New Zealand: Budget 2022 infrastructure investment rises from $57.3b to $61.9b

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Infrastructure New Zealand welcomes additional investment but recognises that much of it is aimed at addressing historic underspending on ageing health, education and transport infrastructure.

The following offers commentary on key aspects of the Budget 2022 announcement:

Climate

The budget allocates $2.9 billion from the Climate Emergency Response Fund (CERF) over the next four years with a strong focus on transport initiatives. With further investment likely in future budgets, this recognises infrastructure’s key role in achieving our emissions reduction targets.

Within this, a $375m fund has been established to deliver infrastructure to support mode shift, measures to increase public transport capacity and encourage uptake, and financial support for households to shift to low-emission vehicles.

“Investment in decarbonising the public transport and freight sectors ($61m) is a welcome addition, but we need to ensure we do not move too quickly and leave ourselves exposed to volatile global oil markets”, says Claire Edmondson, Chief Executive of Infrastructure New Zealand.

Further investment in the freight network includes $349 million to replace KiwiRail’s ageing rolling stock with modern, energy efficient units. While we should see positive outcomes for freight and people-moving, the replacement of old assets will realistically, bring them up to where they should already be.

“Infrastructure New Zealand supports the intent and ambition around reducing emissions. CERF recognises infrastructure’s role in addressing the impacts of climate change, and provides funding for transitional work in bringing sectors along on the journey – particularly regarding alternatives to fossil fuels and the decarbonisation of freight, giving the sector the ability to gear up for the level of change required”, says Edmondson.

People and skills

Many initiatives in Budget 2022 are a good start, however the question remains whether there are sufficient resources in New Zealand to deliver on our infrastructure pipeline – including people and materials like GIB and steel.

“The sector remains constrained by global supply chain issues and the rising cost of fuel, compounded by the effects of Covid-19 and the conflict in Ukraine. Housing affordability and the rising cost of living is also a factor in attracting and retaining the talent our sector needs to deliver projects,” says Edmondson.

“The $37m investment in the Construction Sector Accord transformation plan should see increased productivity, capability and resilience of the construction sector. We support this investment and look forward to partnering with the Government on its development and implementation”.

The almost $200m funding for progression of the Auckland Light Rail project is also a good example of the type of prioritisation of projects and certainty of work that the infrastructure sector needs to plan for the people and skills to deliver.

While last week’s border and immigration announcements were positive, Infrastructure New Zealand would like to see an increased focus on removing more barriers to New Zealand being competitive in the global labour market. Improvements to immigration processes, housing affordability and addressing the cost of living will go a long way to making our country an attractive place to live, work and play.

Overall Analysis

Budget 2022 sees investment in many positive projects and initiatives, including much needed expenditure to lift the quality of our often neglected social infrastructure.

We know that we will not be able to build our way out of the infrastructure deficit we face, which is why the Government needs to genuinely consider alternative infrastructure funding, financing and delivery arrangements, including by working with the private sector. Leaving this opportunity on the table will continue to force successive governments to prioritise and stage projects as we have seen through this latest budget.

This is one of the many recommendations put forward by the Te Waihanga, The Infrastructure Commission’s strategy that we urge the Government to adopt so that we can deliver the world class infrastructure Kiwis deserve.

Infrastructure New Zealand will continue to analyse Budget 2022 over the coming days and looks forward to working with the Government on addressing our significant infrastructure deficit.

Civil Contractors New Zealand Chief Executive Alan Pollard said Aotearoa’s infrastructure sector was facing immense challenges, including a lack of workers, uncertainty around future projects, and spiralling expenses caused by supply chain disruption and rising fuel and materials costs.

“Today’s budget is a good start. The Government investment in trades training, rail and telecommunications infrastructure and the Construction Sector Accord initiatives is very positive but it doesn’t go far enough. As a country, we are missing a trick when it comes to dealing with other key infrastructure issues.”

“Treasury’s 2022 Investment Statement has put our combined infrastructure gap at a whopping $210 billion. If we are going to make headway and create a thriving New Zealand for future generations we need a lasting commitment, from all political parties, to building and maintaining the transport, water, energy, and communications infrastructure that’s desperately needed.

“We must continue to innovate, look for efficiencies and work smarter, but we can’t build our nation on the smell of an oily rag. The $37 million to progress Construction Sector Accord Transformation Plan initiatives will help foster smarter and more efficient ways of working, but without additional funding, it will be difficult to make progress against a rising tide of escalating costs.”

“The civil infrastructure and construction workforce shortage is acute. Australia has launched a major international attraction campaign for infrastructure workers and New Zealand must do the same to attract people to our country and dispel the myth we are not open for business.

“We also need to do more to remove the barriers preventing people from being able to work in New Zealand. That means investing in more resources for Immigration NZ to process the number of applications we will need, as well as broadening visa eligibility criteria – we need engineers and planners, but we also need people out in the field doing the work required.”

“The New Zealand Infrastructure Commission has done some outstanding work over the past few years, gaining input into our country’s first ever long-term infrastructure strategy from over 20,000 New Zealanders, over 700 consultation submissions, and stakeholder meetings and workshops.

“It’s our hope that the Government takes this report seriously and moves quickly to ensure New Zealand’s infrastructure needs are given the attention, and funding, they deserve.”

Source: Infrastructure New Zealand Media Release

Source: Civil Contractors New Zealand

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