Source: New Zealand Government
Thank you for the invitation to join you today.
As Parliamentary Under-Secretary to the Minister for Infrastructure, it is a real privilege to be here with so many of New Zealand’s facilities management professionals.
You’re not often in the headlines. But you are the people who keep our schools, hospitals, justice facilities, defence sites, and transport networks actually working and providing the services that New Zealanders rely on.
The infrastructure challenge: why value matters
New Zealand faces a wave of infrastructure challenges which mean that our needs are growing. Demographic change, energy security and efficiency, climate resilience, housing growth, and rising public expectations all combine with that fact that the infrastructure we built between the 1950s and 1990s is reaching the end of its design life. And alongside this, the cost of delivering infrastructure continues to rise faster than inflation.
That is why getting more value out of what we already own is essential. It is not a “nice to have”. Every dollar we can save by managing infrastructure well is a dollar to invest in preparing infrastructure for the future.
New Zealand’s poor value from infrastructure
But we don’t get good bang for buck when it comes to our infrastructure spend.
New Zealand spends a similar proportion of its GDP on infrastructure as other high-income countries, yet in terms of the value we get, we’re in the bottom 10% of the OECD.
International comparisons (OECD) and the Infrastructure Commission’s own assessments point out significant gaps in central government’s infrastructure investment and management systems.
The results are visible: leaking school roofs, justice facilities in poor condition, military housing with mould, hospitals with asbestos and sewage leaks.
We know that:
- last year, six of the seven capital-intensive agencies did not have full asset registers
- five lacked asset management plans to inform strategic and operational choices.
Without good asset registers, without robust asset management and investment plans, without good business cases and consistent reporting, we cannot accurately compare investments or make trade-offs between cost, risk, and service.
Ministers, Parliament, and the public deserve confidence that we are spending wisely. Right now, that confidence is not guaranteed.
This is why lifting our entire system’s performance is critical to the Crown’s financial sustainability and service delivery.
Central government must do better
Central government owns around 45% of New Zealand’s total infrastructure stock and is responsible for nearly half of all this country’s infrastructure spend.
But the truth is that central government often performs worse at asset management than the private sector or local government. This is not acceptable.
So how do we get better value? The answer starts with asset management.
Asset management also underpins resilience. Every time a cyclone, flood, or earthquake disrupts services, we are reminded of what is at stake. Christchurch, Kaikōura, Auckland Anniversary floods, Cyclone Gabrielle – all have shown us the enormous costs of underinvestment in resilience.
Good asset management allows us to understand such risks, quantify liabilities, and make informed trade-offs between strengthening, relocating, insuring, or accepting risk. It is the discipline that ensures long-lived assets will still be fit for purpose decades from now.
Government reforms: lifting sophistication and capability
This Government has launched a programme to lift asset management performance across central government. It has two phases.
Phase One: getting the basics right
Phase One of the Government’s programme is about some quick wins and is already underway. At its core, this phase is about providing clarity on what ‘good’ looks like and ensuring that agencies have the tools they need to get there.
One of the most important innovations in Phase One is the use of performance indicators to monitor and report on agencies’ asset management performance against plans. One of these indicators relates to natural hazard and climate change risk. We will be asking agencies to quantify this financial exposure so we at least know the natural hazard and climate change liabilities of our infrastructure, and with that knowledge can start to plan the appropriate mitigation.
Having this transparency will allow Ministers, Parliament, and the public to see the real trade-offs, and it will create the discipline we need for smarter, more resilient investment.
Other Phase One quick wins include:
- the benchmarking of our investment management system, using the International Monetary Fund’s Public Investment Management Assessment.
- building an asset management community of practice to share knowledge and lift capability.
Phase Two: system change for the long term
Phase Two, beginning next year, will take on the bigger structural reforms. This will be informed by the Infrastructure Commission’s National Infrastructure Plan, which will likely include recommendations to change government’s Investment Management System.
The draft National Infrastructure Plan includes recommendations for legislative requirements for agencies:
- to produce and publish long-term asset management and investment plans
- to publicly report on performance
- to have their investment plans independently assessed.
