New Zealand must up its game on mega infrastructure project planning, funding and delivery
12 March 2015
New Zealand must continue to up its game on infrastructure and development by becoming more ambitious and coordinated in its approach to investment if we want to compete with global infrastructure leaders like Australia and the UK for skills and capital, says Stephen Selwood, chief executive of the New Zealand Council for Infrastructure Development.
Large steps have been taken in recent years to enhance New Zealands infrastructure capability. Initiatives such as the creation of a National Infrastructure Unit have resulted in improved understanding of national infrastructure needs and strengthened central monitoring and oversight.
One of the most significant changes is the current and planned investment in very large city and nation building mega projects like the Canterbury rebuild and Aucklands City Rail Link and Waitemata Harbour Crossing.
Where global infrastructure leaders like Australia and the UK are heading, however, goes far beyond the approach taken in New Zealand, to date,
Visionary thinking and integrated planning and delivery at scale are achieving transformation of economic and social systems around investment and providing a magnet for global skills and capital.
Projects are planned and implemented to deliver society-wide social and economic outcomes. Currently the focus is almost entirely on delivering jobs, homes and growth working within a sustainable development framework.
The commitment to delivering outcomes keeps officials and the public focused on the bigger picture. Funding availability, consent prescriptions and other inputs are not inconsequential, but they are subordinate.
Globally significant transport projects like the 17 billion Crossrail, 50 billion HS2, A$14.5 billion WestConnex and A$8 billion Northwest Rail Link and major urban regeneration initiatives like Nine Elms in London, Salford Quays in Manchester and Barangaroo in Sydney are exemplars of global best practice.
New centres from communities to mixed use residential and commercial projects to internationally significant business centres are master-planned, funded and delivered as combined infrastructure and development partnerships.
Financial and economic business cases are underwritten by job creation, value uplift through regeneration and improved connectivity.
Central and local agencies work together to achieve joint policy objectives. Local enterprise partnerships between local government and business are focused on growth in the regions working collaboratively with government. Planning arrangements align all levels of government.
Unlike New Zealand where planning and funding constraints so often define project conceptualisation, the promotion of outcomes above processes ensures funding and design follows strategy and innovation is incentivised.
Because of the pressure that outcome-driven nationally significant projects place on budgets, they are financed to the greatest extent possible by private capital not only domestically, but from the Middle East, Europe, Asia and the world.
The private sector is a partner in planning and funding. Major public transport infrastructure receives heavy subsidies from land developers who benefit from improved accessibility.
Public investment is used to de-risk or catalyse private investment aligned to public objectives. This shifts the burden of cost as far as possible to private investors who directly benefit from improved services and away from taxpayers for whom benefits are more widely spread.
The complexity of decision making and expertise required to match public service outcomes with private property market expectations has resulted in an almost complete shift to independent decision making bodies. Special purpose companies or independent statutory agencies oversee project procurement and delivery in established markets, not Government departments which are influenced by often slow and unpredictable political decision making processes.
In both Australia and the UK the potential of public agencies to promote national objectives through carefully conceived provision of essential services in partnership with the private sector is well advanced on current practice in New Zealand.
If New Zealand is to advance global best practice in nation building infrastructure and attract the worlds best and brightest, NZCID makes the following recommendations:
- That the existing effects-based approach to urban development planning be replaced with an outcomes-based approach emphasising the opportunity to promote sustainable development
- That integrated development at scale be promoted as a means to achieve transformation of regions and communities and attract global private capital and expertise.
- That the Government lead national urban development policy and investment with a revised planning framework guided by national and regional spatial planning.
- That all national and regional urban development initiatives be assessed on their capacity to deliver positive economic, social and sustainability outcomes and be prioritised according to opportunities to leverage property value uplift to offset public spending.
- That master planning of major urban developments become a statutory requirement and a commitment is made to local and central government and private sector collaboration on site planning, funding and delivery
- That attracting private investment become a key objective of development initiatives.
- That independently governed specialist procurement agencies be established and existing agencies developed to ensure best practice in project delivery and implementation.