Elections, Infrastructure and the Cost of Uncertainty

As New Zealand moves towards another election cycle, there will naturally be plenty of debate about roads, hospitals, water, energy and where infrastructure money should be spent.

But from a construction and engineering perspective, there is another question worth asking:

How much does political uncertainty around infrastructure affect the industry’s confidence to invest?

The scale of what sits ahead of New Zealand is significant.

According to the latest Te Waihanga National Infrastructure Pipeline update, there are around $290 billion worth of infrastructure initiatives currently captured across various stages of planning and delivery.

Of that:

The longer-term numbers are even bigger.

New Zealand currently invests just over $20 billion per year in infrastructure. Te Waihanga estimates that will need to grow to more than $40 billion annually by the 2050s, in 2025 dollars.

Over the next 30 years, infrastructure investment is expected to need to average around 6% of GDP each year².

MBIE also forecasts total construction activity recovering from around $55.7 billion in 2025 to $65.4 billion by 2030, with infrastructure activity reaching approximately $19.6 billion annually by 2030⁶.

So there appears to be plenty of work ahead.

But having projects on a spreadsheet and having confidence to invest against them are two different things.

A contractor looking at buying another excavator, opening another workshop, employing another project manager or taking on apprentices isn’t necessarily looking at the next 12 months.

They’re looking several years ahead.

Engineering businesses face the same decision when considering another fitter, fabricator, electrician or engineer.

And skilled workers are making their own decisions about whether the opportunities in New Zealand justify staying here.

This is where infrastructure and election cycles start crossing over.

Te Waihanga has highlighted that contractors need credible future funding commitments before they can confidently invest in equipment and workforce capability. Swings in public infrastructure spending can make that investment more difficult and potentially affect delivery costs and capacity³.

There is also an important difference between the headline pipeline and committed work.

Of the approximately $290 billion pipeline, around $192.8 billion has committed funding or a confirmed funding source, highlighting the different between headline pipeline numbers and work with greater funding certainty.

That distinction matters.

Political debate around infrastructure is necessary.

Different governments will have different priorities around transport, water, energy, health and how infrastructure should be funded.

But perhaps the bigger industry conversation is how New Zealand can maintain those democratic choices while providing enough long-term visibility for businesses to plan and invest⁴.

Because our infrastructure requirements don’t reset every three years.

Water networks still need renewing.

Roads still need maintaining.

Hospitals still need upgrading.

Electricity demand still needs to be met.

And a significant proportion of future spending will be required simply to maintain and replace what we already have. Te Waihanga estimates replacing and rebuilding existing assets could eventually consume as much as 60 cents of every infrastructure investment dollar⁵.

For infrastructure businesses, uncertainty doesn’t just affect project scheduling. It influences workforce decisions as well. The timing of permanent hires, contractor engagement, apprenticeship programmes and capability investment often depends on how confident businesses feel about future workload.

Magnetic’s take

From our position working with businesses and people across engineering, construction and civil, we’re less interested in which side of politics an infrastructure announcement comes from and more interested in what it means for the businesses expected to deliver it.

A healthy sector needs visibility.

When businesses have confidence in their forward workload, they can make better decisions around permanent hiring, contractors, apprentices, training and investment in their existing teams.

When that visibility isn’t there, flexibility becomes increasingly important.

That might mean maintaining a strong permanent core while using temporary or contract labour around project peaks, shutdowns and maintenance programmes. For other businesses, it could mean securing key permanent leadership and technical capability before projects move into delivery.

There isn’t one workforce model that suits every contractor or project.

Our role at Magnetic is to understand what’s coming down the pipeline and help clients build a workforce strategy around it – whether that’s permanent recruitment, contractors, temporary trades or broader workforce capability when workloads increase.

Regardless of what happens politically, the infrastructure challenge remains.

If you’re looking at your pipeline for 2027 and beyond and starting to think about what people you’ll need to deliver it, we’re always happy to have a conversation.

Sometimes the best time to talk about workforce isn’t when you need ten people on Monday.

It’s six months before you need them.