Home' Future Building: The Australian Infrastructure Review : July 2011 Contents English speaking: NZ pursues more PPPs
New Zealand’s evolved and stable regulatory
system and economy, coupled with its deep pool of
talented engineers, financiers and other specialists –
and an easier labour market – should help to make
New Zealand attractive to Australian companies, says
Martin Welsh, New Zealand’s Sydney-based Consul
‘The ease of doing business and a relatively
competitive taxation regime support the investment
In the short term, New Zealand’s PPP pipeline
appears likely to focus on social infrastructure
projects. The NZ$1.7 billion Waterview Motorway
in Auckland, for instance, is currently being bid as
a competitive alliance between contractors and the
New Zealand Transport Agency.
But business expects the next round of major
transport projects, such as the expansion of the
NZ$2–3 billion Waikato Expressway from Auckland
to Hamilton, to be considered for delivery under a
PPP. The expressway is part of a national network
that the government has labelled Roads of National
Significance. Other parts of the network too, including
Transmission Gully motorway and a motorway
between Puhoi and Wellsford, may be considered for
But Forgan said any new motorway offered as a
PPP would likely be a greenfield project, rather than
an extension of an existing asset.
‘It’s early days investigating use of PPPs in road
projects, and there’s always the question as to whether
to trial such a model on an expansion to an existing
asset, or something new and more self-contained,’
Support for the alliance model for transport
infrastructure runs deep, in part because under the
alliance model, the government assumes much of
the risk if development proposals are blocked by
environmental assessments and other objections,
NZCID’s Selwood says.
Bid costs are another barrier to entry for overseas
contractors. Modest pipelines risk making the effort of
cobbling together a bid uneconomic.
‘There is a perception by government that the
existing NZTA is pretty efficient in procurement
procedure. But it’s a perception; we just don’t know,’
Selwood says. ‘We’ve never had a competitive model
so we just don’t know.’
Still, as traffic congestion in Auckland intensifies,
and as prices for New Zealand’s biggest commodity
exports, including wool, dairy and lamb test new
record highs, worries are mounting that the country’s
infrastructure faces a growing funding gap.
Over the next decade New Zealand will need
to spend NZ$40 billion on transport, electricity
transmission, broadband and local council
infrastructure, such as water and sewerage.
The New Zealand infrastructure sector says
that the country faces a sizeable funding gap in
economic infrastructure over the next 20 years – over
and above the reconstruction of Christchurch. Key
investments include a broadband network rollout
and a backlog of investment in public transport,
roads and water infrastructure. Plans for a rail
loop through Auckland’s CBD face a NZ$2 billion
shortfall. Upgrading the national rail network also
faces a NZ$3 billion shortfall.
‘We haven’t done any significant rail construction
in this country for more than 100 years,’ Selwood
says. ‘Companies like Leighton have that experience
across Australia’s states.’
Existing budget limitations have been further
exacerbated by the reconstruction requirements
from the devastating Christchurch earthquake. The
stretched public sector balance sheet and mounting
funding gap will likely strengthen arguments in
favour of the value for money outcomes achieved by
private delivery models.
Even so, PPPs will be of limited use in
Christchurch, at least in the short term, where
engineers and emergency workers struggle to bring
some sense of normalcy to the country’s second-
largest city. Portable toilets still dot neighbourhoods.
City residents had to boil drinking water until early
April. The only sounds in the CBD, where the
earthquake was concentrated, are the wind and the
crackle of walkie-talkies.
More than 900 buildings will need to be
demolished or repaired, including stores that for
now still contain their merchandise, and restaurants
where cups and plates remain where patrons left
them in the rush to escape.
‘We need a coordinated reconstruction effort,
and that ideally means only digging up streets once
to repair sewerage and other services,’ Forgan says.
The Christchurch earthquakes impacted on
an area that accounts for about 17 per cent of the
country’s GDP. English says he’s not ruling any
procurement models out for the reconstruction
Volume 2 Number 1
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