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A 10-point Infrastructure-led Recovery Plan For Extraordinary Times

The Government’s $12.1 billion COVID-19 package will soften the impacts of the Coronavirus for individuals and businesses, however these extraordinary times also create the conditions for our Government to build investment momentum, says Paul Blair CEO of Infrastructure NZ

We’re especially pleased with the reinstatement of depreciation deductions for commercial and industrial buildings. This will allow around $2.1 billion in tax to remain with building owners and it is now incumbent upon them to follow the Government’s lead and inject that money into building upgrades and maintenance.

If building owners can take advantage of slack in the employment sector and taxpayer assistance, New Zealand could emerge from this crisis with greener, safer and healthier buildings. We’ll be more efficient, more sustainable and more resilient.

The big opportunity, however, is in the third and as yet unannounced component of the Government’s response – the broader recovery package.

If the Government gets it right, New Zealand will seize this opportunity to unlock constraints to our social, economic, cultural and environmental progress which have built up over many years, allowing our economy and people to bounce back quickly.

Infrastructure NZ has developed ten recovery priorities to ensure New Zealand comes out of this crisis stronger than it went in:

  1. Fund local transport and water projects – many councils have consented, shovel ready projects across every town in New Zealand that are ready to go today and don’t need big workforces. Infrastructure New Zealand’s Building Regions proposal aligns well with the Crown’s unfunded Urban Growth Partnerships – the May Budget must introduce a new co-funding regime to get these projects done.
  2. Rapidly mobilise the Infrastructure Commission – some councils don’t even need money to invest in long overdue water and transport projects, just capability. The faster we bring the Infrastructure Commission’s project advisory team on board, the more central and local projects we can unlock.
  3. Double down on housing growth – Kāinga Ora and the Government’s urban growth agenda must build on progress to address the housing crisis and support urban land supply.
  4. Let NZTA borrow – the Transport Agency doesn’t currently have its own borrowing capacity, but it does have a reliable revenue stream and big asset base. If NZTA could borrow in the same way as Kāinga Ora, multi-year transport programmes could be funded. If NZTA has funding certainty it will also enable councils to spend 100% of their transport capex programmes – today these are often underspent as NZTA doesn’t have sufficient funding.
  5. Invest in green energy – we’ll never again have the opportunity to tackle emissions and climate change that we have today. A number of major renewable electricity projects are consented and awaiting transmission investment, but Transpower is unable to invest ahead of demand. Bring the energy programme forward to accelerate the shift away from oil.
  6. Consenting and design – not all projects need shovels and there are thousands of skilled workers who will slip onto welfare if the pipeline stops. We may need infrastructure spend to be a fiscal lever for us in the months ahead – why not design, consent and build business cases now to create a ‘shovel ready’ pipeline for the future?
  7. Streamlined RMA consents and Public Works Act initiatives – the progress New Zealand made to recover from the devastating Christchurch and Kaikoura earthquakes was enabled by streamlining RMA processes. Let’s use these extraordinary times to ensure projects of national significance get consented, or Public Works Act interventions are made, to cut through excessive delays.
  8. Alliance contracting and open-book project delivery partnerships – we can cut down on the time it takes to tender and procure work by signing longer term and bundled project contracts. An open book approach can ensure the taxpayer gets value for money and give employers confidence to keep and take on staff.
  9. Apprenticeships – some sectors New Zealand’s workforce will be hit hard. The Government can and should attach conditions to infrastructure delivery which require training, upskilling and apprenticeships of those looking for a new career.
  10. RISK – not taking risks in the current environment, is taking risks. The Government is going to have to move quickly and responsively to a situation moving much faster than any infrastructure project. Some decisions will turn out to be wrong, others right. It will be no different for business owners. The Government must continue to exploit its size, authority and balance sheet to de-risk private sector investment and back New Zealand.

If we implement these measures, New Zealand can tackle long standing, costly and damaging impacts from many years of high growth and weak investment. Never waste a good crisis.

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