The government policy void over the past month has created an inevitable game of guessing about the tripartite policy priorities, the shaping of the coalition agreements and spread of ministerial responsibilities. The window of opportunity before Christmas and the summer holiday break is now very small, although the last sitting date for the House has been pushed out to Thursday, 21 December. The focus for government ministries and agencies is the expectation of a mini-Budget before Christmas. Once cloths have been cut to meet the funding available, the new Government’s focus will quickly turn to what tangible results can be achieved within its first 100 days.
Over the past few weeks, we have refined our Briefing for the Incoming Minister (BIM), drawing on the discussions from the annual INZ Leaders Retreat which was held at Millbrook at the end of October. A top-quality programme was topped off with a spectacular dusting of snow at the venue on the final day.
The two-day retreat focused on Shaping the infrastructure agenda post-election 2023 and was an opportunity to reaffirm the sector’s priorities and explore what a reset of various settings might contribute to the successful delivery of key infrastructure for our communities, businesses and the New Zealand economy as a whole. One output was a letter to incoming Prime Minister Christopher Luxon, and, in the coming weeks, INZ will take the opportunity to engage with the other coalition partners and incoming ministers. You can read more about Millbrook Retreat and the INZ letter to the new Prime Minister elsewhere in this InfraRead issue.
The INZ team has continued to prepare responses to a number of the Government consultation packages over the past month, which you can read on our website here:
- The NPS Highly Productive Land proposed amendments to enable solar energy infrastructure
- Royal Commission of Inquiry into Covid-19 Lessons Learned
- Parliament Select Committee’s Inquiry into Climate Adaptation – read more later in this issue
- DOC and MfE’s proposed Biodiversity Credit System
- Consultation on Advancing New Zealand’s Energy Transition – consultation papers
- Proposed NPS for Natural Hazard Decision-making.
The INZ policy team also spoke to He Pou a Rangi, the Climate Change Commission as part of their work to progress its adaptation work programme. The Commission’s first task is to monitor how the Government puts the National Adaptation Plan (NAP) into effect. Their first report is due in mid-2024 and is part of an ongoing two-yearly reporting cycle.
Estimating the cost of an uncertain infrastructure pipeline
In November we held an event in Auckland and Wellington to present the INZ original research report, Estimating the Cost of an Uncertain Infrastructure Pipeline, that we commissioned the Infometrics team to prepare. Brad Olsen, Infometrics CEO and Principal Economist outlined the key findings from the report, concluding that there was real value in having more certainty in our infrastructure pipeline. This could be achieved by streamlining delivery by the Government committing to a more certain infrastructure pipeline, which would result in productivity and savings improvements of between 13% and 26.5% on future infrastructure projects. If applied, these savings could increase the amount spent on infrastructure delivery by between $2.3 billion and $4.7b a year over the 2025-31 period.
After the report was presented, a panel discussion followed, with Geoff Cooper (GM Strategy Te Waihanga), Allan Pollard (CEO NZ Civil Contractors) and Susan Lucking (Head of Infrastructure, Government & Specialised Finance; BNZ and INZ Board member) in Wellington, and in Auckland, Karen Mitchell (Principal Deal Advisory, KPMG) joined the other panellists, including Brad. It was recognised that there were a number of factors affecting pipeline certainty including politics, the changes in demand for infrastructure, pricing shocks and funding issues. New Zealand is heading in the right direction with Te Waihanga mandated to establish an infrastructure project pipeline and now a priority list that can feed into this. Sector data is improving but there is value for all stakeholders in the pipeline including full lists of both public and private sector projects. More certainty will help investment in workforce development, improved capability and also capacity.
Other policy investigations
Another area we are exploring is what is happening internationally around procurement models. We are drawing on our members’ expertise to learn more about different packaging of project phases and different procurement for these. Using third-party financing for long-term assets which are paid off through a revenue stream makes good sense where the risks are correctly allocated.