NZ's infrastructure paradox: When spending more delivers less
Comment: A peculiar economic paradox appears to govern infrastructure development in modern New Zealand: the more we spend on infrastructure, the less we seem to get for it.
This uncomfortable reality was a key takeaway from last week's launch of the New Zealand Infrastructure Commission's Draft National Infrastructure Plan.
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2 days ago
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NZ's infrastructure paradox: When spending more delivers less
Comment: A peculiar economic paradox appears to govern infrastructure development in modern New Zealand: the more we spend on infrastructure, the less we seem to get for it. This uncomfortable reality was a key takeaway from last week's launch of the New Zealand Infrastructure Commission's Draft National Infrastructure Plan.
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4 days ago
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Have Your Say On 30-year Plan For NZ's Infrastructure Investment
The New Zealand Infrastructure Commission, Te Waihanga, has revealed its first look at how New Zealand needs to invest to get the roads, hospitals, schools and other infrastructure we will rely on to live and thrive over the next 30 years. The Commission's draft National Infrastructure Plan looks at the infrastructure New Zealand already has and how factors like an ageing population and climate change will drive future demands. It shows what we should be spending and makes recommendations for how we can get better results from this investment. Te Waihanga CE Geoff Cooper says that compared to other high-income countries, New Zealand already spends a greater percentage of GDP on infrastructure but is in the bottom 10 percent for the value we get from that spend. "To ensure New Zealanders are getting the infrastructure services they need, it's critical that we get smarter about how we invest. "A National Infrastructure Plan can help, showing where our infrastructure dollar will have the greatest impact in meeting New Zealand's future needs," says Cooper. We need to be ambitious "Some of our most essential infrastructure has already been built, but we're not always good at looking after it. Overall, we should be spending around 60 percent of our infrastructure investment on looking after what we've already got," says Cooper. The way we invest in new infrastructure will also need to change: We will need more investment in our hospitals. An ageing population means a greater need for hospitals. At the same time, we'll see a relative reduction in demand in the need for new schools and university buildings. We will need to invest more in electricity. To reach net zero by 2050 we need to increase electricity use by over 60 percent, boosting electricity-using industries and replacing fossil fuel use across the economy. We will see changes in how we invest in land transport. Investment in land transport - our roads, public transport, and railways - has increased over the past 20 years. In many parts of the sector, the pace of investment is expected to moderate as the population ages and the relative importance of income growth as a demand driver eases. The cost of responding to natural hazards will rise as we build more infrastructure to higher standards and bring forward renewals following a rising prevalence of extreme weather events. Improving our infrastructure planning "As we have heard from many in the sector, infrastructure policy and investment has experienced a lot of churn in recent electoral cycles. This perceived 'stop-start' approach can be costly for large projects and ongoing investment programmes. "The draft Plan provides recommendations on how we can get a more consistent and affordable approach and clear the way for delivering the infrastructure we need. It also makes recommendations on how we can better prioritise taking care of what we've got and optimise maintenance cycles so that we have more for new infrastructure. These changes can give the sector the certainty it needs to plan ahead, improve productivity, and create the jobs needed to maintain and deliver our infrastructure," Cooper says. Identifying projects that can make a difference The draft Plan shares the results of the first round of the Infrastructure Priorities Programme (IPP). The IPP takes proposals through an independent process to prove they offer bang for buck and meet a critical need. "While endorsed proposals aren't guaranteed funding, they give decision-makers confidence that these proposals have been independently assessed. "Proposals in the IPP were submitted to the Commission by central government, local government and the private sector. "We expect the list to grow as we receive submissions over future rounds," Cooper says. We want to hear from you "We want the National Infrastructure Plan to help build common ground about our areas of need and what is affordable for Kiwis, giving the Government of the day guidance for making decisions about infrastructure. "This is too important not to get right and too big a job to do alone. This is why we're seeking feedback now, while the Plan is still a draft. Tell us what you think and what we've missed." You can read more and have your say on our website ( this page will be updated from 10am Wednesday 25 June): Some key facts Over the last 20 years New Zealand's average spend on infrastructure is 5.8% of GDP. Crown investment as a share of GDP accounts for about 40% of this, or 2.5% of GDP. More recently, between 2010 and 2019, New Zealand spent more per capita than any other OECD country on infrastructure. The quality of our infrastructure lags, relative to what we spend on it. High-level comparisons suggest that New Zealand has among the lowest infrastructure spending 'bang for buck' in the OECD. We estimate that for most sectors, simply renewing and replacing what we have will consume the majority of our investment dollars over the next 30 years. For most sectors, this is 60% of infrastructure investment on average, but can be up to 80% in some sectors like education. After spending on renewals and replacements, we will have between 2% and 3% of GDP left over for new and improved infrastructure each year, or about $10 to $12 billion per year on average. For central government, this is between 0.5% and 1% of GDP. In dollar terms, this is about $3 to $4 billion per year on average across all types of infrastructure central government provides. The draft Plan is underpinned by a number of technical reports that have also been published on our website. The Commission has also released assessment information from round one of the Infrastructure Priorities Programme.
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4 days ago
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ACT Welcomes Draft Plan To End Infrastructure Whiplash
ACT is welcoming the release of the draft National Infrastructure Plan today by the New Zealand Infrastructure Commission. "This plan is a game-changing step toward getting the best-value infrastructure projects built, at the right price and on time," says ACT Leader David Seymour. "A fundamental problem with our approach to infrastructure planning has been a political cycle shorter than the project cycle. When decision-makers change, infrastructure priorities are jerked around by political whiplash, leading to costly stops and starts on major initiatives like Auckland rail projects, roading, schools, and hospitals. "The plan, once finalised, will deliver exactly what ACT has campaigned on: long-term infrastructure planning and prioritisation, smarter funding and financing, efficient delivery of critical projects, and better maintenance of assets. "Instead of going back to the drawing board every time there's a change of political guard, future governments will be able to draw from an established pipeline of planned and costed projects. "New Zealand ranks in the top 10% of OECD nations for infrastructure spending but the bottom 10% for outcomes. The infrastructure industry has been denied the certainty needed to bring in the investment, equipment, and talent they need to get the big stuff built efficiently. "This plan aligns with ACT's coalition commitment of regional deals between central and local government to ensure funding certainty. Meanwhile, Simon Court has advanced the refresh of the Public-Private Partnership policy and introduced a new strategic leasing policy so that once projects are identified the private sector can play its part in finance and delivery. "Simon's work to replace the Resource Management Act with a less bureaucratic system based on property rights also feeds in to make development faster and more affordable. Without ditching the RMA, projects will continue to be held up for years of arguments about effects that we already know how to manage well. "Crucially, the Infrastructure Minister is seeking cross-party engagement on the Plan. I hope all parties will engage in good faith, because cross-party agreement means certainty for industry, which in turn means more projects get built on time and New Zealand becomes a richer, more industrious, more prosperous place to live."