Other considerations could also include looking at incentives – for example, linking multiyear budget allocations to an agency’s asset management performance and considering how to enhance reporting and accountability requirements.
Ultimately, what gets implemented will be down to the Government’s response to the Plan.
Together, these changes will lift capability across the public sector and ensure central government becomes a more sophisticated client of infrastructure.
Government as a more sophisticated client: working together
This brings me to you – the facilities management professionals, contractors, and service providers and your work with government clients.
I believe that government must improve its performance to become a more able, capable client. That means it must outsource the work, not the thinking. It cannot abdicate responsibility for decisions to contractors. Agencies need the in-house expertise to challenge, guide, and set the right direction.
Working together, we can ensure we get the most value out of New Zealand’s infrastructure.
I know from our research that agencies don’t have complete asset data to drive their asset management planning, and this needs to change in a hurry. It’s up to our facilities management providers to collect asset information on a regular basis and ensure it’s available in a way that it can be used to improve how we manage our infrastructure into the future.
I also know that facilities management has a key role in ensuring maintenance and renewal strategies are fit for purposes. That they don’t result in either premature asset failure or in gold plating by over maintaining non-critical assets when it’s not necessary.
Facilities management contractors need to play a strong role in supporting their clients to make the best decisions, and they also need to be proactive in looking for cost efficiencies. For example, if you are a head contractor who’s managing multiple sub-contractors (such as electricians, builders, plumbers), your client expects you to get the best deal, to schedule their work efficiently and to be on the lookout for improvements. In my view, your role is to be doing this continuously.
I have heard of one example of a large utility where the maintenance contractor owned the maintenance management system and all the data in it. This makes no sense when we are up against it in terms of fiscal constraints. If we are paying for data with the public’s money, why should that not belong to the public, rather than a privately owned contractor? We need to work together to get better outcomes for New Zealand.
We also expect our contractors to be innovative. I am sure many of you are looking at the use of technology for inspections such as roof inspections carried out with drones, which avoids the need for expensive scaffolding.
For clients, you need to be across this critical aspect of your business. Every time a contractor touches one of your assets, it’s an opportunity to collect information about its condition. We don’t want to be replacing any equipment prematurely because we are making erroneous assumptions about age correlating to condition. Instead, it’s important to pay attention to get the best value from your contracts.
Additionally, if you’re a client who’s planning to deliver an infrastructure project, you should consider facilities management as an essential partner in the design process. Because operational costs can be a significant part of a whole-of-life return on investment, and knowing where you can ‘spend a little capex to save a lot of opex’ is important. This link between upfront investment and the ongoing management of our infrastructure is a weakness in government, often for a range of complex reasons. It is one of the reasons that this government has reinstated the public private partnership programme, which has a focus on whole of life management, cost and efficiencies.
In short: good facilities management and good client capability go hand in hand. One without the other will not deliver value.
Opening the door to private capital
Lastly, I want to talk about opening the door to private capital.
To co-ordinate and build capability in this space, we’ve established National Infrastructure Funding and Financing Ltd — or NIFFCo. Its role is to connect projects with the right financing partners, provide commercial expertise to government agencies, and administer central government infrastructure funds.
As mentioned, we’re also embracing public private partnerships. We’ve refreshed our PPP policy and have already committed to using it for major projects like the Northland Road of National Significance, and the next Christchurch Prison project, because PPPs are recognised internationally as an excellent way to procure whole of life outcomes for complex assets.
Closing reflections
Let me close with three messages.
First, New Zealand cannot simply build its way out of our infrastructure challenge. We must get more value out of what we already own.
Second, central government must lead by example. Our current asset management performance is not good enough, but we are determined to change it.
Third, success will depend on partnership. Agencies must lift their sophistication as clients, but contractors and facilities management providers must also step up – by being proactive, innovative, and transparent.
Together, we can shift from being ‘solution takers’ to being ‘solution makers’. We can create a system where every dollar invested in infrastructure delivers not just outputs, but enduring outcomes for New Zealanders.
If good asset management planning is the engine that ensures the right infrastructure is available in the right place and the right time, facilities management can be thought of as the wheels that will get us there. Both have to work together to maximise value.
MIL OSI
