Kia ora, good morning and thank you for having me here today.
I was delighted to see that your conference is named “Building Nations”, although my interest, unashamedly, is in building this nation, New Zealand. This is the best country on planet Earth and has unlimited potential.
National places enormous importance on the value of resilient, high-quality infrastructure and having in place the right framework to deliver it. I’m going to talk to you today about how a National government will do that.
But before I do, let me make a few observations.
After 18 months as National’s Leader, and the opportunity to have met so many New Zealanders all over the country, I believe, more than ever, that if we make the right decisions, New Zealand can do better, can be more prosperous, and can be more ambitious.
I don’t want to settle for drift and mediocrity, and I imagine you don’t either.
But everywhere I go, people are telling me how worried they are, how frustrated they feel, and how much they’re struggling.
The economic picture is worsening. The cost-of-living crisis is now deeply biting many households and businesses, yet Labour has no economic strategy except to spend even more money.
The Government is now spending more than $1 billion more each week compared with 2017 when National was in government.
That spending equates to an extra $28,000 per household each year, but so much of this money is being wasted. It’s going on bureaucrats, consultants, ideological projects and it’s also being wasted because Labour is simply incapable of delivering what it says it will.
It's not only Labour that struggles to deliver. New Zealand has become a country in which it’s too hard to get things done. Working in infrastructure, you’ll already know that, just like farmers know it.
I don’t accept it has to be like this, and I won’t accept it has to be like this.
A National Government I lead will get New Zealand back on track by fixing the economy, reducing the cost of living, restoring law and order, and improving schools and healthcare.
I want a vibrant New Zealand where people encourage good ideas, celebrate success and when they see a tall poppy, they say “let’s plant some more”.
The world is full of opportunities, but to see them, we first need to look beyond the obstacles. If we can’t remove those obstacles, we have to go round them, or over the top of them. We can do that. We are innovative people. We need to back ourselves.
I came to politics because I could see New Zealand was going in the wrong direction and when I see things not working well, and that I know can be different, I feel compelled to get stuck in.
Making things better for New Zealanders starts with a strong, well-managed economy.
To fix the economy National will:
* Stop wasteful spending and get the books in order
* Provide tax relief
* Cut red tape
* Grow skills and attract talent
* Drive technology and innovation
* Encourage trade and investment, and
* Build infrastructure for growth
It’s that final point, building infrastructure for growth, that I want to talk about today.
As I said at the start, I like your conference title, “Building Nations”, because the impact of building infrastructure is greater than the sum of the individual projects.
Building renewable power schemes, more resilient highways, better public transport public and high-quality freshwater, wastewater and stormwater services are important by themselves.
Taken together, they are the foundation on which a successful First World economy runs. High quality infrastructure drives economic growth, boosts productivity, and enhances our way of life.
National gets it. For example, National understands the importance of resilient networks for getting people and products where they need to go.
I think of the vet who came up to me and thanked National for starting the Waikato Expressway. She said the ease of getting around the region now meant she could get to an extra couple of jobs in a day and get home to her young children earlier. Her productivity and her family life have improved because of that significant public investment.
That’s the point of it. That’s why I want lots more of it.
So, National’s Roads of Significance programme, including the Waikato Expressway, the Christchurch Motorways Projects, the Kapiti Expressway and Tauranga Eastern Link have not only improved safety, reduced travel times, and boosted growth – they have made New Zealanders’ lives better.
National also rolled out ultra-fast broadband – that project ran on time and under budget and gave New Zealand world-class broadband.
We also electrified the Auckland rail network, expanded the Wellington commuter network and started the City Rail Link.
The case for infrastructure investment is clear, yet New Zealand has a significant infrastructure deficit. Estimates of the size vary, but I think we all agree that it is sizeable, running into the billions of dollars.
The Infrastructure Commission says the shortage of quality infrastructure means traffic congestion is choking cities, housing is severely unaffordable, and there is poor-quality water infrastructure in many places.
An infrastructure deficit worth up to 50 per cent of GDP does not appear out of nowhere. If we’re going to fix this deficit, we must understand the barriers to building and maintaining infrastructure in our country.
At the most basic level, the problem is not enough money being spent on new and existing infrastructure. So, let’s look first at the financial barriers.
New Zealand builds too many assets with cash. In particular, water infrastructure and roads are chronically under-leveraged, which sharply limits how much investment there can be.
Debt is the right way and the fair way to fund long-lived infrastructure. The debt gets paid back over the life of the assets by the people who are using them.
We do a poor job of connecting large pools of savings like ACC and NZ Super with opportunities to invest in infrastructure. The problem is not only domestic. The world is awash with savings yet New Zealand does not provide a gateway that makes it easy for that capital to enter the country.
A more fundamental problem is the use of cross-subsidies to build new infrastructure. Forcing every dollar for water or roads to compete with funding for other council services will cause an infrastructure deficit.
Another problem is fragmented and uncoordinated public funds. There are more than a dozen public infrastructure funds – for example, the Infrastructure Acceleration Fund, the Provincial Growth Fund and the Tourism Infrastructure Fund.
