Ferrari fixation

Gold-plated designs, bad management and inevitable cost blowouts continue to define our infrastructure spending.

- Danyl McLauchlan

In The Power Broker-the biography of Robert Moses, New York's brilliant and tyrannical city planner for 40 years - the Machiavellian public servant delivers a masterclass on how to manipulate elected politicians into funding his ruinously expensive megaprojects.

The most important thing was to estimate the initial budget at about a tenth of the real price. It would quickly be approved-such a great deal! - and he then used the sunk-cost fallacy to gradually ratchet up the funding.

Yes, the budget for this new park or expressway was a little higher than predicted, but did the mayor really want to tell the public he was abandoning this wonderful project and that the millions already invested would be written off? After all that lavish publicity promoting it? Didn't he have an election coming up?

By the time the project neared completion at 1000% of the initial estimate - the city was raising taxes, cancelling other vital builds and deeply in debt. Voters were furious - but that was a problem for the elected politicians, Moses replied coolly. He just built the roads. Shame about the mayor; Moses looked forward to working with his successor.

This tactic goes some way towards explaining the staggering cost estimate blowouts of the last Labour government's planned key infrastructure projects: Auckland Light Rail, Let's Get Wellington Moving, the Lake Onslow hydro project and replacing the Interislander ferries and building new terminals for which KiwiRail spent $424 million on design and project management fees without delivering anything.