincial New Zealand,” he warns. Jobs in essential services will be stretched in parts of provincial New Zealand and population changes will add financial pressure on local government. “This is at odds with what the provinces contribute to our national economy so we need to find a solution to this conundrum,” Mr Yule says. A shared approach to solving this while ensuring maintenance of infrastructure that supports the economic engine of New Zealand is essential, he maintains. There must be sufficient investment into natural human capital to sustain our provinces, so they can continue to prosper.” Mr Eaqub says there are big differences of opportunities between different provinces. “What we are doing at a national level clearly isn’t working,” he admits. “This is because our regions are different, even though they’re incredibly interconnected through infrastructure and business connections. “We need to start from the point that regions have different specialties, strengths and weaknesses. There is a huge uniqueness to New Zealand’s regions. This is not about places, but people.” Minister Joyce spoke about how the number of New Zealanders migrating to Australia has eased, suggesting better population retention. “Our bigger problem right now is attracting people to live and work in our regions for the jobs that are already there,” he believes. “I was in Southland recently and visited a boat maker that would dearly love experienced welders, but they can’t find them for love nor money.” Many regions of New Zealand have their economies focused on the primary sector, he says. In regions where there was a strong IT, tourism or health sector, underpinning the economy was usually a primary sector and related work such as processing. “We have to make sure we look after and encourage that, then say what’s the plan for the future? I think there’s a very straightforward and succinct plan - we have to be very focused on opening up our markets. We have to make sure we’re focused on trade for the regions, more so than our big cities, and we’ve got to be constantly focused on attracting more capital investment both domes-
tically and internationally,” Minister Joyce says. “If we’re going to continue to grow we need to attract more of the sort of companies that can make a real difference. Investments such as oil and gas in Taranaki and the Marsden refinery expansion up North are very important.” Quality infrastructure has a strong impact on regional economies, as does ultra-fast broadband, Minister Joyce says. He also highlighted the importance of skills development and the Maori asset base. “There is a regional asset base being built up with settled iwi. There is an increasing number of iwi making long-term investments where they live, keen to develop an asset base.” Labour’s spokesperson for Economic Development Grant Robertson spoke about the importance of central and local government working on regional economic development in partnership with industry. While there are signs of economic recovery coming out the recession, complacency should be avoided, he says. “If we’re complacent and allow the economy to narrow, we won’t be able provide opportunities we want. There is no region or town in New Zealand that should be abandoned… We need to ensure we have a people–centered economy with a human purpose,” Mr Robertson says. Labour was focusing on the need for innovation, investment and industry while recognising each region had different strengths. It wants to ensure there are opportunities for people to stay in regions and develop skills in regions, with its Centres of Vocational Excellence to support this. However, any decisions made around regional economic development, Mr Robertson says, need to be on the basis of what will support regional economic growth plans. “This has to be a partnership between central, local government, business and iwi. Unless we are able to get that partnership working properly, we will simply have unsustainable development rather than integrated,” Mr Robertson says. “I know most regions have their own plans but central government needs to sit down with regions to figure out how to work these plans and make sure they will all work across the country. We want to make sure our way of working together isn’t based on one-off forums, but a more sustainable form of working such as regular working groups.” LGNZ continues to advocate for a shared national approach to regional economic development across all of New Zealand, as outlined in the Elections Manifesto i and Policy Statement.
