Policy Options to Improve Infrastructure Resilience
103. There is a need to monitor infrastructure issues actively, and be prepared to act with supply and/or demand management policy responses as pressures are identified that cannot be adequately addressed by infrastructure providers and commercial participants under existing settings.
104. This section presents recommendations, drawing from the conclusions from the preceding comparison of policy settings and functional arrangements against the "best practice" policy framework and the five policy functions. The recommendations can be categorised as follows:
- Those designed to make present policy arrangements work better;
- A further group of specific recommendations broadly addressed to information needs is then presented;
- Ministers are also invited to consider whether these recommendations should be supplemented by improvements to institutional arrangements relating to cross-sectoral infrastructure advice.
The purpose of improved arrangements would be to ensure better outcomes and improve infrastructure providers' and users' confidence going forward.
Making Policy Arrangements Work Better
105. The preceding analysis has drawn attention to a case for a range of infrastructure policy improvements. If Ministers agree, officials (MED lead) will take steps to ensure that agencies with infrastructure policy development roles are well informed of the key learnings from the Stocktake, for example, to ensure that the "best practice" policy framework is applied where relevant and that it is improved over time by drawing on experience with its use, and that opportunities to promote sustainability are fully recognised and taken into account in infrastructure policy. Officials will take steps to ensure that the messages are presented in a form that facilitates this transfer of knowledge.
Improving Information Availability
106. Several possibilities have been considered to help improve the availability of information, including:
- Enhanced information about infrastructure stocks and service provision;
- Periodic infrastructure audits of the type recently conducted by PwC;
- Extended and improved asset management plans to ensure effective service delivery;
- Fostering discussions to improve dialogue between infrastructure providers and users.
Enhanced Infrastructure Statistics
107. There are a number of work programmes currently under way with respect to statistical design and data collection. For example, Statistics New Zealand's sustainable development indicator work programme will probably include high level infrastructure indicators along with the development of decoupling indicators, although it is unlikely that these will be adequate to meet sector-specific infrastructure policy requirements.
108. Given that some infrastructure is managed at the local level, there will be a need for some regional or local data collection and monitoring, along with some at the national level.
109. Various other programmes, such as GIF, Environmental Performance Indicators (Ministry for the Environment), Social Performance Indicators (Ministry of Social Development), tourism data (Tourism Research Council) and Quality of Life indicators (local authorities), involve the collection and/or analysis of data and other information relevant to infrastructure. There is also a range of current initiatives to improve statistical information relevant to the state of infrastructure, its performance and the pressures on it. These include:
- the recently approved recommendations from the review of the official statistical system [CAB Min (04) 6/7] which should promote improved use of existing data relevant to infrastructure and other programmes to provide a more complete statistical picture of New Zealand's key infrastructure and its performance; and
- a Statistics New Zealand work programme to prepare a comprehensive set of indicators on demand for and use of ICT by households, businesses and government to enable individuals, communities, businesses and the Government to understand how new ICT technologies are changing the economy and society.15
110. It is recommended that MED, working closely with Statistics New Zealand and other relevant agencies, should undertake further work to clarify information gaps and identify the information required to fill these gaps, including the possible development of infrastructure indicators, taking into account existing statistics and indicator programmes and using established best practices for identifying any such indicators. This group should provide guidance on how information requirements are to be met and by whom, along with any additional data collection and funding requirements, and report back to Infrastructure Ministers by December 2004.
Periodic Audits
111. The purpose of infrastructure audits is to provide an independent sector by sector assessment of the quality of the current infrastructure stock and potential future pressure points. This provides a foundation for which policy makers can work from and helps them to focus on and prioritise problem areas. The PwC audit conducted as part of the Infrastructure Stocktake is an example.
112. Infrastructure audits are substantial exercises (the recent PwC audit cost $200,000). Future audits may improve over time as officials, auditors, infrastructure providers and users gain experience with the data gathering and peer review processes involved, and as comments are received on audits as they are released.
113. There are two basic ways to approach periodic auditing:
- Audit all infrastructure once every 3 years. A 3-year gap provides a balance between infrastructure sectors that are rapidly changing and where more frequent assessments may be justified (e.g. telecommunications),16 and those that are evolving more slowly and hence do not require very frequent assessments (e.g. water); or
- Tailor the frequency of audits to meet the needs of each infrastructure sector. Hence, for sectors where changes occur slowly (e.g. water and transport), audits could be carried out every 5 or more years, while in sectors such as telecommunications, the audits could be every 2-3 years. This approach may be more appropriate and cost-effective than auditing all sectors every 3 years. However, the different timing of audits would mean that cross-sector comparisons of the quality and requirements of infrastructure in each sector could not be easily undertaken.
114. Officials recommend that Cabinet agree in principle that future infrastructure audits be conducted every three years. Officials (MED lead) will advise on audit needs for the 2006/2007 year, together with information on costs. Recommendations would be accompanied by funding requests.