Each has its own criteria for funding, its own governance and accountability.
The second barrier to infrastructure is red tape.
Resource consents are a nightmare, especially for large complex infrastructure. And the problem is getting worse.
In the last five years, the time taken to get consent to build has increased by more than 150% while the cost of those consents has increased by 70% in 7 years.
The Government’s replacement system for the RMA will only make things worse.
Finally, on the long list of challenges, there’s the global war for talent whether it’s construction workers, or those involved in planning, delivery and maintenance. There’s no shortage of work needing doing, but there’s a severe shortage of people available to do it.
So that’s the bad news. The good news is that New Zealand’s infrastructure deficit can be fixed, and we have some examples right in front of us of it working well.
For example, we can look at areas where there is no deficit – telecommunications, electricity local lines and transmission, airports, and gas pipelines.
What these assets have in common is not public or private ownership, or favourable geography, or special tax treatment.
What they share is the right to recover their costs from their customers, including a return on capital. They can borrow in their own right. And they don’t depend on cross-subsidies from ratepayers or taxpayers to fund growth. As a direct result, the cables and tarmac and pipes turn up in line with customer demand.
The real lesson is clear. Fixing infrastructure means getting the economics right and having regulation that is fit for purpose.
There is so much to gain by getting this right. For example, housing affordability is a chronic problem in New Zealand, and so many social problems flow from it. To fix housing affordability, councils need to “go for housing growth.” And that means infrastructure has to work for councils and ratepayers, and stop being a pressure on councils’ books.
National says, ‘let’s build infrastructure wherever there are enough people to justify the cost’. New Zealand’s future prosperity depends on it.
There’s a lot that an incoming government after October 14 needs to tackle with a fresh approach. Infrastructure investment is high on that list.
Just two weeks ago, Chris Bishop and I announced National’s housing plan, called “Going for Housing Growth”. It requires councils to immediately consent enough land capacity for 30 years’ worth of housing growth. Our plan will fix the red tape around infrastructure funding and financing, and it provides financial incentives to go for housing growth.
I am all about getting things done. Big deficits need big solutions. National is up for them. And we will bring a similar approach to meeting the challenge of infrastructure investment.
That’s why I’m pleased to tell you today that a government I lead will drive a step change in the way infrastructure is delivered in New Zealand.
I am proud to announce today National’s five-point plan to fix the longstanding bottlenecks to infrastructure once and for all.
Here is what National will do:
First, we will expand the role of Crown Infrastructure Partners and build a National Infrastructure Agency to coordinate public infrastructure investment, act as a gateway for domestic and offshore capital, and deliver infrastructure for the future.
Second, we will be making use of innovative funding and financing tools to boost investment in infrastructure.
Third, we will develop National City and Regional Deals, so that central government can partner with local government to create long-term pipelines of regional projects.
Fourth, we will create an infrastructure fast-track consents process to make it easier to build the infrastructure New Zealand needs for the future.
Fifth, we will build a 30-year infrastructure pipeline to deliver long-term certainty, enable more effective planning, and reduce project costs.
Let me run through each of those points now.
First, we will establish a National Infrastructure Agency which is an expansion of the existing Crown Infrastructure Partners.
It will have three main functions.
First, it will consolidate all of central government’s fragmented infrastructure funds.
Let’s face it. Central government capital expenditure on infrastructure is currently unfocused and uncoordinated. Labour has created a variety of infrastructure-related capital funds such as the Infrastructure Acceleration Fund, the Provincial Growth Fund, the Tourism Infrastructure Fund, the NZ Upgrade Programme, and many more, but the criteria for each differs, as do the accountability, governance and reporting structures.
Some Crown infrastructure funds are short-term, and some are long-term. Some involve loans; others do not. Some are contestable; some are not. Private sector expertise is not utilised to the extent it could and should be. Expertise in project evaluation and delivery is spread across multiple different agencies.
Basically, it’s a mess. The Infrastructure Commission has said that “fewer consolidated funds in the future would result in better prioritisation and coordination of programmes at the national level”. National agrees.
Our National Infrastructure Agency will provide proper oversight and governance of these uncoordinated funds. It will be made up of infrastructure funding and financing experts, as well as economic and legal experts. It will take an inter-generational, long-term approach to the infrastructure funding and investment in New Zealand.
The second role of the National Infrastructure Agency will be to be a gateway to connect domestic and offshore savings with New Zealand infrastructure investment.
If you’re an international investor looking to invest in New Zealand today, it’s unclear how you should engage with the Government. The National Infrastructure Agency will become the agency to coordinate and deploy off-shore capital in New Zealand.
The agency will be a centre of expertise for new funding and financing tools, like public-private partnerships, value-capture, and tolls.
We will ask it to fix the Infrastructure Funding and Finance Act to make it much easier for councils to fund long-term infrastructure investment.
The third role of the National Infrastructure Agency will be around procurement and delivery.
