Infrastructure challenges have been front and centre in recent years, but new funding tools and a revised framework proposing a 30-year, system-wide view on how New Zealand can plan, fund, maintain and deliver infrastructure offers a fresh opportunity to unlock value.
Law firm Bell Gully has published a report looking at why traditional funding sources had reached their limits, the changes that are emerging in key sectors and the impact on funding options contained in the National Infrastructure Plan released by the New Zealand Infrastructure Commission, Te Waihanga.
Bell Gully partner Sarah Anderson-Butler, one of the authors of The Big Picture: Infrastructure Funding – new tools and opportunities, said there was a clear need to be more flexible around funding. She said the National Infrastructure Plan makes it clear that the country needs to be smarter about where funds are going and outlines the cost of the status quo: near top of OECD spending as a proportion of gross domestic product, but bottom of OECD returns on that spend.
“We get less infrastructure per dollar than many comparable countries, which suggests system inefficiencies are a problem, rather than absolute funding levels,” said Anderson-Butler, a specialist in funding and financing.
“New Zealand’s infrastructure challenge isn’t about spending more. It’s about getting better value for what we spend,” she said. “That means we need to look at how infrastructure is planned, prioritised, funded, maintained and recycled, including expanding the funding toolkit and making sure the funding mechanism is right for the type of infrastructure it applies to.”
Some of funding options available offer clearer price signals which will help inform decision-making, while others are aligned to shifts in the way infrastructure is being used now.
The National Infrastructure Plan notes infrastructure funding is likely to come under further pressure in the future and the current environment of rising fuel costs will also add pressure to construction, transport and operating costs across the sector if sustained.
“One thing is clear, we have outrun our traditional funding sources. We need to look closely at the variety of funding models on offer and use them to unlock value,” said Anderson-Butler. “We must collectively do better on infrastructure.”
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