Stuff: Reviving a modern Ministry of Works necessary to cope with modern infrastructure demands

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It was, according to some, an outfit of “mere guessers and gamblers”; to others, an organisation “widely respected for its technical expertise”. The Ministry of Works, which from 1870 to 1988 oversaw the roads, railways and power stations that underpinned this country’s prosperity, was always divisive.

Now, in the wake of Cyclone Gabrielle, a proposal to revive it is once more sparking debate. New Zealand’s crumbling public buildings need $210bn of investment, the Infrastructure Commission estimates. Hospitals have sewage leaking down the walls; tens of thousands of state houses are required. To adapt to climate change, post-Gabrielle, the country needs to repair electricity substations and bridges, and build back greener with EV charging points and wind-power plants.

Labour has doubled the previous government’s infrastructure spending. But money alone won’t do it. Our public schemes frequently run late and over budget, suffer quality defects, and cost more than they would overseas. Just look at Transmission Gully.

One response would be to revive the Ministry of Works, which – until it was privatised under David Lange – was an infrastructure titan. Its teams of architects, engineers and other experts scrutinised project plans, designed buildings, oversaw private contractors – and often did the work themselves. Their legacy ranged from the Roxburgh hydro dam to Wellington’s Central Police Station.

All this became terribly unfashionable in the pro-market 1980s, when it was held that government should just “get out of the way” and give the private sector a free hand. But in a thought-provoking 2021 paper, researchers Max Harris and Jacqueline Paul argue for the (re)creation of a Ministry of Green Works. Their call has since been taken up the Council of Trade Unions, and is being heard more loudly in Gabrielle’s wake.

The need for some such agency is, I think, undeniable. The current debate over consultants has revealed how hopelessly, cravenly reliant modern government is on the Deloittes and Chapman Tripps of this world. The state has been hollowed out in recent decades, losing expertise, wisdom and savvy. One of the worst examples came in Kaipara some years back, where, following the grotesque failure of a wastewater project, it became clear the local council was so short-staffed it couldn’t even manage its contracts with private providers – let alone build anything itself.

Central government suffers, too. I spent years as an infrastructure reporter in London, and it became evident to me that British public servants, often trying to procure the one and only large infrastructure deal of their lifetime, were getting done over, time and again, by the sharp-eyed private contractors who did this stuff all day long.

What New Zealand needs, at a minimum, is a ministry of super-procurers: a team of infrastructure experts who have decades of experience behind them and can drive a tough deal with contractors. We should also restore the position of Government Architect and employ more engineers to ensure our public works meet high standards. One of the biggest failures of 1980s market-fundamentalism, after all, is that it ignored imbalances of knowledge. The state must retain some, rather than let it all be dispersed amongst private providers.

Fortunately, Labour knows this. In a little-noticed move late last year, it began repurposing Ōtākaro, the Christchurch rebuild agency, as a super-procurer that will help other departments deliver big projects.

What’s less clear is whether, as Harris and Paul propose, a new Ministry of Green Works should build things itself, employing legions of its own plumbers, electricians and other tradies. The argument is this would save having to pay private profit margins, and help keep a closer eye on quality.

Economic theory suggests, though, that competition and contracting-out works if the state can properly oversee what the private provider does. This is partly why governments outsource stationery, where it’s easy to check quality, but not, in general, prisons, where the evidence suggests it’s very hard to ensure contractors aren’t cutting corners.

The original Ministry of Works never resolved this tension, sometimes buildings things itself and sometimes tendering jobs. Today, the colossal deficiencies of Transmission Gully – the delays, the poor quality road surface, the endless disputes – suggest private contracting can end in debacle. But what, absent competition, would ensure a state construction agency was more efficient?

Sadly, there seems to be little direct evidence of how well the Ministry of Works performed. Rosslyn Noonan’s otherwise excellent history of the organisation, By Design, doesn’t explain how much ministry projects cost per square metre, nor how high their design standards were, compared to equivalent private-sector projects.

So I’d need to see stronger evidence before I embraced the idea of an all-singing, all-dancing Ministry of Green Works. But its advocates are broadly correct. It would be an important move in the ongoing drive to rebuild what is sometimes called state capacity: the government’s ability to provide the public goods on which we all rely.