Hundreds of infrastructure projects that would make a meaningful difference to people’s lives are stuck in the pipeline in New Zealand. The nation needs fresh ways to pay for infrastructure to get its cities and growing towns humming, with less congestion, more affordable homes, better quality water, and resilient energy systems.
Hundreds of infrastructure projects that would make a meaningful difference to people’s lives are stuck in the pipeline in New Zealand. A visiting expert has the ideas and experience to help bring the projects and funding together.
New Zealand needs fresh ways to pay for infrastructure to get its cities and growing towns humming, according to Stephen Selwood of Infrastructure New Zealand. Infrastructure New Zealand hosts the Building Nations Symposium in Wellington on 26–27 October, which this year focuses on finding new solutions for infrastructure challenges.
“Investing in infrastructure means less congestion, more affordable homes, better quality water, and resilient energy systems. It’s clear that New Zealand needs to accelerate the level of investment, especially in our growth regions.”
Stephen Beatty, a KPMG Head of Global Infrastructure and Global Cities with over 30 years’ experience in infrastructure across six continents, is a keynote speaker at the Symposium, and brings with him a toolkit of internationally-tested ideas to help match projects with the money to fund them.
KPMG New Zealand’s Jesse Phillips, who has worked on multiple international projects with customised financing, says traditional ways to pay for projects aren’t working. Local and central governments are struggling to work out how to pay for assets and services that need to be delivered.
“Population growth and urban drift are putting real pressure on infrastructure. Limited access to public services (including public transport), congestion, and runaway house prices are issues that major cities like Auckland have to deal with. In smaller towns, having fewer people leads to almost the opposite problem — an exodus to the cities, less ratepayer money to develop facilities, fewer job opportunities, and dwindling resources.”
“Property rates and user charges are not enough. Central government doesn’t have enough funding to go around and many councils’ balance sheets are full. But $150 billion of private capital dedicated to infrastructure is sitting on the side-lines looking for a home. The bottleneck is having flexible financing tools to be able to invest in these projects. There are smarter ways to put both public and private capital to work.”
Stephen Beatty will bring examples of alternative ideas tested around the world to address these issues.
In the United Kingdom, the £14.8 billion Crossrail project raised 32 percent of the cost by targeting a levy on all the people who benefit from the project — businesses in London.
In Australia, owners of new assets such as roads and bridges are able to sell the rights to collect revenue from tolls. Investors, often pension funds, might pay for these rights and the money paid is then used to build more infrastructure. In this way, initial capital can be recycled indefinitely to pay for future projects. The pension money of ordinary citizens goes back into public projects that benefit the whole country.
In the United States, ‘hot lanes’ are a successful way to give drivers a choice to opt-in to paid faster lanes. The fee for the fast lanes is dynamic and changes according to how much traffic is on the road. For example, it might cost $20 during weekday peak times, but only 20c at 2am on a Sunday. Revenue from the tolls funds the cost of the road.
“Plenty of capital is available in New Zealand to invest in these types of projects, but we need more tools to put it to work. Central and local government need to get more sophisticated in how they fund and finance these projects,” says Phillips.
“We’re able to build the projects. We have the capital to finance the projects. But at the moment the options to bring the two together are limited. Different sources of revenue and flexible financing are needed.”
Phillips says there are early signs of central and local government’s willingness to be more flexible —the Housing Infrastructure Fund and the redeployment of Crown Fibre Holdings to deliver housing infrastructure. More is needed. Beatty’s experience and tested ideas might be the key to unlock the pipeline and get the projects moving to benefit all New Zealanders.
Americas and India Head of Global Infrastructure, Head of Global Cities, KPMG Canada
Availability for interviews:
- Tuesday 24 October: 12pm – 2.30pm.
- Wednesday 25 October: 10.30am – 12.30pm; 2.30pm – 5pm.
- Friday 27 October: 7am – 8.30am.
Director, Infrastructure, KPMG New Zealand
Availability for interviews:
- As above, plus ongoing.