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Other noteworthy announcements | July 2022

July 28, 2022

INZ welcomes Building Consent System Review and Infrastructure Acceleration Fund allocations

INZ has welcomed the Government’s first allocations of the Infrastructure Acceleration Fund, and its recently announced Building Consent System Review.

Developments across Rotorua, Ōmokoroa, Kaikōura, Ōtaki, Napier, Gisborne and New Plymouth have secured $179 million of infrastructure funding from the fund. This is expected to enable more than 8,000 dwellings to be built over the next 20 years, 5,000 of which are expected within the next decade.

The $1 billion fund exists to jump-start housing developments by accelerating provision of the infrastructure needed to support growth. Twenty-eight further projects are currently in negotiations or undergoing due diligence to secure funding.

The consenting system is under pressure to meet significant demand and to adjust to major changes to the way we procure, design and build in the three decades since 1991. An end-to-end review of the building consent system, that seeks to modernise the consenting process is a welcome step towards improving our ability to meet our infrastructure deficit and to support continued population growth.

More information about the review, including an issues discussion document, is available here.

Submissions close on 4 September.

 

Auckland’s biggest water project completed

After more than a decade in construction, work is finally complete on Auckland’s Hūnua 4, Watercare’s biggest ever project.

The 31 km water transmission pipeline from Manukau to Khyber Pass will carry 3,000 litres of water per second to boost the resilience of Auckland’s water network and cater to population growth.

The pipe will now undergo a series of final tests before it is put into service.

 

Let’s Get Wellington Moving – preferred option announced

The Government has announced its preferred option for Let’s Get Wellington Moving – but it would not have been the choice of the New Zealand Infrastructure Commission.

The $7.4 billion option, announced in June, includes light rail to the south from Wellington Central to Island Bay, a new tunnel for public transport, walking and cycling through Mount Victoria and grade separation at the Basin Reserve to enable active transport and improved traffic flow.

The option, which is expected to become carbon neutral in 2055, has been endorsed by Greater Wellington Regional and Wellington City Councils.

However, the New Zealand Infrastructure Commission had recommended an alternative option which would become carbon neutral by 2045. This would keep light rail to the south and the new active transport tunnel while avoiding a grade separation at the Basin.

The Commission also pointed out that the cost of the preferred option is high, comparative to its likely emissions reduction impact and that congestion charging would be critical to ensuring its success.

The LGWM project encompasses the revitalisation of Wellington’s ‘Golden Mile’ from the Parliament end of Lambton Quay through to the top of Courtenay Place. Work on a Detailed Business Case will now begin, which will then be considered by Cabinet. Submissions on the detailed design of this work are open until 14 August. More information is available here.

 

SX Next cable doubles New Zealand’s internet capacity

The Southern Cross Next submarine telecommunications cable has opened, almost doubling New Zealand’s internet capacity.

The $570 million cable, opened in July, will reduce online lag-time by five per cent. It ensures that New Zealand’s connectivity needs are provided for over the next 20 years and as existing submarine cables are decommissioned in the next decade. An important step now is to overcome New Zealand’s historically slow adoption of new technologies to leverage this investment into increased productivity gains for the country.

 

Report highlights Northport’s potential

Expanding Northport and adding a new shipyard and floating drydock would contribute millions to New Zealand’s GDP and create thousands of jobs, a report has found.

The report, commissioned by Northland economic development agency Northland Inc, highlights the potential economic and social benefits of an expansion and the proposed new shipyard and drydock on the port’s western boundary.

It estimates the shipyard and drydock would allow Northland to contribute an extra $290 million to New Zealand’s GDP over the next 38 years, while an expanded container port would deliver $160 million over that same period. Combined, the projects would create 2,600 new jobs in and around Marsden Point and Whangārei by 2060.

The report comes close on the heels of the Government’s $3.7 million investment in Budget 2022 for feasibility studies focussed on a re-location of the Port of Auckland to Manukau Harbour and Northland’s drydock.

