In March 2010 we reported on the first of three instalments of the New Zealand Government's 20 year national infrastructure plan (Plan). The initial version of the Plan represented the government's first comprehensive step in delivering on its plan to make significant investment into New Zealand's infrastructure since establishing the National Infrastructure Unit (NIU) in 2009 and pumping an initial NZ$7.5b into a handful of immediate infrastructure priorities.
Earlier this year, the NIU released its second iteration of the Plan (with the third to follow in 2014). The Plan indicates the government has tagged NZ$17.5b for investment in infrastructure over the next four years although does not provide any new information on specifically how that funding will be allocated. Instead, the Plan outlines a 20 year strategic framework for infrastructure, the perceived challenges to implementation, some shorter term priorities and a three year action plan leading up to the final instalment of the Plan in 2014.
The principal reason given for the lack of detail in the Plan was that the precise allocation of funding is still a work in progress meaning many investment decisions are yet to be made. However, the government also stated the aim of the Plan was to shift focus away from specific infrastructure projects towards a strategic framework that government and the private sector can work towards over the longer term. Some media commentary has viewed this direction as a logical precursor to the anticipated partial sell down of some state infrastructure assets (should the government win a second term in the election this November) in that it provides would-be investors with some certainty in respect of allocation of resources, decision making and the regulatory environment.
With that aim in mind, the Plan conveys the vision that, by 2030, New Zealand's infrastructure will be resilient, coordinated and contribute to the country's economic growth and quality of life. The Plan then assesses the state of five key infrastructure sectors (transport, telecommunications, energy, water and social) against six guiding principles intended to provide a platform for infrastructure development and promote more co-ordinated decision making for infrastructure investment.
While the Plan's overall message (somewhat surprisingly) is that New Zealand's infrastructure is performing reasonably well, it identifies a number of areas where it is perceived that improved performance would stimulate economic growth. Although opportunities for improvement were indentified across a number of the sectors assessed, the water sector was singled out as performing least successfully at present and in need of the closest attention in terms of governance, management, funding and regulation. Conversely, transport was highlighted as performing the most successfully out of the sectors reviewed and which may possibly be due in part to significant recent investment after years of neglect.
The two major earthquakes in Canterbury over the last 12 months are noted as having highlighted some useful lessons for ensuring resilience in infrastructure assets as well as requiring significant additional infrastructure spending to rebuild the region. Auckland is also singled out as facing some significant infrastructure challenges as a result of its position as New Zealand's fastest growing metropolitan area by a considerable margin.
A further useful aspect of the Plan is that it identifies goals for each of the five sectors assessed and the work programmes being undertaken to achieve those goals. These in turn feed into the broad steps the government has committed to undertaking in the three year action plan mentioned above.
In terms of priorities over the next three years, the Plan identifies the following:
- Rebuilding Canterbury following the earthquakes
- Providing a comprehensive approach to infrastructure investment in Auckland
- Improving the management of government owned social infrastructure assets such as prisons, hospitals and schools
- Investing in transport infrastructure that supports growth in exports
- Improving government's ability to monitor performance across all infrastructure sectors.
Although the Plan lacks any meaningful detail in terms of how the various goals and priorities will be achieved, it does take an important step in signalling the government's commitment to key infrastructure sectors and providing a road map against which the specified goals can be managed. To that extent, the Plan has been received as providing some comfort for local and foreign private sector investment and will be a useful scorecard against which progress can be marked when the third instalment of the Plan is released in 2014.