Robust and high-quality infrastructure drives economic growth, boosts productivity, improves our way of life, and underpins a country’s prosperity.
New Zealand faces significant challenges in planning, funding, consenting, delivering, and maintaining infrastructure.
Under the current investment settings, the Treasury of New Zealand’s 2022 Investment Statement reveals a staggering infrastructure gap of $210 billion over the next 30 years. The situation necessitates a doubling of the country’s infrastructure spending from 5.5% of GDP to 9.6% in the next 30 years, as estimated by the New Zealand Infrastructure Commission’s (Te Waihanga) recent 30-year infrastructure strategy 2022-2052 report (Budget 2022, 2022).
ASB, one of the major banks in New Zealand, estimates that an investment of up to $1 trillion over the next 30 years is needed to bring the country’s infrastructure up to par. ASB senior economist Mark Smith points out that New Zealand’s infrastructure investment at 6% of GDP is below the OECD average, a factor that may contribute to the country’s lower productivity and incomes. He suggests that improving our infrastructure could help close the productivity gap with the OECD average, potentially boosting our economic performance (Pelletier, 2024).
What do New Zealanders think of their infrastructure?
The Ipsos Global Advisory Study surveyed New Zealand and 28 other countries to explore their perceptions of their current infrastructure. The survey, which ran from 1-12 November 2019, defined infrastructure as things people rely on, such as road, rail, and air networks, utilities such as energy and water, and broadband and other communications.
Over half of New Zealanders (55%) agree that the country is not doing enough to meet its infrastructure needs, and a great majority (76%) agree that investing in infrastructure is vital to New Zealand’s future economic growth.
New Zealanders are less satisfied with the country’s housing and solar energy infrastructure. Only 29% of New Zealanders say they are satisfied with the new housing supply, below the global average of 43% and Australia at 52%. At the bottom is Solar Energy, which has a 28% satisfaction rate, behind the Australian result of 40% but not dissimilar to the global average of 33%.
When it comes to the type of infrastructure that New Zealanders are most satisfied with, the top five are airports (89%), Water supply and sewerage (70%), Digital infrastructure (67%), Motorway/major road network (62%), and Wind energy (51%).
When asked what infrastructure the government needs to prioritise, New Zealanders want new housing supply to be the top priority (55%), followed by Motorways and major road networks (46%), Local road networks (41%), Rail infrastructure-track/stations, and solar energy infrastructure (37%).
Concerns around rising sea levels have increased over time, as 44% of New Zealanders believe that the country is poorly equipped regarding its defences against rising sea levels.
NZ’s infrastructure challenge
The New Zealand Infrastructure Strategy 2022-2052 identifies New Zealand’s infrastructure challenge and seeks to achieve its vision of a thriving New Zealand through a world-class infrastructure system.
Below are the reasons why the country needs to invest in its infrastructure and why New Zealand must reshape how it plans, delivers, and uses infrastructure:
- The country needs to respond to the aging and increasing population (New Zealand is projected to grow by 1.2 million people in the next 30 years);
- To promote economic growth across New Zealand;
- Correcting a pattern of historical under-investment in infrastructure (for both new infrastructure and maintaining existing infrastructure) and
- Adapting to climate change and developing low-emission and renewable energy projects and ancillary infrastructure is necessary.
Challenges in executing NZ’s Infrastructure vision
The Deloitte article, “Budget 2022: Pipeline of infrastructure has never been better” mentions:
Despite the government’s willingness to invest in closing the infrastructure gap, serious challenges and considerations lie ahead. These include the sector’s worsening workforce shortage. Many are relocating to Australia for higher wages, higher cost of living, and inflationary pressures. Despite New Zealand’s comparable infrastructure investment with other high-income countries in terms of GDP, its delivery efficiency lies in the bottom 10%.
As the New Zealand Infrastructure Strategy points out, the country and the infrastructure sector will face many challenges over the next 30 years.
Meeting these challenges and providing our society’s infrastructure will require innovations, inventiveness, goodwill, hard work, and cooperation, values for which New Zealand is known.
Sources:
Pelletier, N. (2024, April 5). $1 trillion to bring NZ infrastructure up to standard – ASB. RNZ. Retrieved from https://www.rnz.co.nz/news/business/513474/1-trillion-to-bring-nz-infrastructure-up-to-standard-asb
Unleashing Aotearoa New Zealand’s Infrastructure Pipeline: The Path to Sustainable Growth. (2023, October 16). WSP. Retrieved from https://www.wsp.com/en-nz/insights/unleashing-aotearoa-new-zealands-infrastructure-pipeline
The New Zealand Infrastructure Strategy 2022-2052: A foundation for progress. (2022, October 31). Minter Ellison Rudd Watts. Retrieved from https://www.minterellison.co.nz/insights/the-new-zealand-infrastructure-strategy-2022-2052
Ipsos NZ Infrastructure Survey Jan 2020. (2020, January 7). Ipsos. Retrieved from https://www.ipsos.com/en-nz/ipsos-nz-infrastructure-survey-jan-2020
Budget 2022: Pipeline of infrastructure has never been better. (2022 May 19). Deloitte. Retrieved from https://www.deloitte.com/nz/en/Industries/government-public/perspectives/infrastructure.html
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