Infrastructure Minister Chris Bishop wants to have a National Infrastructure Agency and a 30-year pipeline of projects up and running by 2025.
In a speech to the Infrastructure Funding & Financing Conference, the senior minister said New Zealand’s $100 billion infrastructure deficit was a major drag on economic performance.
“This deficit has not come about by accident. It is the product of decades of poor practice across successive governments,” he said.
The New Zealand Infrastructure Commission, an autonomous Crown entity, has been told to develop a 30-year National Infrastructure Plan by the end of 2025.
It will include a “pipeline” of infrastructure projects planned in the next 10 years, a broader set of “priorities” which could be selected in the next five to 15 years, and a high level “needs assessment” for the next 30 years.
“This will outline the scale of New Zealand’s future investment needs – and what we can afford – as our population grows and changes, our assets age and our incomes rise,” he said.
The 30-year plan will be broken down by city and region, while partnerships between central and local governments will help to provide long-term funding for projects. The NZ Infrastructure Commission already has a pipeline in place.
Bishop said the Coalition Government wanted to use various funding models, including road tolls, congestion charges, levies, windfall taxes on land value, and private partnerships.
A National Infrastructure Agency will be established to oversee this plan and is also expected to be operational by 2025, but Bishop was still unsure how it would fit into the sector.
“The public sector infrastructure landscape is a crowded one and there are overlapping roles and functions, with quite a bit of duplication,” he said.
The Treasury has been asked to look at how best to build a “high performing infrastructure system” with help from the Infrastructure Commission and an Expert Advisory Panel.
This panel will be chaired by former National Party minister Steven Joyce and include Fiona Mules, Ross Pennington, Sarah Sinclair and Sean Sweeney.
Fix procurement
While the exact role of the agency is still up in the air, Bishop said its overriding goal was to improve government procurement and delivery.
“I want the Crown to become a commercially competent infrastructure procurer that delivers value for money”.
The Coalition Government hopes to strike deals with private companies to not just build infrastructure but manage it in the long-term in exchange for a steady stream of revenue.
These are often called performance-based contracts and they allow public money to pay for the asset slowly over its lifetime without incurring debt up front — kind of like Afterpay. It also incentivises the private company to maintain and operate the piece of infrastructure with commercial discipline.
Bishop said he had formed an Infrastructure and Investment Ministers Group—with Nicola Willis, Simeon Brown, Paul Goldsmith, Shane Jones, and Simon Court—to oversee a cross-government work programme on infrastructure.
This group will “really get into the weeds” of infrastructure investments and pay close attention to various agencies’ capital expenditure decisions.
“Frankly if Ministers were doing a bit more of this in the last six years we wouldn’t have ended up with disasters like light rail, the Auckland harbour cycle bridge and IREX,” he said.
Speaking in Interest.co.nz’s Of Interest Podcast in February, Geoff Cooper, General Manager of Strategy at the NZ Infrastructure Commission, suggested NZ should be working towards a 100-year planning horizon when it comes to infrastructure, and viewing planning as “an exercise in dynamism and inquisition” rather than a “bureaucratic exercise.”
The $100 billion infrastructure deficit figure comes from a report by consultants Sense Partners commissioned by the NZ Infrastructure Commission.