There’s no shortage of good infrastructure ideas. But delivery, particularly for this government, has been New Zealand’s Achilles heel. Crown Infrastructure Partners has a proven track record of delivery. We want to expand its role.
This means being a centre of expertise for procurement. It will focus on complex projects. I’m thinking of projects like the Second Auckland Harbour Crossing, rapid transit proposals, and new health infrastructure.
No doubt many of you are wondering whether this means we’re doing away with the Infrastructure Commission.
No. The commission is doing valuable work. Under National, their job will be to work on infrastructure policy advice and in particular, developing the 30-year pipeline of projects we want to build.
Second, we will be making use of innovative funding and financing tools to boost investment in infrastructure.
New Zealand has been slow to adopt funding and financing tools that are widely used overseas. This includes streamlined Public-Private Partnerships, which involve long-term contracts to build and operate infrastructure.
The major innovation National will introduce in infrastructure finance is value capture. National believes that those who benefit from publicly-funded infrastructure should help contribute to the cost of it.
New Zealand’s funding model for certain types of infrastructure is a classic case of privatising benefits, but socialising costs.
Infrastructure’s value capitalises in the value of nearby land. But in many cases, those enriched landowners pay no more than anyone else towards the investment.
This way of funding infrastructure embeds a natural resistance to growth. After all, why should ratepayers support more houses in their area if that means higher rates?
National will build more infrastructure with greater use of targeted rates in the Infrastructure Funding and Finance Act, a type of value capture.
Targeted rates will be mainly directed at new greenfields developments. That means existing homeowners will not pay more for their current services.
Third, National will launch National City and Regional Deals.
Addressing New Zealand’s infrastructure deficit cannot be done by central government alone. Local government has an important role to play.
National will reshape the relationship between central government and local government through long-term partnership agreements called National City and Regional Deals. These models have proven successful overseas, including in the United Kingdom and Australia.
Each City and Regional Deal will be bespoke. They will involve long-term funding commitments by both central and local government to enable certainty of planning, and a portfolio approach encompassing road, rail, public transport, housing (including public housing), and environmental resilience investments.
Negotiations for City and Regional Deals will begin shortly after the election, with councils and regions urged to begin identifying priority projects immediately.
The fourth change is to get serious about actually building things by fixing our broken consenting framework.
New Zealand’s planning system needs urgent reform. Labour’s RMA 2.0 is not the answer.
National will make two key changes to New Zealand’s planning system to reduce resource consent timeframes and costs.
First, we’ll introduce an infrastructure fast-track process modelled on the COVID fast-track process for quick processing of resource consents.
This will become permanent for common infrastructure like roads, water, electricity lines and so on. Like the COVID fast-track process, expert panels will process consents within strict timeframes.
Second, we’ll establish a class of projects known as Major Infrastructure Priorities, which will require decisions within one year.
The Minister for Infrastructure will be able to designate a project as a Major Infrastructure Priority if it meets the criteria.
This will cover large, complex projects which, under the RMA, requires public notification and hearings.
As with our Electrify NZ policy announced earlier this year, decisions on major projects will be made within one year, except in cases where the Minister for Infrastructure allows an extension.
Fifth and finally, National will develop a 30-year infrastructure pipeline.
National understands that when it comes to investment in long-lived assets, certainty is crucial.
So, National will direct the Infrastructure Commission to prepare a 30-year infrastructure plan and pipeline for New Zealand, for new and existing assets.
The plan will be broken down by city and region, reflecting our intention to develop City and Regional Deals. The plan will develop an infrastructure priority project list, similar to the list developed by Infrastructure Australia.
The combination of a 30-year infrastructure plan, a priority project list, and City and Regional Deals, will create a genuine infrastructure pipeline. This will give you – the industry - the confidence to invest in technology, equipment, and people, and drive efficiencies and cost reductions.
Ladies and gentlemen, that’s a very brief overview of National’s plan for infrastructure. It’s a lot to take in because a lot needs to change.
I am not afraid of making those changes, and National is not afraid of them either. In fact, National says that to achieve a productive, efficient, growing economy that will serve New Zealanders well for decades to come, a change in the delivery of infrastructure is essential.
What also needs changing is the mindset that puts barriers in the way of development. New Zealand needs to get to ‘yes’, much more quickly.
That won’t happen by being reckless, and your industry will play a huge part in shifting attitudes. I want to see us reach a point where development is welcomed for its potential social and economic advantages, rather than opposed because of short-term disruption and short-sighted concerns.
We need a mindset where risk management is simply one of the many factors that are part of getting a job done, but progress is the priority.
As I said, building infrastructure is a key to growing the economy, and that matters because it’s only with a growing economy that New Zealand can afford all the extra things that Kiwis want, need and expect.
Yours is an exciting sector to be in and I can assure you that under a government I lead, with National’s plan in place, infrastructure will be a bigger and more dynamic sector.
Infrastructure will truly be at the heart of building a secure and prosperous future. It is essential for making New Zealanders’ lives better, and it is critical to getting New Zealand back on track.
Thank you.