New Zealand will need better funding models to charge the true cost of infrastructure to those who use and benefit from it if the country is to stand any chance of successfully addressing its NZ$200-billion plus infrastructure deficit, according to a new report on the state of play for infrastructure delivery in New Zealand.
In its report The Big Picture: Infrastructure - Defying the deficit with better delivery law firm Bell Gully takes a closer look at some of the key challenges facing the sector and explores potential solutions – among them charging users and beneficiaries of infrastructure, pricing to modify demand, use of private financing models such as PPPs and the IFF model, and the emerging discussion around city and regional deals.
“We have water spilling onto streets and rates bills going up across the country. We are all starting to understand what not charging the true cost of infrastructure means,” said Bell Gully infrastructure partner Angela Harford, one of the lead authors of the report. She said the growing public understanding seen in the current environment means there is an opportunity to drive change. “There’s no ‘free lunch’ when it comes to infrastructure.”
The report comes amid a raft of infrastructure announcements from Government affecting the sector, from a new fast-track consenting process, to modernisation of the Public Works Act and the development of a 30-year National Infrastructure Plan.
Harford said success in addressing New Zealand’s infrastructure woes would not be all about Government or even about better funding and financing. “As a sector we also need to look at good asset management to maximise our existing assets and consider all strategies and tools to ensure more effective and efficient delivery of new assets,” she said. “No one strategy holds all the answers.”
Partner Ian Becke, an infrastructure and construction specialist, said making sure projects are designed and built in an efficient and sustainable way would play a part if New Zealand is to overcome its infrastructure deficit. Choosing the right contractual model for the project, allocating risk appropriately and making “sensible selections” on the conditions included could all make a significant difference to delivery outcomes. “It’s positive to see the growing awareness across the industry of the range of contractual options and features that can facilitate successful project delivery,” he said.
“We will close the gap if we ‘think outside the box’ and thoughtfully consider the different ways we can approach impediments to infrastructure delivery, including by taking on board lessons learned from previous successes and failures (both domestically and from abroad),” said Becke.
“We are facing a fast-changing landscape and it will be important for those in the sector to bring their understanding of what will work, and what may not, to this process,” he said.
Read The Big Picture: Infrastructure: Defying the deficit with better delivery report here.