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Insights 11: 5 April 2024
Annual Report: Reflecting on 2023's achievements
Newsroom: Oliver Hartwich on missing the beef for the trees
Herald: Nick Clark on Speeding up approvals sensibly

A new approach to funding school property?
Dr Michael Johnston | Senior Fellow |
Education Minister Erica Stanford has announced a review of the management of school property by the Ministry of Education. The review will be led by Murray McCully, Minister of Foreign affairs in the Key/English government. 

It has been reported that the Minister is considering public-private partnerships to build schools. In fact, though, all school builds are effectively public-private partnerships. The Ministry always contracts private construction firms to build schools. The real issue is the nature of the contracts.  

The business-as-usual approach is for the Ministry to pay for builds up front. But an alternative, used by the Key government to build eleven schools, gives Government more certainty over the cost of school builds over their lifespan. 

Under those contracts, investors met the up-front costs of building, as well as maintaining the schools for 25-30 years. The Government paid those investors in instalments over an agreed period.  

That approach brings two advantages to the state. First, the risk of builds going over-budget is borne by the contractors, not taxpayers. Second, contractors are liable for building defects through the maintenance agreements. There is an advantage for Principals and Boards too: They don’t have to manage cleaning, gardening or maintenance.  

This kind of contract has been criticised on the grounds that the deferred payment arrangements potentially lock the Government into ongoing payments for underused schools. But that criticism doesn’t really make sense.  

If a school’s roll falls so low that it becomes unviable to keep it open, the government is left with a property asset it no longer needs. That is true irrespective of the whether the contract with the developer required upfront payment, or deferred payments over time.  

In either case, the solution is to sell or lease the school. And here, another Government policy might help. Under National’s coalition agreement with ACT, charter schools are making a comeback.  

One of the attractive features of charter schools is that they stand to improve choice in education. In that vein, the charter school approach might especially suit groups wanting to set up special character education. That category includes religious schools, Kura Kaupapa, and schools offering alterative curricula like Montessori, Steiner and Reggio Emilia.  

Finding premises could be a major obstacle for establishing new charter schools, especially for organisations that lack capital. Leasing a surplus Government-owned school from the Ministry, especially one with a maintenance agreement in place, might be a very attractive option. 

China’s Plane Message to New Zealand
Dr James Kierstead | Research Fellow |
It was a picture worth a thousand words. Four or five stooped, scared-looking figures on an aeroplane, black hoods over their heads. On each side, for rows and rows behind and in front of them, uniformed Chinese police officers. 

The accompanying video footage, obtained by 60 Minutes, was even more concerning. Dozens of armed police forced their way into apartments, rounded up and hooded suspects, and marched them onto planes.  

This would have been bad enough had it been taking place in China. 

But this happened in Fiji, an independent state some 9,000 km away from China’s south coast. 

Worse, as the Australian National University’s Graeme Smith said, the officers are shown ‘behaving as though they are in China.’ 

Around 80 suspects were taken into custody by the Chinese officers, allegedly for cyber-crimes. But China has been known to imprison bloggers. It leads the world in the number of journalists currently behind bars. 

The images should act as a further wake-up call about Chinese incursions into the Pacific.
In 2018, the Australian press reported that China had requested permission to build military bases in Vanuatu and Papua New Guinea. In 2019, the Solomon Islands signed a security agreement with China, prompting fears that China could seek to build a base there.  

New Zealand has long tried to woo China, becoming the first Western country to support China’s accession to the World Trade Organisation (in 1997) and to sign a free-trade agreement with China (2008). 

In the last few years, New Zealand has changed its stance. It now looks very unlikely that we will ever join the Belt and Road Initiative. 

The recent images from Fiji should also end any remaining complacency when it comes to China’s intentions in the Pacific.  

New Zealand is still the go-to ally for many smaller Pacific nations. We directly administer Tokelau and are in free association with the Cook Islands and Niue, providing funding and security and extending citizenship and other rights to the islanders.  

Auckland has the largest Polynesian population of any city in the world. Rugby and religion provide further ties. 

But there is no space for complacency. If New Zealand fails to act as a reliable partner in the Pacific, the Chinese Communist Party will be only too happy to fill that gap. And fill more planes with police officers.  

Bridge to the Future
Matthew Birchall | Senior Fellow |
The cancellation of KiwiRail’s $3 billion upgrade of the decrepit fleet of Cook Strait ferries provides an opportunity to finally build what New Zealand really needs: the Cook Strait Bridge.
This 27-kilometre monument to Kiwi ingenuity would show the world that we’re serious about infrastructure – and provide a handy escape hatch for those fleeing Wellington.
As New Zealand’s first Bridge of National Significance, the Cook Strait Bridge would boast a four-lane, grade separated highway, clip-on light rail and a dedicated walking and cycling pathway. Discussions are already under way to turn it into one of New Zealand’s Great Walks.
Supported by hundreds of structures plunging over 200 meters into the deep blue sea, the project would not only bridge physical gaps but also serve as a symbolic leap into the future – where even traffic jams might feel like a scenic drive through Middle-earth.
By investing $25 billion in just one bridge, we can help close New Zealand’s $210 billion infrastructure deficit. And just imagine if we were able to repeat this ten times. Our so-called deficit would be goneburger!
Now, you might be tempted to raise concerns about trivial matters like cost and feasibility. However, let me remind you – we are a nation of builders, where the spirit of can-do economics reigns supreme. Just look at our recent track record of completing megaprojects on time and under budget.
In any case, the funding and financing of the Cook Strait Bridge basically takes care of itself. We’d obviously turn this bad boy into a public-private partnership, slap on a $2 toll and ram it through the new fast-track legislation. Plus, if we borrow from the playbook of the last iteration of the Roads of National Significance, we could recover costs by neglecting routine maintenance elsewhere.
And then there are the tourism opportunities. Frankly, I’ve become a little tired of New Zealand’s 100% Pure sales pitch. But 100% Progress? Now that has a nice ring to it. I can already picture international tourists flocking to see steel and concrete soaring above the waves.
It would be more than just a structural marvel. Travellers would be greeted by traditional carvings and Kiwiana in a celebration of New Zealand's rich cultural heritage.
The time has come for New Zealand to embrace the Cook Strait Bridge – because who needs a ferry when you can build a bridge to the future.

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