The National Party would create a National Infrastructure Agency and give it a mandate to pursue public-private partnerships and bypass some public input into key projects.
Chris Bishop, the party’s spokesperson for infrastructure, unveiled the plan at the Building Nations conference in Christchurch on Wednesday.
National would expand Crown Infrastructure Partners into a National Infrastructure Agency which would invite domestic and offshore investors to co-fund local projects.
It would also coordinate the various government infrastructure investment funds and act as a specialist delivery agency for complex projects.
Privately funded infrastructure projects would be allowed to impose tolls and other value-capture instruments to recover costs at a competitive rate.
National would also implement a permanent fast-track consenting process based on Labour’s pandemic recovery rules which allowed quick consents for “shovel ready projects”.
The opposition would establish a class of projects called Major Infrastructure Priorities which would get approved or declined within 12-months.
All these priorities would be wrapped up in a 30-year infrastructure pipeline and plan overseen by the Infrastructure Commission.
“Infrastructure is critical for economic growth and higher living standards. Where Labour has talked, National will deliver,” Bishop said in a press release.
Years of neglect
A policy document, shared with media, said New Zealand had a large historical infrastructure deficit.
“This deficit is directly responsible for severely unaffordable housing, costly congestion, and poor quality water infrastructure in many parts of the country”.
Fixing these problems could help to unleash economic growth, lift incomes, and build resilience.
The policy document blamed the deficit on a range of issues, including not allowing infrastructure to earn enough revenue to cover costs of maintenance and capital.
It did not provide any examples, but a number of private businesses which own infrastructure have regulatory limits on how much they are able to profit from consumers.
For example, fibre network company Chorus has a maximum revenue it is allowed to earn which is set in consultation with the Commerce Commission.
Similarly, Auckland Airport has some of its aeronautical prices monitored and was pushed to lower its target return to 6.8% in 2019 after being criticised by the Commission.
Publicly held infrastructure, such as water assets, could also be allowed to charge more for their services to help cover the cost of maintaining and upgrading their assets.
Water charges
National’s National Infrastructure Agency would be in charge of helping councils fund water infrastructure as part of “Local Water Done Well”, which is the opposition’s alternative to “Three Waters” — now called “Affordable Water Reform”.
This could involve borrowing money to help councils or a private investor build better water pipes and then recouping those costs in the form of higher water charges.
The new agency would be built out of the existing Crown Infrastructure Partners which was initially set up to manage the government’s $1.7 billion investment in a fibre internet network.
In 2017, it was tasked with looking for commercial models that could attract private investment in water and roading infrastructure that would enable more housing.
Under National, it would be put in charge of coordinating central government funding, connecting with investors, and improving the delivery of infrastructure.
Existing infrastructure-related funds, such as the Infrastructure Acceleration Fund, the Provincial Growth Fund, the Tourism Infrastructure Fund, and the NZ Upgrade Programme, would all be consolidated into the new agency.
This approach has been endorsed by the Infrastructure Commission which said in a report last year that fewer funds would result in better prioritisation and coordination.
“Reducing the number of funds would make it easier to apply consistent, rigorous and transparent criteria and ensure that project evaluation and selection is done by professional management and governance boards,” it said.
The agency would seek out co-investments with public and private investment vehicles such as the NZ Super Fund, the Accident Compensation Corporation, and KiwiSaver funds.
In 2018, the Super Fund pitched a proposal to build light rail to Auckland Airport in a joint-venture with a Canadian pension fund, but was blocked by NZ First.
National has since promised to scrap the entire light rail project, which is still in the detailed planning and consenting process.
Fast-track
The Infrastructure Commission has pointed to this process as one reason that projects are more expensive and time consuming in NZ than elsewhere.
National would attempt to make this process easier by making Labour’s pandemic response ‘fast-track’ into a permanent part of the system.
Under emergency rules in place till July, an expert panel was able to issue resource consents for infrastructure projects which would otherwise have had to go through the process.
