The New Zealand Government will commit a further $71b of infrastructure investment over the next five years to provide certainty to the infrastructure sector.
The New Zealand Government has been making substantial investments in New Zealand’s infrastructure over recent years. We have invested $45 billion in infrastructure projects over the past five years, and in 2019 established Te Waihanga – New Zealand Infrastructure Commission to look at how our infrastructure is planned and resourced.
Te Waihanga’s New Zealand Infrastructure Strategy, Rautaki Hanganga o Aotearoa identifies the challenges we will face over the next 30 years and the change needed in our approach to infrastructure. Alongside Budget 2023, we are releasing our Infrastructure Action Plan in response to the Strategy, and this will be crucial to continuing to deliver the infrastructure transformation required.
The Government’s careful fiscal management has allowed us to commit a further $71 billion of infrastructure investment over the next five years, while keeping net debt well below the 30 percent of GDP. Long-term investment allows for long-term planning, and a clear pipeline of work will provide confidence and certainty to the infrastructure sector.
The government’s announcement of an increased infrastructure investment to $71b over five years has potential to deliver results, but Civil Contractors New Zealand says the investment must come with more certainty around the work programme ahead and focus on the work at hand.
CCNZ Chief Executive Alan Pollard welcomed the new National Resilience Plan, which has an initial funding pool of $6b and a focus on building infrastructure resilience in the medium and long term for at-risk areas, and a $279m investment package for State Highways that focusses on slip prevention, flood mitigation and managing risks such as sea level rise.
Budget 2023 provides a $10.7 billion total capital package for a range of projects, including:
New Zealand’s national rail network is critical for passenger transportation and rail freight services. It provides Kiwis with transport choice, reduces emissions, and benefits the economy. In Budget 2023, we are providing $369.2 million total operating to restore a resilient and reliable national rail service.
This funding will enable KiwiRail to continue network services for all rail users and provide the platform for projected growth on rail. We are also investing $197 million total capital and $9.4 million total operating in the Auckland City Rail Link project, to address cost increases, including those due to COVID-19.
Once completed, this project will provide a key link within Auckland’s public transport network, improving service frequency and travel times.
Te Whatu Ora reports on 110 of their key projects with a combined value of approximately $7.8 billion. This includes 75 projects in design and construction phases worth $6.2 billion. Two major projects that Te Whatu Ora is currently undertaking includes significant hospital redevelopments with New Dunedin Hospital ($1.6 billion) and Pihi Kaha – Whangārei Hospital ($759 million for Stage One).
Careful management of cost pressures and prioritisation ensures that the health system continues to deliver projects in a challenging fiscal and construction environment.
“New Zealand has taken a beating from severe weather events, which has made our massive and well-documented infrastructure deficit even worse and will require sustained funding and focus to overcome,” says CCNZ Chief Executive Alan Pollard.
“It’s great to see recognition of the role well-planned preventative works can play in mitigating the damage flooding and severe weather events can wreak on our infrastructure and communities, and licence given to Waka Kotahi to carry out much needed work,” says CCNZ Chief Executive Alan Pollard.
He said more detail around the work was needed to give civil contractors the confidence they needed to invest in new and emerging technologies, and to invest in hiring and training staff. Because of this, it was important they could have confidence in a consistent a pipeline of work.
National Resilience Plan
As the Infrastructure Action Plan lays out, we need to futureproof our infrastructure for New Zealand’s growing and changing population and climate change events, and to make use of developing technology available to us.
The ability of infrastructure systems to function during adverse conditions and quickly recover after events is fundamental to the wellbeing of communities.
The North Island weather events have added a level of urgency to our infrastructure investment planning and highlighted the importance of resilience in the face of climate change and increasing extreme weather events.
In addition to the $71 billion committed of infrastructure investment over the next five years, we are funding the initial phase of a National Resilience Plan to support significant medium- and long-term infrastructure investments which focus on the resilience of New Zealand’s critical infrastructure and support the Infrastructure Action Plan.
We are committing an initial $6 billion to the programme, with plans for further funding in future Budgets. Given recent weather events,the programme will first focus on projects that support recovery and building back better.
Priority will be given to reinstating road, rail, and local infrastructure as well as telecommunications and electricity transmission investments.
Engineering New Zealand is also pleased to see the release of the Infrastructure Action Plan alongside the funding, which looks across our need for improved investment in areas such as energy and water, housing, diversifying our transport and the ongoing recovery from recent extreme weather events.