ONSITE >> Safety and security
Tracked elevating device enhances safety Removing belly plates from bulldozers and other tracked vehicles requiring maintenance of internal components can be fraught with extreme physical hazard, downtime and expense
he plates - made of hundreds of kilos of steel and often weighted down with accumulated debris buildup on top - are traditionally loosened by mechanics who have to crawl underneath giant machines to line up the bolt holes, risking crush injuries and death. A Tracked Elevating Device, TED, eliminates the human element from the critical lift stage underneath equipment, by employing remote control of the lifting device. TEDs can travel across any terrain and can safely lift up to 800kg. They have a 360 degrees turntable at the top, which makes lining up ball joints safer, quicker and easier than the conventional methods using slings and chain block, says Timothy Lightfoot of Safety MITS, which markets the product. “In addition to making belly plate removal safer, it also makes it significantly more efficient,” he claims. “Safety MITS collected customer data from Thiess, Peabody Energy and Glencore over a one-year period and found that by using TED to remove and install belly plates they were able to reduce work time by 73.5 percent while using one less mechanic.” These savings don’t just apply to belly plates either. TED can also be used for equaliser bars, cutting edges, steer cylinders, load rollers, sound suppression equipment, engine sumps and many other applications. TED is designed and manufactured in Australia and is built with total compliance to Australian and New Zealand mining standards (ASNZ 4240). “With traditional belly plate removal
A Tracked Elevating Device, TED, eliminates the human element from the critical lift stage underneath equipment by employing remote control of the lifting device techniques, there is a high risk of crush injuries where a mechanic has to crawl under the vehicle to line up the bolt holes,” says Mr Lightfoot. “The belly plate can be locked, secured or restrained, but the biggest safety concern is still having the mechanic placed directly underneath the dozer, or heavy vehicle,” Mr Lightfoot says. “If a dozer needs servicing while still in the field, other problems can occur, such as poor lighting, poor ventilation or inadequate space,” he adds. “These create significant hazards for a mechanic who needs to be positioned underneath the dozer to carry out maintenance.” i
TED can also be used for equaliser bars, cutting edges, steer cylinders, load rollers, sound suppression equipment, engine sumps and many other applications
BEST CHOICE FOR WATER STORAGE
TEDs can safely lift up to 800kg. They have a 360 degrees turntable at the top, which makes lining up ball joints safer, quicker and easier than the conventional methods
• Minimal site preparation • Looks great • No rusting • Quick onsite installation • Flat packed components great for restricted access sites. • Perfect for water storage solution for orchards, vineyards, firefighting, and community water
THE BEST STORAGE SOLUTION
Freephone 0800 255 222
e: info@.kliptank.com www.infrastructure.co.nz
E V E N T S > > NZCID Conference
Successful symposium sends strong messages The New Zealand Council for Infrastructure Development (NZCIC)’s Building Nations symposium offered an impressive array of expert speakers and an equally impressive selection of key topics
peakers and topics included: • Project and Infrastructure Finance Australasia for BNZ Head of Infrastructure Chris Milcz discussing recent trends in funding infrastructure mega projects from a financier’s perspective • Plenary Group Head of Origination and Commercial Paul Crowe reviewing the utilisation of PPPs to deliver large infrastructure and urban renewal • three sessions discussing water, telecommunications, and transport
Brendon Lyon showed how Australia has benefited from asset recycling and lessons learnt in the process
Plenary Group’s Paul Crowe talked about utilisation of PPPs
BNZ Head of Infrastructure Chris Milcz discussed recent trends in funding infrastructure mega projects
the occasion with world-leading innovations in frugal delivery of projects that give real value for money – and that the New Zealand public knows it, appreciates it and is invested in accepting the world-best practices that are finding their way into the country. For copies of further presentations go to www.nzcid.org.nz/ Category?Action=View&Category_ id=366
An evolution in consenting projects of national significance” aptly reflected the pioneering work the Further North Alliance has done with the Puhoi-Warkworth national road – notably rail – infrastructure delivery in New Zealand and funding, with the funding of future infrastructure the topic of a heated discussion for guest speakers and parliamentarian panellists • presentations around Auckland as Super City and Christchurch as a model for rebuilding projects prompted lively debate during networking breaks. A particularly striking presentation on the consenting process for the Puhoi to Warkworth national road was delivered by Chapmann Tripp partner Paula Brosnahan, Jacobs Business Development Leader and Further North Alliance representative Tony Innes, and Patrick Kelly, AWHC Project Director for NZTA,
