By David Jenkins and Steve Mooney
Rugby, netball, soccer, cricket, athletics, golf—Kiwis can’t agree on which sport we are best at in the world. However, everyone in New Zealand can agree that each of our towns and cities has a critical infrastructure deficit. Even Hanmer Springs ran into water difficulties this week.
Water infrastructure is in crisis, hospitals are underfunded, and transport projects such as Auckland’s second harbour crossing and Wellington “get moving” have been mired in controversy, scrapped, and then started again . . .
Decades of underinvestment by governments of all complexions and at all levels have resulted in a deficit that the Infrastructure Commission—Te Waihanga estimates at NZ$210 billion over the next 30 years. That’s over $40,000 for each investment required by every person alive in Aotearoa.
The Commission recently asked the think tank, the New Zealand Institute of Economic Research, to examine the hospital sector specifically. Much of the public infrastructure built in the 1950s and 1970s is reaching the end of its design life.
Building a Healthy Future report found that NZ$115 billion, four times the current spending, must be spent on hospitals over the next thirty years.
There is a positive way to look at the current pipeline of total infrastructure assets, and that is the NZ$92 billion in projects set to break ground in the next three to five years, but that still leaves a worrying gap.
Consulting group Sense Partners believes the pipeline needs to grow by as much as $140 billion over the next 30 years.
The October 2023 change of Government should be seen as a groundbreaking opportunity to examine the New Zealand infrastructure sector and take some decisive action, particularly around funding models.
Public funding has limits. Directing more public money to infrastructure would require either a radical change in priorities, which would see areas of Government underfunded, or a significant increase in taxation, which would be burdensome and politically unpopular.
There is international interest in what reforming the sector might look like. Australia’s Plenary Group, for example, which has worked on major Australian hospital and transport projects such as the Gold Coast Light Rail, has put its hand up for public-private partnership initiatives in New Zealand.
The National-ACT coalition agreement is committed to exploring the idea of building and leaseback agreements in the hospital sector, following a model that has been successful in some provinces of Canada.
Infrastructure New Zealand got it right in its open letter to the incoming Government last year. It pointed out that the Government should draw on funding beyond its balance sheet to drive efficiency, productivity, and value for money.
They are strong proponents of the PPP model as part of the solution mix but also advocate learning from past domestic experience while leveraging international lessons.
The letter also makes other valid and non-financial recommendations, such as elevating the more comprehensive economic and social benefits and considering them earlier in the business case.
They recommend faster consent for renewable energy infrastructure and a “system reboot” for Local Government and its relationship with the central Government.
These are all issues that need to be debated and then acted upon with some energy, hopefully in a spirit of bipartisanship.
There is little doubt that New Zealand faces an infrastructure crisis, but from crisis comes opportunity.
The moment to grasp that opportunity has arrived in New Zealand, and IPWEA, with its global partnerships, is ready to contribute intelligently to the debate and support New Zealanders to get the essential infrastructure they expect and need.