“Some of these assets have suffered from underinvestment over multiple decades, and Engineering New Zealand supports all efforts to future-proof infrastructure that improves the lives of all New Zealanders, supports the economy, and strengthens our resilience in the face of climate change,” says Engineering New Zealand Chief Executive Richard Templer.
As indicated at Budget 2022, the change to the debt ceiling as part of the Government’s fiscal strategy means we can use our balance sheet more effectively to support long-term productive investments, such as, the National Resilience Plan.
“Smart investments in infrastructure almost always pay for themselves. This is likely to be especially true when it comes to adapting to climate change, which is a crucial, multigenerational project that’s now overdue,” says Engineering New Zealand Chief Executive Richard Templer.
Engineering is going to be at the front lines of these issues, whether it’s in areas like the immediate response and recovery for the Auckland Floods and Cyclone Gabrielle or the long-term challenge of decarbonising our economy,” says Engineering New Zealand Chief Executive Richard Templer.
“We need to ensure that our infrastructure meets the growing needs of the nation, and that we can bounce back from natural disasters quickly when they occur,” Templer said. “Investing significant resources now is the best way to achieve that,” says Engineering New Zealand Chief Executive Richard Templer.
“New Zealand continues to miss opportunities in its infrastructure delivery, efficiency and scale by solely relying on the Government to fund improvements to our roads, public transport, resilience and water infrastructure,” says Infrastructure New Zealand Chief Executive Nick Leggett.
“More plans, more apparent pots of money, but the funding pool remains the same and the only source is from the back pocket of the taxpayer. New Zealand badly needs to access private capital to inject into a sustainable building plan for our infrastructure,” says Infrastructure New Zealand Chief Executive Nick Leggett.
“As a country, New Zealand doesn’t lack for promises, plans or ambition. However, it often lacks action in getting infrastructure projects built. Budget 2023 doesn’t deal with that problem,” says Infrastructure New Zealand Chief Executive Nick Leggett.
Nick Leggett said that while encouraged by the funding for an expansion of electric vehicle charging infrastructure, in partnership with the private sector, projects like a second Auckland harbour crossing and Get Wellington Moving, require capital that the Government just doesn’t have,” says Infrastructure New Zealand Chief Executive Nick Leggett.
Nick Leggett added, “with some exceptions this Budget doesn’t solve the immediate and long-term challenges facing New Zealand’s poor public infrastructure. You can only hit the ball out to the future with big dollar promises for so long before people start feeling the reality of decades of underinvestment with a shallow funding pool and a workforce shortage. Our question to the Government is, how are you going to deliver this?”
“The investment in young people’s public transport fares in this Budget is positive, however investment is also needed in the public transport system to ensure that our buses and trains even turn up. Reliability and punctual services are the most important factors for the public,” says Infrastructure New Zealand Chief Executive Nick Leggett.
“The work that civil contractors do underpins all other parts of the construction sector, so the focus on a clearly defined and well-funded programme of work is essential if we are serious about tackling our infrastructure challenges,” says CCNZ Chief Executive Alan Pollard.
While good support and collaboration between government and industry was important, delivering good construction outcomes would require all parties to focus on the job at hand – the construction and maintenance of the country’s infrastructure networks in the short, medium and long term.
“It was all too common to see infrastructure budgets remain unspent due to holdups from changes to design, delivery, and administration. Funding was needed to finance tangible work on the ground, rather than growing the amount of government administration,” says CCNZ Chief Executive Alan Pollard.
“As a country, we have a lot of catching up to do. A commitment for $71b in infrastructure investment over five years can enable a lot of good work. We need to make sure it leads to actual work on the ground and leads to productive outcomes,” says CCNZ Chief Executive Alan Pollard.
“There are also a lot of distractions out there, so we need to make sure our people and companies can focus on their core task of construction to achieve the good outcomes infrastructure delivers in terms of healthy, prosperous and well-connected communities. Communities and businesses were hurting from rising costs as well as severe weather events, so mental health support was also an important consideration,” says CCNZ Chief Executive Alan Pollard.
Infrastructure New Zealand has called on all political parties to think long-term about infrastructure decision-making and steer away from politicking around projects and investments,” says Infrastructure New Zealand Chief Executive Nick Leggett.
“A pipeline of essential work should be guaranteed outside of election cycles and budgets, with funding locked in. That way the sector can prepare a workforce and have the kind of skills on hand to make these builds a reality,” says Infrastructure New Zealand Chief Executive Nick Leggett.
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