new zealand council for infrastructure development Advancing best practice in the development of world class infrastructure for the benefit of all New Zealanders. www.nzcid.org.nz
October/November • 2014
Its title “An evolution in consenting projects of national significance” aptly reflected the pioneering work the Alliance has done in this respect. The keynote speech saw Infrastructure Partnerships in Australia Chief Executive Officer Brendan Lyon reflect on Australia’s infrastructure market, in particular the way the country has benefited from asset recycling and lessons learnt in the process. One of his key messages was that Australia’s next reform frontier is how to get more for less in services. This message reflected the mood of the conference, namely that infrastructure demand is high and money is tight but that the local sector has proved it can rise to
Lessons learnt, solutions readied for future infrastructure planning and delivery A leading international expert outlined his vision of a successful infrastructure implemenation programme at the recent New Zealand Council for Infrastructure Development’ Building Nations symposium Infrastructure can best be delivered by an independent body that
Good infrastructure is fundamental to a civilised way of life and economic growth says Sir John Armitt
Olympic Park: political cohesion in the UK resulted in the timely and successful delivery of major new infrastructure to host the 2012 Summer Olympics
determines the long-term strategic infrastructure needs of a country, plans for it in collaboration with all the roleplayers involved, and then ensures these plans become measurable objectives as Acts of Parliament. That’s the view of UK-based civil engineer Sir John Armitt, who was commissioned to undertake an independent review of long-term infrastructure planning in the UK following the successful delivery of the infrastructure for the 2012 Summer Olympics in London in October 2012. His mandate was to consider whether a new institutional structure can be established that will better enable the long-term decision-making necessary for strategic infrastructure planning; and how political consensus can be forged around these decisions. Sir John explains how he arrived at the recommendations in the recent Independent Armitt Review of Infrastructure report, which was compiled after detailed consultation with a range of individuals and organisations experienced in the promotion, funding, and delivery of UK infrastructure. “Infrastructure, described as the network of arteries that circulate water, power, and communications; move people and goods; and connects communities and countries, is about ensuring the foundations of the house,” the vicepresident international, Institution of Civil Engineers, London, and the Chairman of the 2012 Olympic Delivery Authority explains. Good infrastructure is fundamental to a civilised way of life and economic growth, he maintains. “Its provision can be disruptive and expensive, but properly maintained it serves generations, so it deserves to be well-planned and it deserves to be efficiently delivered.”
The key to politicians’ role in this is to give them the tools, then hold their feet to the fire and ensure decisions have been made and they will stick to those decisions, not stop or change them with every election Estimates are that global communities need some $57 trillion worth of infrastructure over the next 30 years, most of which will be provided by the state and be financed by state resources. “Politics will always therefore be central to its introduction, how it is planned, financed, and of course, how it is delivered.” Past predictive Sir John believes that studying the past, starting with the Victorian era,
graphically illustrates the ways in which politics can be leveraged to ensure necessary, timely and quality infrastructure delivery. He notes that it was a period of massive industrialisation and growth, with infrastructure delivered fundamentally by the private sector and the state’s role confined to ensuring land was made available and planning approved through Parliament. Rapid technological development saw the world change equally rapidly, and with no centrally guided infrastructure planning and development, many investors received poor returns on their investments. However, politics still managed to make its mark in this period, particularly in one notable instance: politicians in the Houses of Parliament had to contend with the smell of raw city sewage, which was simply dumped into the River Thames and wafted into their place of work. The result and solution was total political cohesion: they voted for the city to clean up the river and finance and build a sewage system – an excellent network still in use today. The period between the two world wars was one of neglect of infrastructure that had experienced great pressure: between the wars and right after WWII infrastructure delivery was seen as a political tool to stimulate economic growth and employment during a period of recession. The nationalisation implemented in the UK after the Second World War saw all aspects of the economy and infrastructure ownership and delivery come under the control of the state, a period that culminated in the disruption and major strikes of the 1970s. The following decade heralded a fundamental shift in government
