Source: New Zealand Government
Opening
Good morning. It’s great to be here today for the release of the draft National Infrastructure Plan – or the NIP.
I’d like to thank Raveen Jaduram, Geoff Cooper, and the entire team at the Infrastructure Commission for hosting this Symposium and for their hard work on putting the NIP together.
I’d also like to welcome you all to Parliament.
Improving how we plan, fund, maintain and build our infrastructure is critical to lifting productivity, boosting economic growth, and increasing peoples’ living standards.
The government has made infrastructure a top priority.
So, I welcome today’s draft report by the independent Infrastructure Commission.
We need a Plan, and action
As Minister for Infrastructure, I hear regularly that – “what New Zealand needs is a long-term infrastructure plan that transcends political cycles”.
I agree – a plan will give the private sector more certainty so that they can invest in people and equipment. It will also help New Zealanders build consensus on what our future infrastructure system should look like.
But a plan is only as good as it’s execution. So, the NIP will only be successful if it is – at least in part – accepted and adopted across successive governments over the long term.
As I’m sure most of you know, this isn’t our first plan; we have been here before. New Zealand had infrastructure plans in 2010, 2011, and 2015.
Some recommendations in these older plans are identical to those put forward in this Plan – over a decade later.
I’m thinking of things like agencies completing 10-year capital plans and making better use of pricing tools.
What differentiates this Plan is that it has been developed independently by the Infrastructure Commission – separate from the Government of the day.
The NIP is not this Government’s Plan, it is New Zealand’s Plan.
That is why each political party represented in Parliament was offered a briefing on the NIP last year. And I would like to thank the opposition spokespeople for infrastructure for being here today.
Building greater consensus on infrastructure is, unfortunately, not as simple as different political parties getting in a room and convincing each other of the other’s view.
That’s not realistic. Instead, consensus will be enabled by strong system and institutions, robust investment frameworks, high-quality evidence of our infrastructure needs, and advocacy for projects and policies from a better-informed public.
That’s what this Plan is about – independent experts advising New Zealand on the current state of infrastructure, what we need in the future, and the projects and policy reforms that will bridge this gap in the most effective and value for money way.
People often say we need a bipartisan infrastructure pipeline, as if that will solve all problems.
We do have a robust infrastructure pipeline. The Commission has been running it for over five years, and it’s been progressively improved over that time.
The Pipeline includes over 8,000 initiatives underway and in planning from 114 contributing organisations. It represents over $200 billion in investment value – with over $110 billion of the Pipeline having a funding source confirmed.
I can’t claim to speak for all the parties in Parliament, but I suspect that almost all of the projects underway right now are supported by everyone.
It’s the high profile and high-cost disagreements that make the headlines. But it’s the low profile and often low-cost projects that actually make New Zealand.
A lot of people don’t know we have a pipeline. It’s actually really cool – you can go online and search projects by region, timeline, project status, project value, provider, procurement type, and much more.
The Commission is strengthening the Pipeline by aiming to cover all infrastructure providers. There are 14 laggard councils who aren’t contributing, and I’ll be writing to them to get them on board. Having visibility over everything that’s happening, and going to happen, is very important.
But I reckon we need to move away from the rhetoric of needing a bipartisan pipeline and instead build bipartisan consensus on the idea that governments of all flavours should use best-practice to plan, select, fund and finance, deliver, and look after infrastructure.
That’s not the case at the moment.
We need change
It is quite clear that our infrastructure system needs to change. It’s one of my biggest takeaways from our first 18 months in government. I’ve been shocked at the near systemic neglect of the underlying institutional settings and policy frameworks.
Contrary to many perceptions, New Zealand spends a lot on infrastructure.
We are in the top 10 per cent of the OECD for infrastructure investment over the last decade – but in the bottom 10 per cent when it comes to getting quality and “bang for buck” from our spending.
The cause of our problem is not isolated – it is spread across every stage of a project’s life, across different players in the system, and is perpetuated by decades of poor practice across successive governments.
Over the last few years, New Zealanders have seen and felt the consequences of poor practice including:
assets that are wearing out and failing,
project cost blowouts,
poor value for money investments, and
a growing infrastructure deficit.
If we keep doing things the way we are now, we won’t be able to deal with “business as usual”, let alone get a grip on the challenges we are facing like:
a significant backlog of maintenance and renewal activity,
population change,
natural hazards,
and global inflation.
