Executive Summary
Introduction
2. Infrastructure has the potential to make a significant contribution to achieving New Zealand's sustainable development objectives. Investors across the economy need confidence in arrangements for the provision and regulation of infrastructure if they are to commit funds to new projects.
3. Infrastructure was identified as a significant business concern at the Growth and Innovation Advisory Board's Business-Government Leaders Forum in October 2002.
4. In February 2003, Cabinet agreed to establish a group of Ministers to consider and develop the Government's policy and response in relation to infrastructure issues. Infrastructure Ministers agreed to a definition of infrastructure that covers energy, transport, water and telecommunications.
Stocktake Findings
5. To assist with this work, PricewaterhouseCoopers (PwC) was engaged to prepare an assessment of the quality of New Zealand's infrastructure. The report has highlighted a number of national and local infrastructure concerns. These are subject to existing government work programmes. No previously unrecognised issues that might pose a serious barrier to growth and sustainable development have been identified.
6. Existing local and national infrastructure concerns include:
- Electricity security of supply (both short and long term), the former arising due to failure of the market to provide for security margins, while long term security issues are created by uncertainty around fuel availability and regulatory issues such as the future of the carbon tax regime and consent processes under the Resource Management Act;
- Lack of investment in electricity transmission due to uncertainties about who should pay for investment and under what pricing methodology, coupled with land access issues;
- Road congestion in some areas, especially Auckland, as a result of a failure of governance and funding arrangements to ensure appropriate levels of investment and demand management;
- Water allocation issues, due to deficiencies in the statutory framework for prioritising water allocation between competing users; and
- Poor drinking water quality in some areas due, in part, to lack of funds to treat existing water supplies, and lack of appropriate expertise to manage water supplies.
7. In each case, either action has been taken to address the problem (e.g. establishing the Electricity Commission) or appropriate work programmes have been developed (e.g. the Sustainable Development Programme of Action work programmes on water and energy).
8. In particular, the Minister for the Environment, the Associate Minister for the Environment and the Minister of Energy are leading work programmes to address key matters:
- The Associate Minister for the Environment is proposing a work programme on RMA issues (to be considered by Cabinet Policy Committee on 5 May 2004) to provide a package of improvements for delivery to Cabinet Policy Committee by 28 July 2004. The RMA work will cover some work on mechanisms for accessing and allocating water.
- The Minister for the Environment is taking the lead in ensuring that overall water allocation issues are progressed.
- The Government has already taken a number of important actions, principally involving the Electricity Commission, to address key concerns around future electricity security of supply.
9. There are no immediate concerns with telecommunications infrastructure, but officials note that factors such as low uptake of broadband and lack of adequate infrastructure for some users have the potential to impede realisation of the productivity gains that use of information and communications technology can generate.
10. Several potential future "soft spots" were identified by PwC and officials, including security of gas supply, pressures on transport networks associated with the "wall of wood" and coal, irrigation and stormwater discharge issues, and access to and uptake of broadband.
11. This paper proposes arrangements to help ensure that these and other future emerging issues can be identified and addressed in a timely manner.
12. The Minister of Energy is reviewing policy settings in relation to gas exploration and development that would strengthen incentives for increased levels of gas exploration in the near term.
13. Officials have identified five "principal infrastructure functions" where good performance is necessary if infrastructure policy and delivery agencies are to make their best contributions to sustainable infrastructure arrangements. The five functions are:
- Promoting government outcomes
- Establishing infrastructure policy settings
- Monitoring
- Futures analysis
- Emergency management liaison.
14. Several recent policy initiatives have yet to be completed or are, as yet, untested. Some uncertainty will remain until these are "bedded down".
Recommendations
15. The Stocktake has drawn attention to some significant infrastructure information gaps. Insufficient information is collected to identify possible pressure points or bottlenecks, and little or no international benchmarking is undertaken.
16. Several recommendations are made to improve information availability, including a work programme on infrastructure statistics, the introduction of periodic audits, and a future review of asset management planning requirements.
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