New Zealand has committed billions to infrastructure development under a budget that defines success not only by the nation’s fiscal health, but also by the wellbeing of its natural resources, people and communities.
Following statements by Prime Minister Jacinda Ardern about “doing things differently”, New Zealand designed its annual budget around wellbeing priorities and instructed its ministries to create policies to improve wellbeing. The resulting Wellbeing Budget, published in May 2019, emphasises citizen’s needs and the health and wellbeing of current and future generations.
Wellbeing outcomes in infrastructure
Following the release of the Wellbeing Budget, the government formed the autonomous Infrastructure Commission (Infracom) in September 2019. Infracom is tasked with lifting infrastructure planning and delivery to a more strategic level and by doing so, delivering “wider public outcomes” in the form of long-term economic performance as well as social, cultural and environmental outcomes. The Commission is also responsible for maintaining the nation’s projects pipeline.
Infracom is developing a 30-year infrastructure strategy to assess the fitness for purpose of New Zealand’s infrastructure system as a whole, determining how well it’s working, identifying priorities and barriers to good outcomes, and publishing a long-term capital intentions plan. The strategy will be completed by the end of 2021.
Significant infrastructure investments in 2020
Back in January, the government announced the New Zealand Upgrade Programme – a 10-year, NZ$12 billion plan to build and upgrade rail, roads, schools and hospitals across the country. Prime Minister Jacinda Ardern said at the time, “This is a once in a lifetime opportunity to invest in New Zealand – modernising our infrastructure, preparing for climate change and helping grow the economy. It makes sense to do this now because we’ve managed the books wisely and have historically low interest rates, which makes our programme affordable.”
At mid-year, the government committed an additional NZ$10 billion to support its push for infrastructure and construction to be key drivers in leading the country through recovery to growth as part of its response to the COVID-19 pandemic. Of this, NZ$3 billion will fund the Infrastructure Industry Reference Group (IRG). The IRG is compiling a list of projects that are most shovel-ready to kick-start the building process.
There is also NZ$4 billion per annum earmarked for The National Land Transport Fund, and another NZ$3 billion will be set aside from the proposed COVID-19 Response and Recovery Fund (CRRF) to support infrastructure development.
The NZ$50 billion CRRF is the foundation of the 2020 Wellbeing Budget.
Accelerating sustainable development
Putting citizens’ wellbeing first is one factor helping to continue driving the country’s embrace of sustainable development, and accelerating its plans toward net-zero emissions. In September the government announced it will bring the goal of 100 percent renewable electricity forward five years, from 2035 to 2030.
Renewables already contribute 84 percent of New Zealand’s electric power, but a way to reach the 100 percent goal faster is the Lake Onslow pumped hydro storage scheme. The NZ$4 billion project will take five years to build and employ 4,500 workers at its peak. When the lake fills up two years later, the generated and stored electricity will be as much as all existing such schemes combined. In July the government committed NZ$30 million to begin the preliminary preparation for the project and in September added another NZ$70 million for the planning work.
The Global Infrastructure Hub’s Infrastructure Outlook previously estimated that New Zealand faced a NZ$17 billion gap between budgeted for and needed infrastructure development between now and 2040. But with its recently announced plans for robust infrastructure development, and the reelection of Prime Minister Ardern in October 2020, New Zealand may well be on track to considerably reduce that gap.