The opposition party would establish a permanent Infrastructure Fast-Track Process for public transport, roads, rail, and water projects that are referred to the panel by the Minister for Infrastructure.
This process would require much less consultation with the public and allow governments to better push ahead with their priorities.
National would also introduce a new class of large, complex projects called ‘Major Infrastructure Priorities’, which would currently require public notification and public hearings under the RMA process.
The Minister for Infrastructure would be able to classify a project as a major priority and require a decision to be issued within one year.
This could include permissions for state highways, public transport infrastructure, power plants, mobile towers, gas pipelines, and even airports.
52 Comments
I've got just the company for you already in mind! Transurban. Failing that, I guess we should consider Macquarie Bank.
They've done fabulous jobs of holding users' hostage in the places they've won the contracts for.
https://www.transurban.com/about-us
But too late, they've realised what it all means "Labor vows to restructure toll roads to limit Transurban ‘windfall’"
https://www.afr.com/companies/infrastructure/labor-vows-to-restructure-…
Well Larry76, whilst Transmission Gully was a little late in getting its final tick-off because of legal liability wrangling regarding the build specs, at least it actually happened. It was steadfastly opposed by Helen Clark's government (thank you Kris Fafoi) despite repeated calls for an alternative route from all local authorities affected and judging by the do-nothing performance of the latest Labour government, it would never have happened during Adern's tenure.
Anyone tune in to Luxon on RNZ this morning? Wood is coming out of this share issue looking like a bit of a buffoon (I've always kind of felt that he's one of those politicians that genuinely doesn't have any 'real world' experience), but Luxon's take on the matter sounded like something any middle manager in a company could have come up with. Unimpressive.
Wonder if the NACT plan is just to hold the line and then roll him if they get in?
tackle New Zealand's infrastructure deficit
Easier said than done if your election campaign also includes tax cuts and cracking open migration floodgates even further.
To build large-scale infrastructure, NZ has to import everything from abroad - financial capital, materials, equipment, skills (design, engineering, trades, etc.). Let's begin with limiting the inflow of migrants to net producers of exports/infrastructure rather than net users until at least some of that gap is filled.
Since neither party is willing to do that, there is absolutely hope for NZ to have first-world infrastructure in the foreseeable future.
“Infrastructure is critical for economic growth and higher living standards. Where Labour has talked, National will deliver,” Bishop said in a press release.
and yet in the next paragraph.....
Years of neglect
"A policy document, shared with media, said New Zealand had a large historical infrastructure deficit".
National seems to think that money is a commodity of some fixed quantity that has to be sought out from those that already have it. This is not how modern money works though as the gold standard finished decades ago and we now operate with a fiat currency.
Our government operates with its own sovereign currency the NZ Dollar and which is a public utility created by the government through its spending and so we don't require anyone else to finance our infrastructure, the government can finance it by using its own currency and by employing whatever resources are at its disposal, the money can then be taxed back and cancelled again afterwards using tolls, fuel levies and other fees and charges if necessary.
Most, especially in government and the RBNZ don't seem to get this. As infrastructure is vital to the economy, there is clear economic return which would justify the government creating the funds for it. there remains some big "buts" though. I would suggest that the contracts be restricted to NZ companies only, and the expectations around excess profits made very clear. ( I do realise that they may have to develop the expertise, but that is I suggest a manageable issue). Thus the immediate economic benefits remain in NZ too. Such foundations would also lead on to the development of stronger secondary industries that will support the infrastructure development and maintenance, which i suggest should also be NZ companies. We need to be looking at how we can use the opportunities to grow resilience, capability and employment.
Agnostiums comment below is a very pertinent point where we should guard against nepotism and corruption creeping in.
Don't agree that we can't contract out, but we do need to ensure any central ministry with oversight has the capability and expertise to be able to do these projects, but also that we build a national skill base for resilience. There are traps in that i know, but there are every way, so we look to what preserves the country the best. I don't think that will be buying in overseas expertise that sees the profits go over seas.