style, with comprehensive privatisation of state assets and infrastructure delivery leaving only highways and flood defences the only infrastructure provided by, and under the control of, the state today. Political presence “Infrastructure being in the private sector doesn’t make it simple, it does not actually remove the politics,” Sir John says, because most large monopolies have to be regulated in order to ensure fair pricing levels and future planning and proofing. Even so, he observes, the system has many shortcomings. The world is changing rapidly again and in particular faces the challenges of population growth, technology bursts and climate change, against which backdrop the UK has been struggling for the past 30 years with vital issues such as increasing airport capacity and energy provision. Politics are central to resolve these and other infrastructure demands to the satisfaction of the public, and similar to the Victorian era, albeit for different reasons, the net result is a lack of long-term policy security for private investors. “They don’t know which way to turn, they don’t want to discover again they invested in something and a few years down the track they have to stop their investment and start all over again because the government changed the ground rules,” Sir John explains. Then came 2012, when politicians realised in the cohesion that grew out of national pride and a desire to be a worthy Olympic host that they had hit upon a highly successful infrastructure delivery model; the upshot of which was the Armitt Review. “I have to confess our success was to a large degree supported and assisted by our friends in
Australia, and what they, and we, learnt from the way they delivered infrastructure for the Olympics hosted there in 2000,” Sir John admits. The Armitt Review makes five core recommendations aimed at achieving cross-party political consensus, public support, and investor certainty for long-term decisions on the UK’s energy, transport, water, waste, flood defences, and telecommunications needs. The five core recommendations are: • the establishment of a new independent National Infrastructure Commission to look 25-30 years ahead at the evidence for the UK’s future needs across all significant national infrastructure and set clear priorities • a National Infrastructure Assessment that would be carried out every 10 years and include extensive research and consultations with the public, local government, NGOs, regulators and other interested groups or individuals • a Parliamentary vote on the evidence-based infrastructure priorities that would have to take place within six months of their publication to avoid delays • within 12 months of this vote government departments would have to form detailed 10-year sector plans of how they will deliver and fund work towards these priorities • Parliament would then vote on these 10-year plans and the permanent National Infrastructure Commission would scrutinise the ability of these plans to meet the 25-30 year national priorities and report to Parliament annually on their delivery “The only way to change the plan would be to go through the entire process again,” Sir John adds. “The fundamental objective of the recommendations is to try and take the political flip- flop out of the infrastructure issue.” Investor incentive This will ensure there is a plan that investors can take forward and deliver on. “Strong political leadership is always going to be fundamental to infrastructure delivery, but that leadership has to be given the right bias,” Sir John believes. The recommendations also address the key aspects of discussing infrastructure, namely the why, what, and how. “The ‘why’ is time-consuming and often neglected, but we must start with analysing it, not by rushing into construction,” Sir John explains. “We stand a better chance of completing the right work within budget if we contain ourselves at the very beginning and really think through the key issues.” He says we all live in a world
October/November • 2014
where we have to communicate and consult, so that is what the assessment committee will have to do. “We have to communicate and consult with the public, understand their needs, engage in discussion, help them understand what their needs are, and what the consequence are of doing something or nothing so they in fact then take on board these decisions – because at the end of the day the public pays,” Sir John believes. “We also need more communication, consulting, and collaboration among clients, designers and contractors.” For too long, he adds, there has been “separation between the various disciplines”, and this clearly doesn’t work. “We would never dream of designing and building a car that way, yet we still do it in infrastructure,” Sir John observes. “The key to politicians’ role in this is to give them the tools, then hold their feet to the fire and ensure decisions have been made and they will stick to those decisions, not stop or change them with every election,” Sir John concludes.
