Infrastructure New Zealand’s Senior Leaders’ Retreat

INZ and MartinJenkins will be jointly hosting our first Senior Leaders’ Retreat at the Millbrook Resort in Queenstown on 30 June and 1 July.

A group of senior leaders will discuss and debate New Zealand’s most pressing infrastructure challenges.

We have curated a line-up of speakers who will speak to the South Island context, the Construction Sector Accord’s Transformation Plan, the challenges and opportunities of climate change related infrastructure adaptation, the funding and financing of infrastructure. Nicola Willis MP will also outline the National Party’s priorities.

The programme includes a site visit to the $45 million Research and Innovation Queenstown centre and a workshop session oriented toward the 2023 election.

 

The latest OCR hike

As expected, the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) by 0.5 basis points to 2% in late May.

RBNZ signalled that slower than expected global economic growth, ongoing geopolitical uncertainty in Europe and the exacerbation of supply chain disruption due to lockdowns in China were key international considerations in its choice to follow global efforts to tighten monetary policy.

A number of domestic factors have coloured the Monetary Policy Committee’s thinking on the OCR change. These include, a rapidly slowing housing market; continued skills shortages as employment remains above its maximum sustainable level; and a weakened New Zealand dollar adding to the relative cost of imported goods.

Treasury has downgraded its medium-term outlook for real GDP and identified inflation as the most pressing economic challenge here and abroad. The Reserve Bank has indicated it expects the OCR to be as high as 3.9% by June next year, a jump from its previous prediction of 3.4%. That 3.4% figure is expected to become reality as early as December.

The Bank is also beginning its five-yearly review of its Monetary Policy Remit. Public consultation is open from 1 June – 15 July. More information, including the consultation paper, can be found here.

 

First Water Services Entities Bill referred to Select Committee

The Water Services Entities Bill has passed its first reading in the House and been referred to the Finance and Expenditure Select Committee.

The Bill establishes four publicly owned water services entities that will provide safe, reliable, and efficient water services in place of local authorities. It incorporates the recommendations of the Working Group on Representation, Governance and Accountability, including the shareholding ownership model and mechanisms for non-ownership rights for iwi.

Further legislation in the coming months is expected to cover the transfer of assets and liabilities from local authorities to Water Services Entities, the integration of the entities into other regulatory systems, and the design of economic regulation and consumer protection in the provision of the entities’ services.

Public submissions on the Bill will close on 22 July.

 

The Construction Accord’s Transformation Plan 2022-2025 to be considered by Cabinet

Cabinet will consider the Construction Sector Accord’s second Transformation Plan this month.

The Accord was allocated $37.485m in Budget 2022 to deliver the plan which will be launched to the public in late July subject to Cabinet approval.

The new Transformation Plan has a greater focus on:

The Māori construction ecosystem
Strengthening capability and productivity across small to medium enterprises
Driving innovation
Reducing carbon emissions.

INZ is looking forward to partnering with the Accord to deliver on their 2030 vision of a thriving, fair, and sustainable construction sector that enables the wellbeing of Aotearoa New Zealand’s people and its environment.

 

Building materials shortage continues to put pressure on project delivery

Supply chain constraints and domestic competition issues have continued to place significant pressure on the supply of important building materials.

Plasterboard has been hit hard. Having only one key supplier of GIB in the country means the sector has been forced to rely on imported materials, with wait times for these already stretching into mid-2023. There are acute shortages of structural ply and seismic mesh, and electrical products are also beginning to feel the strain.

Nationally consistent treatment of GIB substitutes as a minor variance for consenting will be an important next step. A key to moving forward will be wider work looking at how we can smooth the New Zealand regulatory environment and assess the viability of undertaking peer review of overseas consenting practices in instances where there is a critical shortage. MBIE’s guidance on product substitution can be found here.

The current situation regarding domestic supply underscores the importance of the Commerce Commission’s market study into residential building supplies. We look forward to the release of its draft report, expected next month.

 

Ports of Auckland scraps plans for automation

Ports of Auckland (POAL) Chair Jan Dawson announced in early June that $65 million of investment in the Fergusson Container Terminal automation project would be written off as the project was abandoned.

The project was meant to go live in 2020, but, six years from its conception, it had faced significant delays and cost uncertainties.

Auckland Council is seeking a review of decisions made by the former POAL Chief Executive and Board of Directors.

The Port has however gained handling capacity as a result of the project with new infrastructure, including a wharf and cranes, already in place.

Now under the leadership of Roger Gray, the Port has signalled that it will be ‘getting back to basics’ and prioritising its core freight business.

 

Auckland Council’s Climate Action Budget adopted

On 29 June, Auckland Council’s Climate Action Budget will be formally adopted.

The plan includes:

  • $1 billion of investment to reduce emissions and tackle climate change
  • $600 million to deliver new and extended frequent bus routes throughout the region
  • 79 new electric or hydrogen buses
  • Up to seven new electric and low-emissions ferries
  • 35km of improved active transport infrastructure.

The Budget lays the foundation for delivery of Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan. Climate action programmes in the Budget will be funded by the Council’s Climate Action Targeted Rate (CATR) which will generate $574 million over 10 years and seeks to leverage a further $482 million in co-funding from central government and other sources.

It will also use the full $127 million of the first tranche of Three Waters ‘better off’ funding available to the Council and includes a capital deferral of $230 million over the next three years to enable critical projects, as well as those that support growth and climate action.

Ratepayers with a median-value home of more than $1 million, will pay an extra $1.12 per week as a result of CATR. The Budget garnered significant public attention, with 11,500 submissions – triple the number received for the previous Annual Budget.

 

Auckland Airport capital expenditure programme

A suite of capital expenditure is planned or underway at Auckland Airport, including a $300 million Transport Hub and a $1 billion-plus combined terminal.

Enabling works began this month on the hub which will pave the way for the expansion of Auckland’s airport-connected future mass rapid transit network.

The ground floor of the four-storey building will accommodate buses and cars, with the upper floors featuring smart car parking, electric vehicle charging stations and office spaces.

This comes alongside plans for the combined international and domestic terminal, set to take five years to build once it gets the green light. The timeline will depend on the speed at which the aviation industry can recover from effects of the pandemic and related border closures.

 

Construction costs take a toll on Christchurch stadium plans

Te Kaha Project Delivery Limited and Christchurch City Council has advised that the long-awaited Canterbury multi-use arena is likely to come in around $140 million over budget.

Lead contractor BESIX Watpac puts the cost of building the covered 30,000 seat multi-use arena at $673 million, with costs expected to rise even further as overseas supply chain disruption and domestic construction cost inflation bites.

The completion date for the project has also moved out to April 2026.

 

New port chief executives appointed

Anthony Delaney has been appointed permanent Chief Executive Officer (CEO) at CentrePort in Wellington after holding the position of acting CEO since April this year.

Kirstie Gardiner was appointed as Lyttelton Port Company’s CEO in May, following previous CEO, Roger Gray’s, appointment, in April as CEO of Ports of Auckland.

 

Alliance formed to deliver Whangaparāoa Peninsula connection

HEB, Fulton Hogan, Aurecon, and Tonkin + Taylor have officially formed an alliance to construct Penlink, the long-awaited two-lane proposed toll-road north of Auckland.

The Government approved the implementation business case for the project in early June, with the alliance formally established on 10 June.

Penlink is part of the Government’s New Zealand Upgrade Project. Construction is expected to cost approximately $750 million and is set to begin in coming months. Ministers are considering whether the road will be tolled.

 

 

 

 

 

 

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