Yes, but the choice is including a profit in private/commercial firms delivering infrastructure, or, (& let's be clear of this inevitability) we include the usual civil service "featherbedding" element in any construction. (& for heavens sake don't romanticize the old Ministry of Works! There were positive aspects to many MOW projects but cost efficiency was never one of them.
I think it is high time to create a state contracting organisation as proposed, to establish a timely pipeline of projects and to include sufficient engineering expertise to be able to properly let and supervise contracts.
I do worry however, that such an organisation as is proposed will be captured by the big commercial engineering firms, both local and overseas companies. ie a revolving door whereby the state hires recent engineering graduates who then get hoovered up by offers of more lucrative careers in the big commercial firms.
And of course common practice in many countries include routine elements of financial corruption.
So National know that we need to spend billions on infrastructure, but are desperate to keep the debt off the books.
So instead, we will pay over the odds to get private companies to fund it. Look at the debacle that was the PPP for transmission gully.
Just fund the things from core borrowing, the rates are much lower.
What we need is government spending and debt measures that includes these sort of shenanigans.
Also it seems fast track for infrastructure is good, but fast track for housing is bad.
There is a limit to how much debt you can take on without affecting the interest rates you pay. Why don’t we borrow 10 trillion dollars and then invest it in the NZ Super fund. The return should be more than the interest we pay on the debt. If make 2% on it that is $200b a year. Problem solved right?
This is the current issue in Govt agencies. Managers for managers for managers and nobody is working to productive capacity. Lord forbid a leader try and squeeze productivity form their staff, the staff up and leave for better money elsewhere or make a complaint which is overblown by HR due to the fragility and woke-ism that has infected the public sector. Have seen it while in leadership over the last 2 years time and again.
We only have an infrastructure backlog as:
a) we import more people than we can cater for - we need an immigration rate set to that maximises net wellbeing per capita not increases our wellbeing.
b) tax rates are too low (also no comprehensive capital gains tax, no wealth tax, no inheritance tax) to support the immigration rate and the infrastructure backlog along with the social and environmental deficits we face.
I'm completely dismissive of the infrastructure commission who says PPP's & other funding mechanisms so we can build the backlog. It all still has to be paid for. Its better for the government to increase its debt rather than face monopolistic PPP profits or complete PPP defaults.
Fundamentally our population is simply growing too fast. Our emissions targets are absolute not per capita. If we dont sensibly and strategically manage population growth we are going to be paying billions to other countries to mitigate our emissions.
So your plan is to take money of those who create and grow businesses and jobs and then let the government waste it. A bit like we are going to build 3000 new state houses at a cost of $1m each. That isn’t value for money. The government is terrible at delivering anything. Some things it makes sense to centralise but house building isn’t one of them. The government should be enabling the private sector to do it.
a) we import more people than we can cater for - we need an immigration rate set to that maximises net wellbeing per capita not increases our wellbeing.
Please would you define how we quantify wellbeing? The current government seem to do so however they wish, chhanging the criteria daily to prove their 'success'.
It is nothing short of a subjective farce and this 'metric' needs to be removed from all constituencies of the public sector. People need to do their jobs, not worry about constantly reflecting on their wellbeing every other minute. Staff come to work to work and contribute, not to discuss how their wellbeing is going on a day to day basis and pull a sickie whenever they aren't feeling like working for 'wellbeing' purposes. What happened to work ethic these days
I almost choked when I saw that one. It just goes to show how disconnected from reality and the root causes of the issues the planet and country is facing he is, and simply does not have any vision or clue how to fix it. James Shaw is likely cheering him on though.
So, turning the coin on a value capture tax it should be possible to then raise a damages compensation claim against the govt, council & Housing NZ for your neighbourhoods property values dropping substantially because state housing is secretly approved to be built in it without consultation and consideration ?
The existing homeowners paid a premium for their neighbourhood property & amenity value & will logically suffer a loss.
https://www.rnz.co.nz/news/national/491492/neighbours-feel-caught-out-b…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.