Treasury warns government over overspending and poor planning on major infrastructure projects

Transmission Gully, which connects Wellington to the north, costs approximately $1.25 billion.
Photograph: Mark Coote

The government has received a stark warning from the Treasury as it struggles with how to plan, manage and pay for billions of dollars worth of investment. roads, hospitals, courthouses And water projects.

The Treasury told Infrastructure Minister Chris Bishop that many agencies lack the understanding of planning major infrastructure projects and this is “exacerbated by skills and talent gaps and poor asset planning and management”.

It was stated that planning new projects and building them is a concern, and existing assets are also a concern.

The Treasury also warned the government: “There are major gaps in our understanding of the state of the Kingdom’s assets, as well as a lack of comprehensive planning for the maintenance, renewal, replacement or disposal of assets.”

Conclusion? Increased risks and possible blockages.

Bishop warned his cabinet colleagues in September: “New indications from the Treasury suggest investment proposals are coming to us for approval before they are ready and there is insufficient evidence to support our decision-making.”

“This will ultimately slow our ability to deliver on our infrastructure and investment priorities.”

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Poor planning adds to the pressure: In the latest available report, agencies now report cost pressure on projects of $2.2 billion, or 11 percent of budget; On top of this pressure comes the NZTA and the Defense Force.

The warnings come as the Treasury introduces a raft of new controls in a bid to force institutions to step up their own game.

Bishop said, “This is a big deal, isn’t it?” he said. Morning Report on Friday.

“It sounds boring, but it’s very important.”

He said these massive projects had “a huge impact on the Crown books.”

The scale is huge: the Crown has 175 investments in the planning stages, with an estimated value of $79 billion, and 198 investments currently “in the pipeline” with approved budgets of $85 billion.

“Nearly half of the delivery portfolio is experiencing delays,” the Treasury said.

One of the new measures, called “chief executive attestation”, had already revealed Health New Zealand and the police were also behind the ruse.

Health fell short on 11 of 15 measures in August; This includes not giving enough information to the Treasury or Cabinet about upcoming major expenditures.

Reports say the fix could take four years; This is well beyond the current mandate of the government.

Bishop said he and Chancellor of the Exchequer Nicola Willis had told institutions to be serious. It was expected to announce more details about the infrastructure work later on Friday.

He underlined the risks by stating: Huge explosion in the construction of the $1.9 billion Dunedin HospitalConsultants were now paid to retrieve agreed-upon designs.

“There were red gradings all over New Dunedin. And people started charging.”

A. Transcript of official documents regarding Dunedin Hospital The main weakness, he said, was the “confusion” over oversight and management over the years.

Senior doctors told RNZ they now fear Dunedin will swallow up the funding they need for regional rebuilds such as Hawke’s Bay and Palmerston North hospitals.

Published proactively Documents show Bishop warned a Cabinet committee of deep-rooted problems with investment management In September.

“Treasury has begun to provide us with indicators to inform agency investment planning and delivery performance,” he said.

“They state that investment proposals come to us for approval before they are ready and that there is not enough evidence to support our decision-making process.”

This suggested that other major projects currently in the delivery phase were on shaky planning foundations.

Bishop is now largely dependent on the Treasury, which oversaw the previously flawed system.

In contrast, the Treasury relies on oversight through a blurred lens on both new projects and old assets; Reports note how agencies tend to underinvest and “sweat assets for as long as possible.”

“It is possible that there are unrealized fiscal pressures that are not reflected,” Bishop warned in his quarterly investment report.

The Treasury’s new checks include a quarterly investment report (the first of which was presented to Cabinet in June) and new ‘president statements’Where leaders verify whether their systems for planning, creation, reporting and asset management are up to date.

Police were also non-compliant in half the categories: the first assessment of asset management in 2023 rated it as “navigating basic/awareness levels.”

When it comes to asset management decisions, “the lack of reliable, underlying asset data and therefore the inability to gain insight impacts the ability to make informed decisions that equally consider risk, cost and performance”, police CE approval in question.

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