Best practice infrastructure a matter of SMART thinking A 10-point plan released earlier this year to improve Australia’s infrastructure planning and delivery could hold valuable lessons for New Zealand, says Jenny Pretorius The SMART Infrastructure Facility of the University of Wollongong developed the improvement plan out of concern about the lack of strategy involved in government planning and delivery of infrastructure, SMART Infrastructure Facility Chief Executive Garry Bowditch told the New Zealand Council for Infrastructure Development symposium. He says resources burn in Australia puts immense stress on the economy, increases the price of labour and decreases access to equipment and raw material, while the associated income surge attracts strong urban population growth which in turn puts pressure on infrastructure. If infrastructure projects do not fit into a strategic plan, a resources boom plus an increased spend on infrastructure can result in serious cost escalations and poor value for money. “The government needs to consider infrastructure programmes
Customer service outcomes should inform the capital and operational expenditure of a project,” says SMART Infrastructure Facility Chief Executive Garry Bowditch
in a way that does not exacerbate the cost pressures,” Mr Bowditch says. “The impact of poor timing of decisions and basic housekeeping – red and green tape, escalating asset standards without proper consideration of the costs and benefits of those asset standards and planning around land use in general – represent about AUS$ 5 billion per annum in lost opportunities of efficiency gains.” In addition, new infrastructure will only deliver growth to the Australian economy and deliver prosperity if the country identifies good projects with strong returns that can stand on their own, and then use the infrastructure optimally. Although Western populations, and in particular the fast-growing Australian population, experience infrastructure shortfalls, there is no excuse for wastage and poor value for money. “So while many countries are performing excellently in some areas of infrastructure delivery, none seem to be achieving best practices across the board,” Mr Bowditch reflects. Proposition one of the 10-point plan therefore states good infrastructure starts with good planning, which must involve short-, medium-, and long-term horizons and enjoy political consensus. A concern is that political consensus is often only achieved through the delivery of a new mega project at the cost of optimising and decongesting existing infrastructure: “That’s the stuff where you just need to improve it, you don’t necessarily get to cut a ribbon,” he comments. Deep distortion “This is a deep distortion existing across much of the Western world
and is robbing the country of strong infrastructure projects that can extract much higher productivity from the existing infrastructure network.” Proposition two states the biggest impediment to a better infrastructure future is lack of transparency. “The reasoning behind infrastructure decisions, data, and priorities must be well-argued and clear to the public, and politicians must be accountable and give clear reasons why they chose one project over another.” Transparency is also about proper institutional structures, proper corporate memory, clear cost-benefit analyses, conducting cost-benefit reviews before and after the project, and ensuring there is a focused effort to define the problems to be addressed. “We need to ask why we are doing this, then communicate and consult with the role players, particularly the public, and access their opinions, innovation, and creativity,” he explains. “These are valuable to ascertain whether there may in fact be a way of fixing the problem that does not necessarily include a
Building new infrastructure should be an option of last resort - listed companies know exactly what their assets are and respond to future challenges in a way that is rich in option value and in extracting as much as they can from existing assets
greenfield project.” Proposition three states transport planning and land use planning are the same thing, although Mr Bowditch notes that government after government continues to treat land-use planning and transport planning as highly siloed. “Without efficient land-use planning and efficient use of land, you trigger an unholy cycle of more infrastructure investment, pipes, wires, and rails that are unnecessary if the land is used efficiently,” he says. “When attempting to increase the productivity of a nation, the land-use planning, the price of that land and the future price signals of that land will be absolutely critical in defining the urban form and ensuring proper and sound investment opportunities that are set around the transport plan.” Proposition four states building new infrastructure should be an option of last resort: listed companies know exactly what their assets are and respond to future challenges in a way that is rich in option value and in extracting as much as they can from existing assets, including the full use of technology to improve the functioning of existing assets. “Why should infrastructure be an exception?” Mr Bowditch asks. “We need a government that is prepared to say we will not go through another greenfield project until we have
extracted every possible cent of value from the infrastructure we have.” He notes good work in this respect is already being done in the UK with roads, in the US with rail and freight and “generally” with air traffic control, but there is clearly still plenty of room for improvement in Australia. Project paramount The fifth proposition states good project selection is paramount; funding is secondary. “The discussion around funding is one that is largely misplaced, because what is most important to those who fund it is the quality of the project that is put forward,” Mr Bowditch maintains. If there’s a good programme selection process, the funding remains secondary.” The converse is also true – proposition six states a bad project never becomes a good project because of its funding. Proposition seven states a better infrastructure future will come from better data and a culture of learning and reflection: Mr Bowditch remains disconcerted by the persistent lack of institutional memory in the infrastructure sector. He says each completed project offers valuable lessons of unsuccessful behaviour that should be avoided and successful behaviours and innovations that should be tracked and repeated in the
