By David Jenkins, Chief Executive Officer; and Steve Mooney, Country Head, Institute of Public Works Engineering Australasia
Rugby, netball, soccer, cricket, athletics, golf … Kiwis can’t agree on which sport we are best at in the world; however, everyone in New Zealand can agree that each of our towns and cities has a critical infrastructure deficit.
Water infrastructure is in crisis, hospitals are underfunded, and transport projects – such as Auckland’s Second Harbour Crossing and Let’s Get Wellington Moving – have been mired in controversy, scrapped, and then started again.
Decades of underinvestment by governments, of all types and at all levels, has resulted in a deficit that Te Waihanga (the New Zealand Infrastructure Commission) estimates at $210 billion over the next 30 years. That’s more than $40,000 for each investment required by every person alive in Aotearoa.
Te Waihanga recently asked the New Zealand Institute of Economic Research to examine the hospital sector specifically. Much of the public infrastructure built in the 1950s and 1970s is reaching the end of its design life. The ‘Building a healthy future’ report found that $115 billion (four times the current spending) must be spent on hospitals over the next 30 years.
There is a positive way to look at the current pipeline of total infrastructure assets, and that is the $92 billion in projects set to break ground in the next three to five years – but that still leaves a worrying gap.
Consulting group Sense Partners believes that the pipeline needs to grow by as much as $140 billion over the next 30 years. The October 2023 change of government should be seen as a groundbreaking opportunity to examine the New Zealand infrastructure sector and take some decisive action, particularly around funding models.
Public funding has limits. Directing more public money to infrastructure would require either a radical change in priorities, which would see areas of government underfunded, or a significant increase in taxation, which would be burdensome and politically unpopular.
There is international interest in what reforming the sector might look like. For example, Australia’s Plenary Group – which has worked on major Australian hospital and transport projects, such as the Gold Coast Light Rail – has put its hand up for public‑private partnership (PPP) initiatives in New Zealand.
The National–ACT Coalition Agreement is committed to exploring the idea of building and leaseback agreements in the hospital sector, following a model that has been successful in some provinces of Canada.
Infrastructure New Zealand got it right in its open letter to the incoming government last year. It pointed out that the government should draw on funding beyond its balance sheet to drive efficiency, productivity and value for money. It is a strong proponent of the PPP model as part of the solution mix, but also advocates learning from past domestic experience while leveraging international lessons.
The letter also makes other valid and non‑financial recommendations, such as elevating the more comprehensive economic and social benefits, and considering them earlier in the business case. It recommends faster consent for renewable energy infrastructure, and a ‘system reboot’ for local government and its relationship with the central government.
These are all issues that need to be debated and then acted upon with some energy, hopefully in a spirit of bipartisanship. There is little doubt that New Zealand faces an infrastructure crisis, but from crisis comes opportunity.
The moment to grasp that opportunity has arrived in New Zealand, and the Institute of Public Works Engineering Australasia (IPWEA), with its global partnerships, is ready to contribute intelligently to the debate and support New Zealanders to get the essential infrastructure they expect and need.
About the authors
David Jenkins is currently the CEO of the Institute of Public Works Engineering Australasia (IPWEA), a role he has held for four years. Jenkins is recognised as a thought leader in infrastructure asset management, speaking at The Sydney Morning Herald Infrastructure Summit and major events hosted by the UK Institute of Civil Engineers, Institute of Asset Management, Institute of Municipal Engineering of Southern Africa, and the Government Finance Officers Association, based in the United States. He has published articles in The New Zealand Herald and regularly contributes to Government News. Jenkins has an Executive Master of Business Administration from the University of Auckland, a postgraduate degree from the University of Oxford, and a degree from the University of London. He is on the Board of the International Federation of Municipal Engineering. Jenkins hosts IPWEA’s Infrastructure Matters podcast, and has interviewed international thought leaders on water, roading infrastructure, and asset management.
Steve Mooney is the Aotearoa New Zealand Country Head of IPWEA, bringing diverse business experience across various industries. Mooney has worked across public, private, and not‑for-profit sector organisations in New Zealand and international markets. As an experienced senior manager with a strong sales, marketing and relationship management background, Mooney understands the challenges faced by membership organisations and the need to engage with members.