Source: New Zealand Government
Introduction
Good morning. It’s a great privilege to be here at the 2024 Infrastructure Symposium.
I was extremely happy when the Prime Minister asked me to be his Minister for Infrastructure. It is one of the great barriers holding the New Zealand economy back from achieving its potential.
Building high quality, resilient infrastructure is a key part of our economic plan.
And it is intimately connected to my other great passion, housing. Somehow in a country the size of the UK we’ve managed to create a housing market so dysfunctional that after-inflation house prices in New Zealand have increased by more than any other OECD country over the past 30 years.
I want to be clear with you: we will be an infrastructure government.
I don’t need to go through all the statistics with a learned audience like this: we have an infrastructure deficit. It’s been built up over many years. It will take time to turn it around. You know all this, and you’ve heard it all before.
What I want to do today is run you through what we’re doing about it.
Infrastructure Pipeline
The first thing we are doing is ensuring our infrastructure investment delivers value for money.
We campaigned on cancelling Auckland Light Rail, Let’s Get Wellington Moving and Lake Onslow. Nobody should be surprised when we proceeded to do just that after the election.
The reality is these were phantom projects, sucking up enormous time, resources and expertise.
It’s a tragedy that after 2017 we turned off the tap of sensible projects as part of a considered pipeline of work, in preference for a random combination of alleged shovel-ready projects mixed with massive mega-projects that were unlikely to ever see a spade in the ground.
Anyway I won’t relitigate history, but just make the point to you that our aim is to build a coherent pipeline of infrastructure projects that will enhance productivity and improve our standard of living.
We’ve made a good start already.
Earlier in the year my colleague Simeon Brown released the government’s draft Government Policy Statement on Transport, which contains 15 new Roads of National Significance across the country.
Simeon is also making good progress delivering on our Local Water Done Well policy for water infrastructure, and you’ll no doubt have seen and digested the good news from the weekend about a financially sustainable model for Watercare in Auckland.
You will see a strong focus on infrastructure in the Budget coming up on 30 May.
The second thing I’d like to highlight is the development a 30-year National Infrastructure Plan.
The Prime Minister is particularly excited about this idea, which we campaigned on and we are now going to deliver.
The purpose of a 30-year Plan is to demonstrate a pipeline of major projects that makes New Zealand a place worth doing business.
The 30-year Plan will include priority problems, projects, and non-built solutions – using a spatial approach where possible.
The 30-year plan has three main parts.
First, the National Infrastructure Pipeline, to provide a national view of projects which are planned and being planned. This will look at the next ten years.
This covers projects in all sectors and builds upon the existing pipeline from the Infrastructure Commission.
Second, an assessment of Infrastructure Priorities: This will be a structured independent review of infrastructure proposals and problems. This is also intended to include initiatives that avoid the need for investment. This will provide a look at what is coming up over the next 5-15 years.
This will provide a menu of quality-assured proposals that governments can choose from. This will provide greater confidence that infrastructure projects will deliver as expected.
One of the things I constantly hear from people is that infrastructure should be depoliticised. I think that is just a pipe dream, excuse the pun, but what I think we can do is try and make sensible investment decisions relatively immune to the vagaries of political change.
I see the Infrastructure Priority List as an important part of this. If the list of priority projects is credible, if it is done independently of politicians, if it is done with robust cost-benefit and economic analysis, and focuses on a real need – then people will have faith in the list.
Most importantly, politicians will have faith in the list and funding will flow accordingly.
And third, an Infrastructure Needs Assessment: This will be an analysis of long term infrastructure needs at a sector and/or regional level. This will provide a look at what is coming up over the next 5-30 years.
This will outline the 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.
It will also help identify the policy, process, and practice changes we need to deliver New Zealand’s infrastructure well.
Third let me talk about the National Infrastructure Agency
We campaigned on establishing a new National Infrastructure Agency.
As you know, the public sector infrastructure landscape is a crowded one and there are overlapping roles and functions, with quite a bit of duplication.
I commissioned a piece of work from Steven Joyce and an expert team to fully understand what the Crown wants and needs from a high performing infrastructure system, who is doing what in the system currently, and what might need to change.
Our overriding goal is to improve government procurement and delivery. We want the Crown to become a commercially competent infrastructure procurer that delivers value for money. That’s not the case at the moment.
Steven and his team have presented their report to me and we’re now digesting it and thinking about next steps.
Fourth, let me talk about the consenting framework.
Our consenting framework for infrastructure is totally broken.
It takes too much time and costs too much to get on with building things in New Zealand. And we are all the poorer because of it.
We’re going to fix this problem.
The first way is through Fast Track, which is getting a bit of airtime at the moment. We’re open to sensible changes to the Bill, but the core of it isn’t changing: a one-stop-shop, so all consents and permits are considered together, and a fast-track – so consents speed up. The clue is in the name.
The second way is through standards for infrastructure via national direction in the RMA. Standards reduce compliance and red tape and standardise processes and procedures, reducing cost. Simon Court is doing some work on this area, which builds – to be fair – on the work of the previous government under the ill-fated Natural and Built Environment Act.
The right long-term answer is wholesale replacement of the Resource Management Act with a new regime, based on property rights. We’ve started the work on that and I’ll have more to say in due course.
The fifth thing I’d like to briefly mention is about new tools for infrastructure funding.
We’re serious when we talk about using new tools for funding and financing infrastructure.
“New” is a bit of a misnomer, because things like tolls, value capture, road pricing etc have been around for decades in other countries – we just don’t use them in New Zealand.
Well, that is about to change.
The Coalition government is very open to opportunities for the private sector to invest its capital to deliver high quality infrastructure for New Zealanders.
These projects leveraging private finance obviously need to stack up, based on cost benefit analysis and public good.
To pave the way for more projects that leverage private finance, officials have been instructed to modernise the Crown’s infrastructure governance, procurement, funding and financing, and asset management policies and frameworks.
Through my Housing and Resource Management portfolios I’m also intending to enhance the Infrastructure Funding and Financing Act, explore new funding and financing tools that support councils, and create incentives for councils to facilitate the construction of more housing.
I have also directed officials to refresh the NZ PPP model so this is ready to go once we have our new structure and people on board. Part of the next steps will be to identify projects already in development that could be an early tranche to pilot and test this model so we can iterate and get better as we go.
Conclusion
I could take all day but I’ll leave it there for now and take questions. Let me say in closing that New Zealand’s infrastructure challenge goes well beyond Government – success means leadership and change from individuals and teams across the infrastructure system – in other words, from many of you here in this room and beyond.
We need to bring all our ingenuity to solve the problems we face, share ideas and change the game here. It will be hard. Let’s not pretend otherwise. But it’s work worth doing. New Zealand’s future depends on it.