execution of future projects. “We need institutional memory capacity to nourish this learning, similar to what, for instance, the manufacturing industry does,” Mr Bowditch insists. “It is also an important scaffold for politicians to rely on, one they can use to reassure the public that government institutions are actively learning from past mistakes and locking in the advantages of innovation and learning.” Proposition eight states infrastructure is about the services it delivers to customers, not just physical design. “Customer service outcomes should inform the capital and operational expenditure of a project,” he maintains. “There should be a value proposition…this goes right to the heart of any part of a properly functioning Western economy, yet in the case of infrastructure we still largely work on a take-it or leave-it basis, particularly in the transport sector.” Proposition nine states all infrastructure needs an owner and whole-of-life balance sheet responsibilities. “In Australia the roads sector is the great laggard in infrastructure – there’s very poor accountability of the balance sheet,” Mr Bowditch admits. “We need to find a way to manage it in much the same way utilities are managed now as a result of the
competition reforms of 1995.” Proposition 10 states the obvious: if the problem is well-understood the solution has a better chance of working. Mr Bowditch adds SMART would like to see Infrastructure Australia continue to grow in independence from the Commonwealth, including the opportunity to offer infrastructure owners incentives to improve good governance processes and institutional memory capacity. Consider ex-post, cost-benefit analysis reviews, he urges. “We need to better understand the way previous cost-benefit analyses have performed in project selection – were they right or wrong?” he asks. “We don’t have the proper mechanisms to make the best of this expensive tool. “Infrastructure Australia would do well to focus energy in that direction.” Mr Bowditch concluded by announcing that the University of Wollongong through SMART, the University of Auckland, and the University College of London established a joint venture in late August to exchange knowledge, students, and lecturers to “… ensure our countries each has the very best experience in infrastructure best practices knowledge.” i
Environmental building products New Zealanders will be able to find out more about the environmental impact of various building products following the launch of a new programme that provides Environmental Product Declarations
he Australasian Environmental Product Declaration (EPD) Programme has been set up so that construction product manufacturers in New Zealand and Australia can develop EPD, providing credible, science-based information about the environmental performance of their products. BRANZ building sustainability manager Lynda Amitrano says the construction sector had led the development of EPDs internationally. “We are very pleased EPDs have been introduced to Australasia,” Ms Amitrano says. “This international, scientific, unbiased analysis will help businesses, designers, and consumers fully understand the environmental impact of their products.” The process of developing an EPD can help companies identify opportunities for cost savings and improved environmental performance, whilst publication of an EPD provides transparency and a commitment to continuous improvement to their customers. “EPDs present facts about
a product’s environmental performance based on scientific principles and independent verification.” BRANZ research identified EPDs in 2011 as a useful tool to help manufacturers communicate with their customers about the environmental aspects of their products and its launch in New Zealand has been supported by the BRANZ Building Research Levy. The Building Research Levy has co-funded the development of the Australasian EPD Programme accepted in Australia and New Zealand. The Australasian EPD Programme is a not-for-profit strategic joint venture between the Life Cycle Association of New
Zealand and the Australian Life Cycle Assessment Society . Allied Concrete is the first New Zealand company to publish an EPD, a concept now gaining credits in green building rating systems around the world including LEED, BREEAM and most recently Green Star in Australia. “For us, the EPD format was a transparent and smart way to present our product’s environmental profile,” Allied Concrete Technical Manager Chris Munn says. “As a result of developing our EPD, we can encourage our customers to select different concretes based on environmental considerations as well as structural performance.”
He adds that Allied Concrete also has “a much better understanding “of how its business operates. “We can now drive efficiency improvements across the business and assess the environmental impact of business decisions,” Mr Munn explains. “Our expectation is that the New Zealand Green Building Council will recognise EPDs here in the near future.” The Australasian EPD Programme is aligned with the International EPD System, one of the world’s longest- established and largest EPD programme operators. “This alignment provides greater global recognition and compatibility, as well as being a cost effective way for Australasian EPD producers to leverage existing information and experience,” says Australasian EPD Programme Director Bryan King. i
L A S T W O R D > > Communications
Tait digital voice and data system for Australia’s largest rail network Queensland Rail has selected Tait Communications for the digital migration of its radio communications network
Australia’s largest rail network will rely on a Tait Communications digital mobile radio system
he Tait DMR (digital mobile radio) system will provide important communications infrastructure for Queensland Rail’s day-to-day operations in and around Brisbane city, and is core to the safe and efficient operation of the wider Queensland Rail network that is the largest rail network in Australia. Tait is upgrading the radio commu-
Tait’s emphasis on a comprehensive implementation and support plan were key factors in securing the contract says AsiaPacific General Manager Brett Smythe
nications system across 50 sites to provide a DMR Tier 3 trunked voice and data solution and will provide
a significant amount of services for the design and deployment of the system. “We understand the importance placed on the reliable operation of this technology, and we’re dedicated to achieving better business outcomes for all of our clients through a strong partnership model,” says Tait Asia-Pacific General Manager Brett Smythe. He says Tait’s emphasis on a comprehensive implementation and support plan, incorporating deployment, migration, risk management, change management and project management were all key factors in securing the contract. “This isn’t just a technology project, it’s a people project,” says Mr Smythe, “so we place just as much importance on supporting the employees who use the system as we do on the hardware, software and applications that create the system.”
