What do our infrastructure services really cost?

Tāmaki Makaurau – A new report published by the New Zealand Infrastructure Commission Te Waihanga finds New Zealand households spend about 16 percent of their after-tax income on infrastructure services such as drinking water, transport, broadband and home heating.

Aotearoa households’ spending on infrastructure services is comparable to Australian households. The share of household’s after-tax income spent on infrastructure services declined from 19 percent to 16 percent between 2006-07 and 2018-19. Infrastructure spending rose slightly over this time, but incomes rose faster.

The research looked at how much households spend on four types of infrastructure services – land transport (roading and public transport), energy (electricity, gas, and heating fuels), water (drinking, storm, and waste), and telecommunications (mobile and fixed-line).

This was followed by electricity (15 percent), telecommunications (10 percent), water (drinking, storm, and waste) (7 percent), and public transport (6 percent).

The research includes some of the first results of a year-long project which will help Kiwis’ understanding of how infrastructure is servicing different groups in New Zealand.

The project will inform the Commission’s advice on how equity should be considered in deciding what and where infrastructure is provided – and, importantly, who pays for it.

Other key findings:

• Average household infrastructure spending is highest in small regional centres and rural areas and in low-density metro areas, and lowest in medium and large regional centres and medium-density metro areas.
• On average, the lowest income households spend 37 percent of their after-tax income on infrastructure services, but there’s a lot of variation – one in six low-income households spend less than 10 percent of their income on infrastructure services.
• Relative to low-income households, high-income households spend more on mobile telecommunications (366 percent higher), heating fuels (233 percent higher), and both private and public transport (228 percent and 210 percent higher, respectively). They also spend more on water (drinking, storm, and waste) (77 percent higher), electricity (90 percent higher), and fibre and copper telecommunications (125 percent higher).
• On average, working households spend around 17 percent of their after-tax income on infrastructure services, compared with 27 percent for non-working households. Higher incomes for working households more than offset higher infrastructure service costs for these households. Working households spend almost twice as much as non-working households on private transport. Similarly, infrastructure spending as a share of income is around 1 percentage point higher for households with children, relative to households without children.
• Non-working households with dependent children are disproportionately likely to report difficulty paying infrastructure bills. A total of 40 percent of these households reported having difficulty, compared with just 6 percent of non-working households without children. This compares with 12 percent of working households with dependent children and 5 percent of working households with no children.
• Patterns of household spending on transport vary significantly between countries, potentially reflecting different approaches to providing and using transport infrastructure. In the United States, low-income households spend a much larger share of their household budget on transport than high-income households.