To put this in perspective – over the next 30 years, every year, central government’s existing infrastructure assets is expected to wear out by $9.3 billion.
To keep up with this and other challenges, as the Commission says, we need to “lift our game”.
Taking action
Over the last 18 months I’ve been focused on six priorities as Infrastructure Minister:
Developing a 30-year National Infrastructure Plan,
Establishing National Infrastructure Funding and Financing Ltd (NIFFCo),
Improving infrastructure funding and financing
Improving the consenting framework
Improving education and health infrastructure, and
Strengthening asset management.
I didn’t pick these priorities randomly. They reflect findings and recommendations from the Infrastructure Commission’s Infrastructure Strategy, developed in 2022, and are also based on a big programme of work we undertook in opposition engaging with experts from here and overseas.
I am really pleased to see that many of the recommendations of the draft NIP reflect these priorities. This indicates that as a government we’re heading in the right direction.
I want to mention a few in particular as they pick up on a few themes coming through in the draft NIP.
Improving infrastructure funding and financing
Let’s start with improving infrastructure funding and financing.
Public infrastructure in New Zealand has historically been primarily funded by taxpayers or ratepayers.
But our reliance on this blunt approach is not serving us well and has led to perverse outcomes including congestion, run-down assets, and the unresponsive provision of enabling infrastructure – contributing to unaffordable housing.
Last year, we released a suite of new and improved frameworks and guidance including:
Treasury’s new Funding and Financing framework,
The Government’s refreshed PPP policy,
Strategic Leasing Guidance, and
Guideline for Market Led Proposals.
The purpose of these documents is to help the Government use its balance sheet more strategically, apply good commercial disciplines to investment, and be a more sophisticated client of infrastructure.
This year, I have focused on establishing new funding and financing tools. In February, I announced five specific changes to New Zealand’s funding and financing toolkit to make it easier for councils and central government to provide infrastructure to support urban growth.
I won’t cover these in detail today, but the key takeaway is that we are moving to a system and to tools where councils can fully recover the costs of housing growth, and where infrastructure providers can recover costs of significant and city-shaping projects.
I am happy to see the draft National Infrastructure Plan make recommendations that align with our Government’s direction on funding and financing – such as making better use of pricing, user charging, and beneficiary pays.
Improving the consenting framework
Secondly, our consenting environment.
As successive reports from the Commission have noted, our consenting system for infrastructure is broken.
It takes too long and costs way too much.
We are on track to replace the RMA with new legislation next year. Our new system will be effects based, embrace standardisation, and be far more permissive and enabling – while also protecting the environment.
We also aren’t willing to wait for a growth-enabling planning system, so in the meantime, last year we introduced the Fast Track Approvals Act. It’s underway now.
We’re consulting right now on a big programme of National Direction changes under the RMA, including developing a National Policy Statement on Infrastructure. It’s baffling that we haven’t had one.
We are also progressing our second RMA amendment Bill, which will pass into law in a matter of weeks.
This Bill is a precursor to full replacement of the RMA and will make it quicker and simpler to consent renewable energy and boost housing supply.
Strengthening asset management
Lastly, before we move onto the draft Plan – I want to talk about my strengthening asset management.
Asset management may not be the sexiest aspect of the infrastructure system – as it has to compete with new, big, and exciting projects – but everyone knows, if you don’t paint the weatherboards on your house, the wood will rot.
And billion-dollar infrastructure is fundamentally no different.
Last year, I was shocked and quite frankly embarrassed to hear that New Zealand ranks fourth to last in the OECD for asset management, and dead last for the metric on Accountability and Professionalism.
But this is not surprising when you look at the performance of our central government investment system.
Over half of all capital-intensive government agencies do not have robust, comprehensive asset registers or asset management plans in place. Maintenance spending is also regularly diverted to building new infrastructure, resulting in costly catch-up spending later.
Years of poor asset management has led to leaky hospitals and schools, mould in police stations and courthouses, service outages on commuter rail, and poor accommodation for Defence Force personnel and their families.
This is not good enough.
In May this year, Cabinet agreed to a comprehensive work programme that will improve asset management practice across central government.
The aim of this work is to provide safer, longer lasting and more reliable and resilient infrastructure services; and to achieve better value for money by making the most of what we have.
