By Michelle McCormick, Infrastructure New Zealand Policy Director

Effective funding and financing of our significant infrastructure deficit is one of Infrastructure New Zealand’s strategic pillars.

Te Waihanga / The New Zealand Infrastructure Commission estimates it will cost $31 billion per year, roughly a tenth of New Zealand’s GDP, to plug the infrastructure deficit and build for the future. This gap cannot be met by government alone and we have been continuously advocating for more effective use of private capital to fund this deficit.

The INZ Funding and Financing working group has developed an alternative financing model which could be used to help address the massive infrastructure deficit facing the country.

Drawing on this work, we wrote to Hon Grant Robertson, Minister of Finance and Minister for Infrastructure, seeking dialogue on opportunities to expand the private sector’s role in infrastructure funding and delivery.

In his response, the Minister indicated some support but did not commit to a direct pathway for the development and application of the proposed leasing model. However, he did suggest that we seek the support of Te Waihanga and reach out to Kāinga Ora and the Ministry of Housing to work through the details of how the proposal could be applied and tested for its potential strengths and weaknesses.

The working group had already been engaging with Te Waihanga on this opportunity and see it as supporting Rautaki Hanganga o Aotearoa, New Zealand’s Infrastructure Strategy 2022-2052. It outlined specific recommendations for improving infrastructure funding and financing:

  • Improve the ability to debt fund infrastructure: a) Investigate opportunities to use the Infrastructure Funding and Financing Act 2020 and b) explore other special purpose vehicles as a mechanism for new infrastructure investments (Recommendation 51- government response: supported in full).
  • Improve funding of infrastructure services through targeted funding tools (Recommendation 52 – government response: supported in principle)
  • Enable value capture tools through legislation to ensure that more funding is available for infrastructure that generates value for users and communities (Recommendation 53 – government response – supported in full).
  • Increase infrastructure funding to meet our infrastructure challenges and boost productivity (Recommendation 54 – government response: Supported in full).
  • Reform the transport funding system (Recommendation 48 – government response – supported, subject to the outcomes of the Future of the Revenue System Review).

We will be meeting with Te Waihanga officials in the coming weeks. Now that the Government has indicated its support for the Infrastructure Strategy, we view this initiative as part of a deeper discussion with government as to how it would support increased private sector involvement to address the infrastructure deficit.

As an organisation we are keen to progress this work, identify a tangible project and work through what assurances and constraints the government needs to meet its goals and find out where the private sector can play a vital role. 

Our working group has also met with Chris Bishop, National’s Infrastructure Spokesperson, to outline the proposal and seek support for an expanded role for the private sector in the funding and delivery of infrastructure.