Infrastructure Policy Objective and Framework
83. Drawing on the NZIER report, officials propose the following over-arching objective for infrastructure policy:
"To enhance infrastructure's net contribution to economic growth and societal well-being over time, while reducing the incidence and severity of service failures and adverse effects on the environment."
The Foundation for Research Science and Technology (FRST) has indicated that, should the Government agree to this objective, FRST will adopt the objective to guide its new infrastructure research and development (R&D) investment strategy.
84. This objective is consistent with the Government's objectives with respect to the SDPoA and the Growth and Innovation Framework (GIF), as well as with sector-specific strategies such as the New Zealand Transport Strategy.
85. The objective provides the focus for an infrastructure policy framework designed to answer the questions: Will New Zealand's infrastructure be sufficient to support the Growth and Innovation Framework objectives to return our per capita income to the top half of the OECD? What can be done to ensure that infrastructure makes its full contribution to growth and sustainability objectives in the coming years? Arrangements that bring infrastructure pressures to attention before they turn into serious impediments, are required.
86. Officials identified five "principal infrastructure functions" where good performance is necessary if the policy and delivery agencies involved are to make their best contributions to sustainable infrastructure arrangements. The five functions are:
- Promoting government outcomes - i.e. ensuring that GIF and sustainable development principles are appropriately taken into account in establishing the strategic overview for infrastructure policy.
- Establishing infrastructure policy settings - Advice to the government on policy issues, including:
- Identification and co-ordination of policy proposals across the various agencies involved;
- Fostering improvements to the governance and regulation of infrastructure markets. This includes ensuring adequate rules of engagement for infrastructure users and suppliers, and promoting security of supply;
- Provision of advice on wider policy issues, e.g. relating to the RMA and the Kyoto Protocol;
- Setting up arrangements for monitoring the Crown Entities involved in infrastructure delivery; and
- Advice on financing arrangements for publicly and privately funded infrastructure investment.
- Monitoring - Assembly, analysis, monitoring and sharing of data/information on infrastructure quality, availability and needs, including:
- Statistical monitoring;
- Audits such as the PwC audit completed for the Infrastructure Stocktake;
- Asset management planning: To develop cost-effective long-term strategies for infrastructure supply;
- Ad hoc monitoring: To act as an "antennae" on emerging problems and needs within infrastructure sectors; and
- Benchmarking: To answer the question "how well is our infrastructure delivering in comparison with our competitors and the OECD?"
- Futures analysis - Provision of comprehensive "futures analyses" on infrastructure needs including activities such as:
- Forecasting demand and other variables where appropriate analytical techniques are available (e.g. GDP) or where future developments are largely pre-ordained (e.g. population cohorts);
- Ensuring that forecasts are robust to a range of yet-unknown possible developments (e.g. decarbonisation, dematerialisation, new technologies); and
- Building in a state of preparedness for dealing with shocks (e.g. SARS).
- Emergency management liaison - Liaison with disaster contingency planning and emergency management initiatives elsewhere within government.
87. A "best practice framework" for infrastructure policy (set out in Attachment 4) was also developed to identify the principles for sound policy arrangements. The framework features several "tests" to facilitate assessment of the effectiveness and robustness of current policy settings in the four sectors. While policy arrangements will vary between sectors, there are many principles in common. Poorly developed policy can result in an over-reliance on supply rather than demand management, failure to align sector performance with government objectives, inefficient pricing and deterrence of timely investment in new capacity.
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