Thanks to the open standards technology on which all Tait products are based, the Tait digital terminals are compatible with Queensland Rail’s existing analogue system, its existing Zetron consoles and location services data. “This means the Tait DMR Tier 3 solution for Queensland Rail is ‘future flexible’, cost efficient, reutilizing existing assets and reducing the complexity of implementing the new system,” says Mr Smythe. “The Tait DMR tier 3 system is the ‘no compromise’ digital trunked radio solution; engineered specifically to keep employees performing optimally no matter what the conditions.” Tait is well-known for supplying critical communications solutions to public safety agencies, utilities and transportation agencies including Brisbane Airport Corporation, Air France, London Bus, TriMet, and British Columbia Rail. i
Tait acquires Brazilian partner to strengthen Latin American presence Global critical communications company Tait Communications has made a significant step in strengthening its presence and growth prospects in Latin America through the acquisition of long-time partner SGM Telecomunicacoes
ao Paolo-based SGM, which has been a partner of Tait Communications for over 20 years, will become the regional hub for the company’s Latin American operations, joining Houston, Brisbane and Vienna as major overseas offices. “Strengthening Tait in Brazil by acquiring the expertise and market know-how of SGM moves us closer to our clients and gives us the strategic advantage of a local presence in the burgeoning Brazilian market,” says Tait Americas President Victor Agnellini. He says the company is now “better positioned” to strengthen relationships with current clients and partners and embrace a wider range of future opportunities across Latin America. “We expect to expand revenue opportunities in Latin America not only via our
October/November • 2014
Sao Paulo Military Police is a long-term client of Tait and SGM products and platforms, but through our services and solutions offerings too, as well as those offered by our global partner initiatives.” The two companies have previously won numerous analogue
and digital communications contracts across Brazil’s 27 states and throughout Latin America, including Sao Paulo Military and Civil Police, Minas Gerais Military Police, Polícia Militar do Paraná (Military Police of the State of Paraná), Companhia Paranaense de Energia and Petrobras. “Brazil is one of the world’s growth economies and the opportunities for us are significant,” says Tait Communications acting chief executive David Wade. “SGM has been a long-time partner of ours in Brazil for more than two decades, so their expertise and reputation will enhance the Tait brand significantly.” He adds that it’s a “key step in our global growth” that capitalises on the outstanding market development work the Tait team in Latin America has already achieved and is a key part of the company’s global growth strategy.
“We’re increasing our focus on building complementary solutions, growing our professional services business and driving a greater return on our significant investment in digital technologies,” Mr Wade says. “That means delivering innovative communication solutions that help our clients save lives, protect people and property.” Originally established as a spin-off from Philips Electronics in the late 1990s and also a reseller for a number of other critical communications vendors’ technologies, SGM will be rebranded as Tait Communications. “SGM has existing clients, contracts, cash flows and people, which means we are acquiring relationships, capability, revenue and earnings to add to our overall financial performance,” Mr Wade notes. “Strategically, this makes far more sense than a green field start-up.” i
We provide engineering, project management, and maintenance services to asset owners and major infrastructure projects in Power, Water, Gas and Transport. To each and every engagement, we bring our experience and technical expertise along with our commitment to safety, quality and the environment.
Pride Performance Value