Launch of the Thirty Year New Zealand Infrastructure Plan 2015

Thursday, August 20, 2015 - 09:35

Thank you for coming along today.

It’s a pleasure to be here in Christchurch, for the launch of the Thirty Year New Zealand Infrastructure Plan.

Meeting New Zealand’s infrastructure challenges over the next 30 years will require coordination across central government, local government and the private sector.

So I would like to recognise our partners for the progress we’ve made together, their engagement in developing this Plan, and their commitment to meet New Zealand’s infrastructure needs over the next 30 years.

Infrastructure supports people’s daily lives, even if they don’t think about it all that often – unless something goes wrong.

Infrastructure investment provides the roads we drive on and it delivers the electricity we use.

It gives us the water we drink and farm with.

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.

I recall when we first came into office in 2008, conversations with the infrastructure industry were often quite short term in focus. They were about which project would go ahead next, in what time frame and with what funding.

That changed when we established the National Infrastructure Unit and Advisory Board six years ago.

We are now able to have more sophisticated conversations about infrastructure rather than simply creating a long list of different projects.

We’re now working with the sector to do four things:

  • understand the infrastructure challenges New Zealand faces now and in the future
  • set out the results we want to get from investment in infrastructure
  • improve the information about, and management of, our existing assets
  • and ensure we have the right settings to make better investment decisions in the future.

I’d like to spend a bit of time talking about the infrastructure challenges New Zealand will face over the next 30 years.

For a start, we have a number of ageing 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 ageing. 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, the demographers expect another 1.2 million people to be living in New Zealand, with most of that increase expected to be north of Taupō.

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

To keep our economy growing, infrastructure also needs to support higher levels of productivity. This is vital to ensuring New Zealand grasps the opportunities open to us over the next 30 years, including our access to a growing, more affluent population in Asia.

And then there is the issue of affordability.

Infrastructure is very expensive – something I’m acutely aware of as Minister of Finance.

Central and local government together are expected to spend $11 billion on infrastructure each year, for the next ten 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.

When I talk to people about social services, I like to say that what is good for communities is also good for the Government’s books.

This is also the case with infrastructure. Better managed infrastructure not only makes communities function better, it also helps the Crown’s finances.

The same is true for local government.

The Thirty Year Plan we’re launching here today provides a response to the challenges I’ve just outlined.

It reaffirms the vision that by 2045 New Zealand’s infrastructure will be resilient and coordinated and contributing to a strong economy and high living standards.

That will require a better understanding of the levels of service we want to deliver.

It will require more mature asset management practices together with better use of data.

And it will require effective decision-making that considers non-asset solutions, alongside the traditional approach which is to see a problem and build something to address it.

The Infrastructure Plan sets out a comprehensive suite of actions for central government, local government and infrastructure bodies to deliver on this new approach.

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 initiatives.

I’d like to talk about a couple of these key action points today.

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.

Analysis and presentation of data are also specialised skills that call for something different from our typical infrastructure practitioners.

These skills are not needed in every government department or in every council – so we are going to establish centres of excellence in using data to support decision making.

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.

An increased focus on non-asset solutions such as demand management is also important to ensure we 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 well-being.

And charges for infrastructure use should never be used simply to raise revenue.

The Government has also been working hard to provide greater transparency and visibility to future investment programmes across government agencies.

In 2014, the Treasury published a report on spending intentions for infrastructure over a ten-year period across central government and local government. The exercise was repeated earlier this year.

Having a forward pipeline of projects gives businesses greater certainty and confidence about the breadth of the Government’s investment in better public services.

Last month, the third National Construction Pipeline report was published.

This provides a comprehensive view of all known building and construction in New Zealand for the next six years.

It shows that the expected level of construction activity will peak at over $36 billion in 2016 – $7.5 billion higher than the last peak in 2007.

In addition to this previous work, I am today releasing a pipeline of capital spending intentions for central government departments.

This includes traditional infrastructure spending, but also goes wider to cover investment across all asset classes.

So, for example, it includes Inland Revenue’s business transformation IT programme, as well as the Defence Force’s upgrade projects.

The pipeline shows we are committed to ongoing investment in infrastructure and other public services, where that provides value for taxpayers.

Over the next five years, central government agencies are looking to invest over $5 billion of capital each year.

This includes the land transport programme and the roll-out of Ultra-Fast Broadband and the Rural Broadband Initiative.

On Christchurch specifically, the $40 billion rebuild is continuing. This investment is made up of residential property of $18 billion, commercial property of $9 billion and infrastructure and social assets of $11 billion.

Recent commentary on Christchurch can sometimes give the impression that the rebuild is winding down. In fact it is around 50 per cent complete. Construction will continue at a high level for a number of years.

This spending builds on the Government’s investment programme over the last seven years, which has seen over $46 billion of property, plant and equipment added to the Crown’s balance sheet.

The reports aren’t a precise science but they do signal the Government’s commitment to a transparent, open dialogue with local government and industry.

They increase the transparency of the Government’s business and give the market an opportunity to respond.

They will also form the basis of ongoing discussion with Australian counterparts to develop the trans-Tasman procurement market. 

Government departments will continue to release more information on existing and prospective investments over the coming year.

The quality of that information can only improve with more engagement with you in the sector.

And that is the point of both the Infrastructure Plan and capital intentions pipeline that we are publishing today – they are an opportunity to continue the positive engagement this group has been having over the last few years.

Collaboration is essential to deliver the vision of the Plan.

So today, I would like to thank you for how you have engaged so far, and challenge you to continue that in the future. 

Thank you.