The Minister for Infrastructure, the Honourable Grant Robertson, set the scene for what his vision of 2050 looks like.
This includes a future where:
- innovative project financing approaches are now an integral part of our system
- special purpose vehicle models have been refined many times over the years, and we now have a series of projects funded by central government and private financing
- the City Rail Link is completed, and further upgrades are being made to ensure we meet the growing demand for passengers in Auckland
- and large scale urban regeneration is giving us more than 16,000 homes.
The Minister for Infrastructure also announced the repurposing of Ōtākaro, the Christchurch rebuild agency, into a new company to deliver infrastructure projects across government in an effective and efficient way. Ōtākaro will work across government to help deliver significant vertical or horizontal infrastructure projects in agencies that do not have this as part of their regular day to day activities.
Later in the conference, Arup’s Ignacio Barandiaran kicked off a session on tackling the funding gap from a global perspective. He started with the context that funding gaps are an issue globally – New Zealand is not alone.
Ignacio outlined two main levers to address these gaps:
- governments need to lead the establishment of strategic plans with a particular focus on industry capability
- and the need to use the linkage of project objectives with broader outcomes, for example linking the transport and housing stories.
MinterEllisonRuddWatts’ Sarah Sinclair then led a panel session focusing on the funding gap, with Arup’s Patrick Andison, Auckland Light Rail’s Tommy Parker and Russell McVeagh’s Michael Loan. Sarah acknowledged this was not a new discussion, however now there was a need to really push the boat out and do things differently.
Tommy Parker gave a brief update on Auckland Light Rail and the opportunity that the project has to bring urban development and transport together – as a truly ‘city shaping project’. He spoke about the potential for capturing land value. Patrick then added that capturing land value is more about a way of thinking and a method rather than a particular mechanism. Michael came on to challenge the very notion that we have a funding gap. He outlined that this assumes that we have a strong pipeline of projects and the capacity to build. From his perspective, the pipeline is the first step in solving these issues.
BNZ’s Laura Harris then led a session on leveraging private sector capacity to deliver public infrastructure. H.R.L. Morrison and Co’s Christoph Vojc, Te Waihanga’s Helen Kerr, Babbage Consultants Limited’s Suman Khareedi, and Stellar Projects’ David Jones joined Laura to share their perspectives. Laura set the scene by outlining that despite all the opportunities around us, we are still not delivering infrastructure fast enough. The gap is not the tools or money, it is that we are not using them. In particular there is an abundance of finance opportunities out there that we are not leveraging.
The conversation started with an outline of the work of the INZ’s working group which tried to encourage the Government to partner with the private sector to deliver public infrastructure. This working group came up with a leasing model – which is a very similar approach to a public-private-partnership. This led into a robust discussion about public-private-partnerships, including the opportunities and risks.
Westpac’s Kate Archer spoke about funding climate resilience. Kate reflected on how the financial sector is responding to the funding risk of climate change and reducing financed emissions. She outlined how banks are seeking to better understand the resilience of their lending books and what lending is exposed – ‘climate risk is a financial risk’. Kate also outlined how banks are trying to get a better understanding of the emissions from their lending books. She described how larger companies will need to provide credible transition plans or face changes to the way they are lent money.
Kate then took delegates through sustainable financing as a way to help customers achieve their sustainability goals and figure out how to pay for them. More and more businesses are aligning their financing with their sustainable strategies. Sustainable financing itself is becoming mainstream finance and can help reorient capital towards sustainable activities.
Premier sponsor ANZ’s Sharon Zollner and Richard Yetsenga gave a macroeconomic update. Sharon set the scene by putting our current inflationary pressures alongside other countries, we discovered we are middle of the pack and following the same journey as many others. She explained one of the main issues we are now seeing; a record high proportion of firms identifying labour shortages as the reason they can’t grow their businesses.
Sharon also discussed the Reserve Bank’s attempt to get inflation under control. Even with tightening interest rates, spending is not down, and our employment rate remains at a record high. Sharon warned that if inflation does not fall as far or fast as banks are forecasting, the OCR could go even higher.
Richard then stepped back and took a global perspective. In ANZ’s global forecast it doesn’t have any country easing monetary policy (outside of China) before 2024. He noted that we can expect a proportionate response and closed the discussion by reinforcing that inflation is not the only issue, without a sustainable climate, there is no economy.