The view from the top

BILL ENGLISH, MINISTER FOR INFRASTRUCTURE, NEW ZEALAND

INFRASTRUCTURE INVESTMENT is a key driver of the economy. For businesses to invest another dollar and employ another person, they need to be confident they have reliable access to the right infrastructure.

Infrastructure also underpins the delivery of social services. Ensuring that education, health and justice networks are fit for purpose gives the government the best chance of making a difference in the lives of New Zealanders.

The government has committed to a significant and ongoing infrastructure investment programme over the past seven years. This includes:

• over $46 billion of property, plant and equipment added to the Crown’s balance sheet;
• a $13.9 billion land transport programme between 2015 and 2018;
• over $1.7 billion for the roll out of ultra-fast broadband, and $400 million for the Rural Broadband Initiative.

But what matters isn’t the amount of money put in. Instead it is the results that this delivers for New Zealanders – and in this regard we are seeing good progress.

For example, 54 percent of targeted end-users had ultra-fast broadband access in June 2015; up from 39 percent in 2014. We have created 127 Special Housing Areas across the country which have the potential to deliver over 50,000 new homes.

The government’s focus on understanding infrastructure requirements also means we are now able to have more sophisticated conversations with the infrastructure industry, rather than simply creating a long list of different projects. We have a better understanding of the infrastructure challenges New Zealand will face over the next 30 years.

For a start, we have a number of aging infrastructure networks that will need renewing. Our schools, for example, have an average age of 42 years, and parts of our water network have had a century of use.

New Zealand’s population is aging. The median age has increased from 32.8 years in 1996 to 36.9 years today, and is expected to reach 42.7 years in 2043. This has implications for the types of services New Zealanders will want, the infrastructure required to deliver those services, and the available funding.

Some of our regions will grow in size, while others will shrink. By 2045, another 1.2 million people are expected to live in New Zealand, with most of that increase coming north of Taupo.

Those people will require housing, transport, electricity, water and telecommunications. They will also help to pay for it.

Infrastructure is very expensive – something I’m acutely aware of as Minister of Finance. Together, central and local government are expected to spend an average of $11 billion on infrastructure each year for the next 10 years.

As a country we own around $220 billion of infrastructure assets across central and local government – not far short of $50,000 for every person in New Zealand. Better management of this huge investment can deliver real benefits for New Zealanders – and high performing infrastructure also helps the government’s books.

Tackling these challenges requires us to think differently about our traditional approach to infrastructure, and to move away from simply building more things.

Earlier this year the government launched The Thirty Year Infrastructure Plan, which sets out what this new approach should look like. There are 145 initiatives in total that will strengthen asset management practices, improve our understanding of demand, and lead to better decision making around infrastructure provision. And there is a clear timeframe for completing each of these.

Together with other stakeholders, the government will develop national, shared data standards for roads, water and buildings. This will ensure we are all using a consistent base on which to build evidence, undertake forecasting and deepen capability.

A common basis of facts, methodologies and approaches will help cut through the assumptions that sometimes lead people to talk across each other when making infrastructure decisions.

Another key action is to look at how best to undertake long-term integrated regional planning – expensive and long-lived infrastructure assets won’t deliver the right results if planning occurs in silos. Schools, hospitals, roads, public transport, water networks and community assets all come together to provide vital services to businesses and the community, and regional planning needs to better reflect this.

The Plan also promotes the need for an increased focus on non-asset solutions, such as demand management, to make better use of existing networks. This isn’t a new idea – taxes on fuel to pay for the National Land Transport Fund mean we already use demand management tools in roading, and all councils meter large water consumers.

New technology will offer greater opportunities for managing demand for infrastructure assets over the next 30 years. But demand management shouldn’t be used without considering wider infrastructure outcomes such as increasing productivity or wellbeing. And charges for infrastructure use should never be used simply to raise revenue.

New Zealand has good infrastructure – but the government is committed to ensuring that in 30 years’ time our infrastructure is resilient, coordinated and contributing to a strong economy and high living standards.

It isn’t just big, new investment that will get us there. Instead, the biggest gains will be through a better understanding of the services New Zealanders expect, and better, more coordinated management of new and existing infrastructure to enable those services to be delivered – and that is what we are working hard on delivering.