Budget 2022 lifts infrastructure investment over the next four years from $57.3b to $61.9b, representing an increase of $4.6b.
Infrastructure New Zealand welcomes this additional investment, but recognises that much of it is aimed at addressing historic underspending on ageing health, education and transport infrastructure.
The following offers commentary on key aspects of the Budget 2022 announcement:
The budget allocates $2.9 billion from the Climate Emergency Response Fund (CERF) over the next four years with a strong focus on transport initiatives. With further investment likely in future budgets, this recognises infrastructure’s key role in achieving our emissions reduction targets.
Within this, a $375m fund has been established to deliver infrastructure to support mode shift, measures to increase public transport capacity and encourage uptake, and financial support for households to shift to low-emission vehicles.
“Investment in decarbonising the public transport and freight sectors ($61m) is a welcome addition, but we need to ensure we do not move too quickly and leave ourselves exposed to volatile global oil markets”, says Claire Edmondson, Chief Executive of Infrastructure New Zealand.
Further investment in the freight network includes $349 million to replace KiwiRail’s ageing rolling stock with modern, energy efficient units. While we should see positive outcomes for freight and people-moving, the replacement of old assets will realistically, bring them up to where they should already be.
“Infrastructure New Zealand supports the intent and ambition around reducing emissions. CERF recognises infrastructure’s role in addressing the impacts of climate change, and provides funding for transitional work in bringing sectors along on the journey – particularly regarding alternatives to fossil fuels and the decarbonisation of freight, giving the sector the ability to gear up for the level of change required”, says Edmondson.
People and skills
Many initiatives in Budget 2022 are a good start, however the question remains whether there are sufficient resources in New Zealand to deliver on our infrastructure pipeline – including people and materials like GIB and steel.
“The sector remains constrained by global supply chain issues and the rising cost of fuel, compounded by the effects of Covid-19 and the conflict in Ukraine. Housing affordability and the rising cost of living is also a factor in attracting and retaining the talent our sector needs to deliver projects,” says Edmondson.
“The $37m investment in the Construction Sector Accord transformation plan should see increased productivity, capability and resilience of the construction sector. We support this investment and look forward to partnering with the Government on its development and implementation”.
The almost $200m funding for progression of the Auckland Light Rail project is also a good example of the type of prioritisation of projects and certainty of work that the infrastructure sector needs to plan for the people and skills to deliver.
While last week’s border and immigration announcements were positive, Infrastructure New Zealand would like to see an increased focus on removing more barriers to New Zealand being competitive in the global labour market. Improvements to immigration processes, housing affordability and addressing the cost of living will go a long way to making our country an attractive place to live, work and play.
Budget 2022 sees investment in many positive projects and initiatives, including much needed expenditure to lift the quality of our often neglected social infrastructure.
We know that we will not be able to build our way out of the infrastructure deficit we face, which is why the Government needs to genuinely consider alternative infrastructure funding, financing and delivery arrangements, including by working with the private sector. Leaving this opportunity on the table will continue to force successive governments to prioritise and stage projects as we have seen through this latest budget.
This is one of the many recommendations put forward by the Te Waihanga, The Infrastructure Commission’s strategy that we urge the Government to adopt so that we can deliver the world class infrastructure Kiwis deserve.
Infrastructure New Zealand will continue to analyse Budget 2022 over the coming days and looks forward to working with the Government on addressing our significant infrastructure deficit.
Melanie Drumm 0221201672