Source: New Zealand Government
The Government has released new guidelines for market-led proposals to clarify how market participants can contribute innovative ideas for solving New Zealand’s infrastructure problems, Infrastructure Minister Chris Bishop and Parliamentary Under-Secretary Simon Court say.
A market-led approach is where a private sector player wishes to deal directly with Government with a proposal, where the Government has not requested the proposal in the first place.
New Zealand has never experienced a successful market-led proposal, whereas there are numerous examples across international jurisdictions.
“There is no government monopoly on good ideas, so it’s imperative we have a clear framework for assessing ideas and engagement from the private sector,” Mr Bishop says.
Mr Court says that a New Zealand framework for market-led proposals has been lacking.
“It has not been clear where responsibilities for proposals have sat within government, which has led to proposals being subject to agency hot potato and opportunities slipping through our fingers.
“In 2018, the New Zealand Super Fund and Caisse de dépôt et placement du Québec (CPDQ) put forward a proposal to design, build, own and operate an Auckland Light Rail to transport 11,000 commuters per hour for an estimated $6 billion. Leaving aside the merits of the proposal, the way the Crown responded was a master class in bureaucratic inertia.”
“New Zealand needs to be positively embracing private sector ideas and solutions to our infrastructure deficit, not doing our best to turn them away because the Crown hasn’t got the systems and frameworks to engage commercially”, Mr Bishop says.
“When I visited Texas in 2022, Cintra presented a proposal they had shared with the then government for an upgrade to Auckland’s Northern Motorway, adding express lanes and an upgraded busway at no cost to the taxpayer in exchange for a 50-year concession. They couldn’t find a front-door agency to assess the proposal”, Mr Court says.
“The new guidelines have been developed by the Treasury and focus on three core, related considerations:
- Public interest – is the proposal consistent with government and community interests, including Government objectives, policies, strategies and priorities?
- Value for money – does the proposal represent a good and responsible use of the taxpayer dollar?
- Exclusivity – does the nature of the proposal justify entering exclusive negotiations with the proponent, bypassing a competitive tendering process?
“Competitive tension through an open tendering process remains an important way to achieve value for money, so the exclusivity threshold is central to this guidance.
“The new National Infrastructure Funding and Financing Ltd agency (NIFFCo), which launched yesterday, will be the “front-door” for market-led proposals and queries.
“These new guidelines are part of the government’s work programme to reform infrastructure funding and financing, and follows the release of a refreshed Public-Private Partnership framework last month.”
Notes to editors:
- Attached: the new Market-led proposals – Guidelines for submission and assessment
- Ownership of the market-led proposals policy has shifted to The Treasury from the Ministry of Business, Innovation and Employment (MBIE).
- MBIE remains the government procurement lead agency.
- The new national infrastructure agency – National Infrastructure Funding and Financing Ltd – will be the ‘front-door’ for market-led proposals and queries.
