$6.1 billion-plus Government building programme revealed for next three years: first pipeline report out

A Government building programme of $6.1 billion-plus has been revealed, with education and defence taking the lion's share of new infrastructure and building work and each with 52 new building projects under way or about to start.

Shane Jones, Infrastructure Minister, yesterday released the first Government Infrastructure Pipeline report, which showed the scope of spending from now to 2021.

"Five departments and Crown entities have identified 174 projects with an estimated value of over $6.1b as having funding certainty or near certainty in the pipeline," a statement on the new report said.

Some of the largest projects are:
• New schools at Torbay, Prebbleton, Pokeno, Owairaka, etc.
• School refurbishment/remediation at Rangitoto, Taihape, Opihi, Napier, etc.
• Defence projects at Linton, Burnham, Ohakea, etc.
• Replacing the existing Dunedin Hospital for potentially $1.4b.
• New 500-bed facility at Waikeria Prison.
• SH1 work SH1 Papakura to Bombay.
• Te Ahu a Turanga or the Manawatū Gorge replacement route project.
• $275m to replace and upgrade critical infrastructure at Auckland City Hospital, Starship Hospital and Greenlane Clinical Centre.

Jones said the Government was the construction industry's biggest client and lack of certainty and transparency on new state projects had been an issue, so the report would give much-needed certainty.

The new Infrastructure Commission had been established to improve state/private sector coordination and planning, Jones said.

"The new commission will play an important role in coordinating and planning New Zealand's infrastructure investment to ensure we're making the right decisions and helping improve the wellbeing of all New Zealanders," Jones said.

The Infrastructure Pipeline Tool is available on the Treasury's website and was developed by its Infrastructure Transactions Unit in the lead-up to Infrastructure Commission being established.

Data will be updated at least quarterly. The next update is planned after May 30, 2019, to incorporate any changes resulting from Budget 2019.

Stephen Selwood, Infrastructure NZ chief executive, said the new report was extremely welcome.

"It's vital that the Government provides a credible pipeline of upcoming projects.
Certainty of pipeline underpins investment in training, capital equipment and capacity building across the sector as well as being key to attracting domestic and foreign direct investment," Selwood said.

New Zealand had a traditional construction sector malaise due to boom-bust cycles, he said.

"This promotes the short-term subcontracting model where firms hold costs to the minimum when the market is slow, under-invest in training, technology and equipment and rely on the subcontracting sector to bring in additional skills when needed," Selwood said.

Consolidating information on the five capital-intensive agencies in one place was a useful start and overarching data on total volumes and dollar value of projects was interesting, especially when that shows a trend of spend over time, but, beyond that, is of little use, Selwood said.

"A detailed schedule of what projects will be released, their value and sequencing to market is at the heart of the information that is required," he said.

"The database needs to be able to be interrogated by sector, geography, timing and value and ideally would include anticipated procurement methodology. The credibility of the pipeline needs to be backed by a serious commitment to projects actually being funded and brought to market within the stated timeline. While some slippage in timelines is to be understood, these should not be significant variations over time," Selwood said.