Northport is calling on the Government to support its expansion by taking a long-term strategic view of Upper North Island supply chains and the economic development of Northland itself.

The report is available here.

 

Green light for Christchurch arena

Christchurch City Councillors have voted to proceed with the city’s new multi-use arena project, backed by strong public support.

The council voted 13-3 in July to give the green light to the Te Kaha arena at a fixed price of $683 million.

A $140 million cost increase sparked public consultation on whether to continue, pause, or stop the project altogether. Seventy-seven per cent of the 30,000 submissions received, were in favour of proceeding.

The Te Kaha Project Delivery team was able to negotiate the fixed price with its lead contractor, BESIX Westpac, ahead of the council meeting. The figure includes contingency funding to cover any issues that may arise during construction.

The Government is not willing to cover the cost increases, so the bill will fall to ratepayers. The Council is yet to debate how they will cover the increased cost.

 

Workplace Diversity Survey Results Released

The latest New Zealand Workplace Diversity Survey has flagged up challenges around workplace diversity, equity and inclusion.

The 2022 survey, released in June, found that neurodivergent people are at risk of being overlooked in workplaces. Organisations also reported that they have the most difficulty in recruiting Māori, Pacific People, people with disabilities and transgender/gender diverse people. This was more of an issue for private sector organisations than public sector workplaces.

In terms of leadership, the private sector was seen as more inclusive than in the public sector. Sixty-one per cent of private sector respondents indicated that leadership style in their organisation was a best practice example of inclusive leadership or mostly inclusive compared with 51 per cent in the public sector. Respondents in the private sector also perceived their teams as more inclusive than respondents in the public sector.

Almost 90 per cent of organisations were found to offer some form of flexible work arrangements but access is not always equitable. Respondents reported that access to flexible working initiatives depended on a manager’s attitude and management style, work location and field of work.

People working in small organisations were also found to be more likely to be negatively impacted by Covid-19.

See the full survey report here.

 

Two finalists compete to deliver world’s biggest green hydrogen project

Fortescue Future Industries, and Woodside Energy Limited have entered final negotiations to become the lead developer on the Southern Green Hydrogen project.

The counterparties are expected to provide the joint Contact and Meridian Energy project team with more detailed proposals by the end of August. The final partner selection will then be announced.

 

Increased borrowing costs a challenge for sector

The increased cost of borrowing is likely to spell difficulty for the infrastructure sector in an environment where cost overruns are quickly becoming the norm.

Inflation soared to 7.3 per cent in July, its highest level in 32 years, and the Reserve Bank raised the Official Cash Rate (OCR) by a further 50 basis points, to 2.5 per cent.

The cost of building a house has risen 18 per cent this year. Housing and household utilities were the biggest driver of domestic, or non-tradable, inflation.

Shipping costs and supply chain pressures are beginning to ease, contributing to a welcome expectation that the inflation rate will decline slightly in coming months. The OCR is, however, expected to continue to rise. Another 50bps is expected to be added on 17 August, with the rate forecasted to peak at 3.9 per cent next year.

 

Government extends cost of living transport support

The Government has extended its reductions to fuel excise duty, road user charges and half-price public transport to the end of January 2023.

Petrol prices have increased 32 per cent in the past year and diesel costs are up an eye-watering 74 per cent. As the Government tries to combat inflation, the move will be welcomed by many Kiwis but will likely be a hard policy to reverse in an election year.

 

Watercare welcomes new partners as part of long-term collaborative delivery model

Watercare is welcoming four new partners who will provide strategy, planning and design expertise to help them meet their targets for carbon reduction, cost efficiency and health and safety on their infrastructure projects over the next 10 years.

Strategy and planning partners, Aurecon and Stantec, with design delivery partners Beca and WSP will help them deliver on an expected $9 billion water and wastewater infrastructure 10-year work programme.

Bringing new partners on board is a key part of Watercare’s Enterprise Model approach to infrastructure delivery and will allow them to deliver on their targets for reducing built carbon, reducing costs and improving health, safety and wellbeing outcomes for their staff and contractors.

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