Asset Management Plans (AMPs)
115. The goal of infrastructure asset management planning is to establish arrangements designed to meet a required level of service in the most cost-effective way through the creation, acquisition, maintenance, operation, rehabilitation, and disposal of assets to provide for present and future infrastructure users.
116. Sound asset management planning has a potentially powerful role in ensuring that providers, working with users, maintain service quality over time. This is particularly important given that much of New Zealand's infrastructure is provided by companies that are not subject to strong commercial pressures. A variety of regulatory AMP requirements exist covering infrastructure in public ownership and/or where the assets have strong monopoly characteristics.
117. The key elements of infrastructure asset management planning are:
- Providing a defined level of service and monitoring performance;
- Developing cost effective management strategies for the long term;
- Taking a life-cycle approach; and
- Managing risks associated with asset failures.
118. AMPs for water and transport came into widespread use in local government after the amendments to the Local Government Act (LGA) in 1996 requiring local authorities to prepare 10-year Long Term Financial Strategies (LTFS). The LGA 2002 requires assessment of water and sanitary services and this expands the role of councils to consider the quality of these services to not only the community served by council infrastructure, but also the community served by privately owned services (e.g. schools, camping grounds).17AMPs are not explicitly referred to in local government legislation but form the basis of 10-year financial planning (now encompassed within a LTCCP rather than a LTFS).
119. Among the things local authorities are required to include in their LTCCPs is:
- How they will assess and manage the asset management implications for changes to (a) demand for consumption of services; and (b) service provision levels and standards;
- What additional asset capacity is estimated to be required to respect of the above changes;
- How the cost of additional capacity will be met; and
- Asset maintenance, renewal, and replacement information including costs.
120. Although these provisions do not apply to council controlled organisations, the LGA places other reporting disciplines on councils to ensure that the contribution of such organisations to council outcomes is monitored.
121. Less comprehensive regulatory requirements exist for asset management planning in electricity distribution. Similar arrangements have been agreed for gas pipelines, but these have not yet been introduced.
122. The local authority requirements reflect the sustainability objectives of LGA, while the energy requirements reflect narrower competition policy concerns.
123. The LGA 2002 also requires the Local Government Commission to review the Act as soon as possible after the 2007 local authority elections. This review will include council planning procedures. It is proposed that the content and coverage of these arrangements be included in the Commission's wider review of the LGA 2002 to include asset planning by council-controlled organisations.
Facilitated Discussions
124. GIAB has expressed interest in "facilitated discussions" between infrastructure users and providers, and possibly with Ministers. The purpose of the discussions would be to increase collaboration between government and business in identifying emerging infrastructure needs (particularly relating to export-oriented businesses) and to assist in the development of linkages between particular infrastructure sectors.
125. GIAB has commenced work on an "Export Infrastructure Services Project" to identify risks and opportunities associated with transporting goods from production sites to markets. The terms of reference cover identification of the nature and scope of future demand, preparedness of transport infrastructure providers to meet demand, and prospects for improving co-ordination. Tourism is explicitly excluded from the study. Discussions between users and providers are a key part of GIAB's process. GIAB plans to report to Ministers in May/June 2004.
126. Further initiatives to promote dialogue around infrastructure issues include:
Building an Infrastructure Dimension into Sector Engagement
- The sector engagement programme conducted by New Zealand Trade and Enterprise provides an opportunity to improve public and private sector co-ordination by facilitating the development of networks and linkages between government and the sectors. Recent sector engagements have led to an appreciation across government and firms that a government-facilitated process to address sector specific impediments to growth can be an effective economic development tool.
An infrastructure dimension could be built into existing sector engagement frameworks to facilitate increased dialogue on infrastructure issues. For example, specific proposals are under development to ease buildability constraints which might arise from construction activity following the Auckland Transport Package, by strengthening the relationship between government and industry.
Ministers are invited to note that MED plans to ensure that infrastructure issues are built into sector engagement programmes.
Regional Partnership Programmes (RPPs)
- The regional partnerships programme facilitates partnership formation in 26 regions for the purposes of economic development. It gives regions guidance and funding to develop and activate sustainable economic growth strategies. The programme has three components: strategy development, capability building and major regional initiatives (MRIs) for economic development.
The purpose of the RPP is to encourage all partners within a region to take a more strategic view of their regional economic development goals and needs, in addition to making the most of their strengths and competitive advantages. This requires developing a shared vision of how the foundations for regional development, including key infrastructure services, can be improved.
Ministers are invited to note that MED plans to ensure that infrastructure issues are built into regional partnership programmes.
Collaborative Action within Local Area Water Advisory Groups
- The Ministry of Health is considering a collaborative approach between a Medical Officer of Health, district councils, stakeholder groups and regional councils to address drinking water and sewage issues within a local area. These local water advisory groups are intended to make use of local expertise to advise on public health risk management plans and assist district councils develop their LTCCPs as they relate to drinking water and sewage. The local advisory groups may input into the assessments of water and wastewater required under LGA 2002.
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