The Labour-led Government is expected to play a hands-on role as it enables private capital to deliver the massive house-building and urban development needed to accommodate Auckland's growth.

Though the new Government does not support public private partnerships (PPPs) where they result in introducing a "profit dynamic" into building social infrastructure like schools, hospitals and prisons, it is open to using them elsewhere if they can deliver value for money and quality outcomes.

The scope of the new Government's infrastructure programme was unveiled this week following an agreement by Labour and New Zealand First to form a coalition Government with support from the Green Party.

The breadth of the new programme will be debated at Infrastructure New Zealand's Building Nations summit which gets under way in Wellington today.


The Government has signalled the KiwiBuild programme - which will result in 100,000 high-quality, affordable homes and additional state houses - will be designed and built by private sector firms.

Other opportunities for private sector involvement are expected to come from the 10-15 large-scale urban development projects expected to run simultaneously in Auckland.

These will be co-ordinated by urban development agencies based on the Hobsonville Land Company model, with all the design, construction and development carried out by the private sector.

Investing in modern transport infrastructure like the City Rail Link, and the announced light rail network, will create development opportunities for private capital to build and market places for people to live, work and play around the new network.

At a philosophical level, the Labour-led Government has said it recognises "fit for purpose" infrastructure is critical to the economic success of the country.

Investment in social and economic infrastructure will be at the front and centre of its programme, underpinned by three core values: economic efficiency, resilience, and sustainability (with an emphasis on reducing carbon emissions).

The new Government is understood to be strongly of the view that reforming the financing of infrastructure to support urban growth is vital to allowing New Zealand cities to grow, and making housing affordable.

It believes the current system is broken: central Government has resisted being the funder, high-growth councils are up against their debt limits, and developers struggle to access capital.


In the new Government's view, the lack of ready finance for new infrastructure is a major brake on development, chokes off the supply of new land for urban expansion and drives up land prices.

During the election campaign, Labour took issue with the former National Government's $1 billion Housing Investment Fund, labelling it a lame duck - simply a line of credit for councils who were largely unable to borrow more.

But it welcomed the subsequent move for Crown Infrastructure Partners to set up special purpose companies to build and own new trunk infrastructure for housing developments, in return for dedicated long-term revenue streams from councils through targeted rates and volumetric charging for use of the infrastructure by new residents, as a step in the right direction.

The Labour-led Government believes what is needed is a pipeline of debt finance - for instance by the Government issuing long-term bonds - that the Government then packages up for new developments, with the debt serviced by a targeted rate on properties in a new development.

It also plans to free up the planning rules, get better alignment between the Resource Management Act, the Land Transport Management, and the Local Government Act, and more robust spatial planning for growth by central and local government.

A proposal for an independent Infrastructure Commission - which would be a centre of excellence for procurement, along the lines of recent moves in Canada, the UK and Australia - will also be looked at seriously by the new Government.


Labour's infrastructure rollout

A $15 billion 10-year programme to build a modern rapid transit network that includes light rail to the airport and out to West Auckland is the centre-piece of new initiatives to overcome Auckland's transport deficit.

The rapid transit system will sit alongside the road and motorway network, giving people a congestion-free alternative to Auckland's motorways.

The Government will also legislate for a regional fuel tax, if, as expected, Auckland Council requests it, and will work with the council to allow the use of targeted rates to capture value uplift around the new rapid transit network. This is similar to the funding method used by Crossrail in London and with the new light rail line on the Gold Coast.

The new rapid transit infrastructure will also be funded through the National Land Transport Fund just as is done with new state highways.

At national level there will be a significant multi-year funding commitment to rail including investment in line upgrades, new technology, and new rolling stock to reduce freight journey times and allow rail to compete more efficiently with other transport modes.

Labour forecasts this will get trucks off the road, reduce carbon emissions and allow rail to play to its strengths within the multi-mode freight system.


Among other initiatives:

• A study on the future of the upper North Island ports designed to reach a decision and give certainty so planning for future investment can get under way.
• A New Zealand ports plan and a commitment to greater use of coastal shipping within an overall Freight Strategy.

Infrastructure NZ's priorities

Infrastructure New Zealand chairman Patrick Brockie says there is ample room for the private sector - which sings from the same hymn sheet as Government when it comes to the critical need to address NZ's infrastructure deficit - to share more of the heavy lifting with infrastructure investment, yet remain a minority partner.

Infrastructure NZ's Top Ten:

• NZ Infrastructure Commission
• Resilience review of strategic networks
• Procurement Centre of Excellence
• Industry training investment
• Satellite "innovation" city
• Urban Development Authorities
• Asset recycling
• Road and water pricing
• Corporatise water delivery
• Reform NZ's planning laws