macrohard

All candidate causes

Under-funded renewal of long-lived public assets

Hospitals, schools, water networks and roads are renewed more slowly than they wear out, whether they are funded by central Budgets or by council rates. The shortfall builds up as a hidden deficit in asset condition and surfaces years later as degraded service. Weak asset management and low investment efficiency reduce what each dollar renews.

Open 1 of 4 support, 0 against; partly supported needs one more.

Timing Mixed Does the cause move before the symptom?
Under-renewal is on record before the symptoms: hospital capital stock fell 42% relative to GDP from 1975 to 2022, nearly all by 2000; council renewals have been below depreciation every year since 2012/13. But the stock was near-flat from 2000 until elective waits worsened in 2016/17: a slow build-up, not a trigger.Hospital stock/GDP: 0.06738 (1975), 0.04064 (2000), 0.03932 (2022); (0.06738 - 0.03932) / 0.06738 = 41.6%. Council renewals as a share of depreciation: 74% (2019/20), 76% (2022/23), 84% (2023/24).Te Waihanga, Nation Building long-term infrastructure investment databook (2025); Auditor-General, Insights into local government 2020, Part 2 (2021); Auditor-General, Insights into local government: 2024, Part 2 (2025); Health New Zealand, Health targets: 5 and 10 years of results, Q4 2025/26 (2026)
Distribution Mixed Is the symptom worse where the cause is stronger?
Where renewal rose, service improved; where it stayed low, service degraded. Water renewals roughly doubled against depreciation as protozoal compliance rose from 76% to 90%; hospital investment stayed near 0.2% of GDP and elective waits worsened most. Each contrast has a rival cause (new regulator; workforce).Water supply renewals 48% to 91% and wastewater 44% to 94% of depreciation, 2015/16 to 2023/24. Protozoal barrier 76% (2023) to 90% (2025). Hospital investment: 0.46% of GDP (1960-77), 0.20% (1990-99), 0.24% (2010-19 and 2020-22).Auditor-General, Insights into local government: 2024, Part 2 (2025); Taumata Arowai, Drinking Water Regulation Report 2025; Te Waihanga, Nation Building long-term infrastructure investment databook (2025); Treasury, He Puna Hao Pātiki: Investment Statement 2025; Health New Zealand, Health targets: 5 and 10 years of results, Q4 2025/26 (2026)
Peers Mixed Do comparable countries with the same cause show the same symptom?
Too little capital overall is contradicted: NZ's public investment share of GDP was the OECD's highest in 2010-19 (IMF). Public capital stock/GDP fell in 13 of 22 OECD countries, 1980-2000; NZ's fall was the fourth largest, from the highest base. No peer renewal ratio was found.Net government capital stock/GDP, 1980 to 2000, 1995 prices: NZ 110.3 to 76.6 = -30.6%; UK -36.9%; Ireland -53.6%; Australia -25.7%. NZ counts public sector; AU and UK general government.Te Waihanga, From plans to projects: public investment management self-assessment (2025); Te Waihanga, Investment gap or efficiency gap? (2021); Irish Water, Business Plan: Transforming Water Services in Ireland to 2021 (2015); EPA Ireland, Drinking Water Report 2014; IMF Staff Papers, Kamps, New Estimates of Government Net Capital Stocks for 22 OECD Countries (2006), Tables 1 and 2
Mechanism Supports Does an official review document the pathway?
Official reviews record it as occurring. Treasury (2025): low asset-management maturity 'continues to drive under investment in maintenance activity and a backlog'. Te Waihanga: central assets 'wearing out faster than they are being renewed'. Productivity Commission (2019): some councils are 'unable to comply'.Treasury, Cabinet paper EXP-25-SUB-0095: Quarterly Investment Report, June 2025; Te Waihanga, National Infrastructure Plan, s4 Looking after what we've got; Treasury, He Puna Hao Pātiki: Investment Statement 2025; Productivity Commission, Local government funding and financing: final report (2019); Auditor-General, Insights into local government: 2024, Part 2 (2025)

What would settle it: Renewal-to-depreciation ratios by sector over time, set against each sector's service series, holding workforce and demand constant. Councils report the ratio through the Auditor-General; central government agencies are not required to report it.

tested · the causes as data

Cite Under-funded renewal of long-lived public assets

macrohard.nz, “Under-funded renewal of long-lived public assets”, The Hollowing Index, tested 2026-09-28. https://macrohard.nz/causes/asset-renewal