Pausing, deferring and cancelling big infrastructure projects has quietly cost New Zealand an estimated 11.8 billion dollars over the past 25 years, according to a new report that challenges the long-held idea that stopping a project is a way to save money.
The report, called The Cost of Stopping, was released on Thursday and written by economist Shamubeel Eaqub. It was commissioned jointly by Civil Contractors New Zealand, Infrastructure New Zealand and Water New Zealand, three groups that represent the firms and councils that actually build and maintain the country’s roads, pipes, hospitals and rail.
Its central argument is blunt. When a government hits the brakes on a project to ease pressure on the books, the headline saving is rarely the real picture. The bill simply moves into the future, and it usually grows on the way.
“The surprising finding is how expensive pausing or cancelling projects really is,” Eaqub said. “Delays create inflation costs, productivity losses and defer public benefits that compound over time.”
The 11.8 billion dollar figure is built from three separate kinds of cost. The first is the inflation cost of deferral, the simple fact that materials, labour and finance all get dearer the longer a project waits. The second is a productivity penalty, the loss of skilled crews and specialist firms when work dries up and they leave the sector or move overseas. The third is the value of the benefits communities miss out on while they wait, the trips not saved, the homes not connected, the floods not held back.
New Zealanders have watched plenty of these stop-start decisions play out. The report points to Auckland light rail, Transmission Gully, the Interislander ferry replacements, Dunedin Hospital and Auckland’s Onehunga water treatment plant as examples of projects that have been paused, redesigned or scrapped as governments and priorities have changed.
To show how the damage spreads, the research modelled what happens when individual projects are halted. A major roading project worth more than 500 million dollars, paused for two years, was estimated to lose about 65 percent of its direct workforce, with around 18 million dollars then spent on recruiting and retraining a new crew to pick the job back up. A medium-sized council project worth 10 million dollars, paused for a single year, was estimated to waste about 5 million dollars, shed half its workers and require roughly 235,000 dollars in retraining costs to restart.
Those numbers point to a problem the construction sector has complained about for years. Skilled tradespeople, engineers and project managers do not sit idle waiting for a stalled job to restart. They move to the next employer, the next city or across the Tasman, and the knowledge they built up walks out the door with them.
Alan Pollard of Civil Contractors New Zealand said the harm reaches well beyond any single site. “Stop-start investment damages capability across the entire supply chain,” he said. When a pipeline of work becomes unpredictable, firms stop investing in machinery, training and apprentices because they cannot be sure the work will still be there next year.
Water New Zealand chief executive Gillian Blythe said households end up footing the difference. “Communities ultimately pay more through higher future costs, reduced resilience,” she said. That is a particular worry for the country’s ageing water network, where deferred maintenance has already been linked to burst mains, boil-water notices and the wider reform of how water services are funded.
Infrastructure New Zealand chief executive Nick Leggett said the point of the work was to give decision-makers a clearer view before they reach for the pause button. “Tools like this help decision-makers understand the real long-term costs of delays,” he said. Alongside the report, the groups have published an interactive calculator at costofstopping.nz that lets users estimate the cost of stopping a given project.
The report does not argue that every project should be locked in regardless of merit. Instead it calls for a more disciplined approach, including ring-fencing maintenance budgets so basic upkeep is not the first thing cut, committing to multi-year infrastructure pipelines with dedicated funding so firms can plan ahead, and requiring a formal cost assessment before any project is paused or cancelled so the true price of stopping is on the table from the start.
The findings land at an awkward moment for the Government, which has talked up infrastructure as central to lifting New Zealand’s stubbornly weak productivity while also working to rein in spending. Asked for a response, the office of Infrastructure Minister Chris Bishop said he had not yet had a chance to read it.
For an economy that has churned through repeated reviews, resets and cancellations over the past quarter century, the report’s message is simple. Every time a project is shelved to balance one year’s books, someone pays the difference later, usually with interest. You can read the full coverage at RNZ.
What do you think? Has New Zealand’s habit of stopping and restarting big projects cost us more than it has saved? Share your view in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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