Funding and financing focus at Parliament event

Infrastructure funding and financing was the subject of a WSP-hosted event at Parliament last night, where 150 people gathered for the public launch of WSP and the Helen Clark Foundation’s latest research report - ‘Bridging the Infrastructure Gap’.

Thursday, 27 June 2024 - New Zealand

MC’ed by TVNZ journalist Jack Tame, the event was attended by parliamentarians, senior representatives from central government agencies, local authorities, private sector businesses, academia, and industry associations.

The Helen Clark Foundation patron, former Prime Minister Helen Clark set the scene by noting that long-term underinvestment has led to a shortfall in quantity and quality of infrastructure.

To address this, she highlighted one of the report’s main recommendations – that cross-party infrastructure consensus is needed, along with increased infrastructure spending.

Ministers signal willingness to work together

There was no argument from infrastructure minister Hon Chris Bishop and Labour transport spokesperson Hon Tangi Utikere about the country’s chronic infrastructure problems.

Both gave a brief speech and referenced the damaging impact of recent severe weather events, welcomed the report, and signaled their willingness to work in a cross-party way to help solve the issues.

Report gets first public airing

Report author and WSP Fellow Kali Mercier gave some key highlights from the report, noting that our per capita spend on infrastructure is low compared with many other countries and that the bulk of new infrastructure investment will almost certainly have to come from debt.

There will be "no magic bullet" in paying this back, but it should be done in a fair, efficient and effective way – likely involving a mix of taxation, rates, and user charges.

Panel digs into causes and solutions

A panel discussion followed, featuring Kali, WSP director of strategic advisory Grant Hodges, NZTA national manager of commercial delivery Andrew Robertson, and Infrastructure Commission general manager of infrastructure delivery Andy Hagan.

With the Infrastructure Commission putting the country’s infrastructure deficit at over $200 billion over the next thirty years, the panel was asked ‘how did we get here’?

Panelists agreed that it's largely down to a lack of consensus and transparency on infrastructure needs over time. Additionally, public pressure to keep taxes, rates, and user charges low has led to constrained fiscal positions.

It was pointed out that failure to make long-term strategic infrastructure decisions leads to an adverse cycle where agencies can become less effective in their stewardship role. That's not helped by investment decision-making often favouring shiny new projects over asset management of existing infrastructure.

All panelists emphasised the need for a stable pipeline of infrastructure projects. Having that certainty will attract investment and lead to long-term productivity gains.

Public-Private Partnerships (PPPs) can play a crucial role by putting private capital to work on essential projects, but these are just one part of a funding and financing toolkit that also includes value capture and greater levels of public borrowing.

New Zealand’s inflexible PPP model from a decade ago was compared with more flexible approaches used in the UK, US, and Canada, and panelists noted that any decisions about whether a project suits a PPP should be based on capacity, timeliness, and appropriate risk management.

Panelists tackle audience Q&A

In a series of audience questions, panelists were asked about how managed retreat should best be funded. All highlighted the lack of a definitive answer currently, and that there's a greater need for consistent signals on climate change risks and information to asset owners.

In response to a question about improving investment decisions, panelists emphasised the importance of thorough planning before announcing infrastructure projects. Having a consistent pipeline of projects was again highlighted, which allows for a more methodical approach and can boost confidence in project delivery.

Panelists were asked about ensuring infrastructure delivery efficiency beyond just funding and financing. They stressed the need for better infrastructure quality relative to spending levels, and suggested focusing on maximising asset utility, and improved asset management.

A copy of ‘Bridging the Infrastructure Gap: Funding and Financing for a Resilient Aotearoa New Zealand’ can be found here.