This work programme will take place across two phases and will be led by Treasury and the Infrastructure Commission.
Phase 1 is about giving agencies better tools to help them succeed. This includes detailed guidance that agencies will need to follow on asset management; long-term planning; and related performance, assurance, and accountability indicators
Phase 2 is about driving more fundamental changes to system settings and will actually be informed by the National Infrastructure Plan – particularly Chapters 4, Setting up Infrastructure for Success; and Chapter 5, Driving Excellence from the Core.
Draft National Infrastructure Plan
So, let’s talk about the National Infrastructure Plan.
I haven’t had a chance to read the document in full as it was released today – but three things instantly stood out to me:
The first is the Needs Analysis, or “Forward Guidance”,
The second is the Infrastructure Priorities Programme, which InfraCom has put in Chapter 6, and
The third is how we can change the Investment Management System to get better infrastructure outcomes.
Forward guidance
On the Forward Guidance, it was interesting to see how our investment mix will need to change to meet future demand.
While total spend on infrastructure will increase, the relative priority between sectors will change overtime.
This is due to long-term trends that boost demand for some infrastructure and reduce it for others. For example, an aging population will increase relative demand for healthcare and hospitals; and decrease relative demand for education services and schools.
The Commission suggests that over the next 30 years hospitals, social housing, and electricity and gas sectors should all experience a rising share of infrastructure investment.
I also found it helpful that the Commission’s Forward Guidance outlines a rough indication of how much we should expect to be spending by sector.
In my view, forward guidance would be significantly strengthened in future if all agencies had provided the Commission with 10-year capital investment plans and asset management plans. This way, the Commission could provide more detailed and specific guidance on what bundle of projects across all sectors governments should be prioritising.
Infrastructure Priorities Programme
Moving on to the Infrastructure Priorities Programme, or the IPP – which is a structured independent review of unfunded infrastructure proposals.
The IPP is just starting out and it will take some time to scale and provide a robust investment menu, but I am glad to see the Commission received 48 submissions for their first round of evaluations.
17 projects were positively endorsed, and three projects have been identified as being ‘investment ready’ – these are New Zealand Defence Forces’ Accommodation, Messing, and Dining Modernisation Project; Defence Forces’ Ohakea Base Project; and Hamilton City Council’s Ruakura Eastern Transport Corridor.
I encourage all government agencies to submit their significant projects and programmes to the IPP.
A positive independent review will strengthen your case for investment.
Improving the Investment Management System
Lastly, there are a number of recommendations in the draft Plan that aim to improve the Government’s investment system – which is made up of the rules and processes for how we plan, prioritise, fund and finance, delivered, and looked after investments – including infrastructure.
For our Government to boost productivity, reduce the cost of living, and lift peoples’ prosperity, we need to get better value for money from our new infrastructure and do a better job at looking after our existing assets.
So, I am open to hearing about stronger rules such as legislative requirements for central government agencies and entities to prepare and publish long-term asset management plan, asset registers, and investment plans.
I am also open to legislative requirements for performance reporting to keep central government infrastructure entities accountable – like we do for regulated utilities and local government, who both face much stronger regulations and information disclosures requirements compared to central government.
We need to stop holding others to a higher standard than we do ourselves.
Overall, I am pleased to see the draft Plan makes recommendations that align with existing Government priorities, such as:
making better use of user pricing to fund investment,
adopting spatial planning,
relaxing land-use restrictions,
transport system reform,
prioritising infrastructure through the resource management system, and
drastically improving asset management.
The Government will continue to advance these policy priorities, and we will benefit from insights from the Plan.
The final National Infrastructure Plan will be given to me by the end of 2025. As the Plan is an independent Strategy report, the Government will provide a formal response to the Plan in 2026.
As part of that response, I will be engaging with other political parties in Parliament, and I intend to ask the Business Committee to hold a special Parliamentary debate on the final Plan early next year.
Conclusion
I’d like to finish by thanking the Infrastructure Commission for its hard work in delivering this draft National Infrastructure Plan.
I encourage everyone including agencies, local government, opposition parties, the private sector, the public to have their say on the draft Plan through the consultation process – and I look forward to receiving the final Plan by the end of this year.
ENDS
MIL OSI New Zealand News –
