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IPW: New Zealand budget seeks to reduce infrastructure deficit, South Africa's transport policy

07 June 2022

In this week’s Infrastructure Policy Watch, New Zealand increases investment to tackle its infrastructure shortfall and South Africa puts environmental sustainability at the heart of its national transport policy. 

IPW: New Zealand budget seeks to reduce infrastructure deficit, South Africa's transport policy
There will be NZD4.7bn for capital investments this year, including projects to modernise the country’s rail assets. Image credit: Iva photos/Shutterstock

New Zealand steps up investment in transport, digital and climate response

New Zealand will increase its infrastructure spending with the government announcing over NZD60bn of investment over the next five years in its 2022 Budget.

There will be NZD4.7bn for capital investments this year, including projects to modernise the country’s rail assets.

There’s also a strong focus on the digital transition and response to climate change.

New Zealand will invest NZD2.9bn from its Climate Emergency Response Fund towards emissions reduction, with an emphasis on increasing uptake of public transport and low emission vehicles.

In the energy sector, businesses will receive support to shift to low-carbon energy sources. The insulation and heating retrofits scheme for low-income homeowners will also be extended.

New Zealand recently published its first long-term national infrastructure strategy, which highlighted the impact of decades of underspending on infrastructure.

The increase in investment is intended to help close that deficit.

In order to do so, the government used the budget speech to call for smarter planning, delivery and use of infrastructure to manage costs, prioritise investment and achieve the greatest impact.

ICE’s view

Having a strong planning framework underpinned by a national infrastructure strategy is a key enabler for tackling long-term challenges, such as climate change and economic growth.

With many countries increasing infrastructure spending following the Covid-19 pandemic, those strategic frameworks will help direct that investment to achieve the desired socio-economic benefits.

The need to optimise investment is more pressing in today’s high inflation environment. ICE explored strategies to manage rising costs in a recent presidential roundtable.

New Zealand has been one of the countries most impacted by inflation, particularly in its housing sector.

While inflation poses a risk to efforts to reduce its infrastructure deficit, the challenge also creates an opportunity for governments to address some of the systematic weaknesses in their infrastructure frameworks.

South Africa publishes white paper on National Transport Policy

South Africa’s revised its White Paper on National Transport Policy aims to provide a new integrated strategic framework for developing the country’s transport network.

Its publication follows the first review of South Africa’s overarching transport policy since the mid-1990s.

It identifies challenges and sets policy goals across the country’s aviation, maritime, rail and road sectors.

Those goals are oriented towards addressing the country’s long-term challenges of poverty, high unemployment and inequality, as identified in its National Development Plan.

However, the white paper also responds to growing concern about the impact of climate change, with South Africa recently suffering devastating floods.

The proposals make environmental sustainability a priority for the country’s transport network.

The white paper envisions a planning environment and incentives that reduce unnecessary travel and promote modal shift to low carbon options. Some of the measures explored include:

  • Revitalising the rail network and making it the preferred land transport mode for people and freight, as outlined in the recent White Paper on National Rail Policy,
  • expanding the ‘user pays’ principle for motorists where appropriate to reduce private vehicle use while protecting the most vulnerable members of society, and
  • developing an accessible, safe and reliable public transport network that caters to the needs of all South Africans.

The white paper also discusses potential responses to other overarching issues, including poor policy coordination across modes and inconsistent devolution of responsibilities.

The impact of underinvestment in infrastructure, particularly in the rail sector, is also discussed. The paper looks at how South Africa might unlock private investment to complement public spending.

ICE’s view

As ICE explored in a recent presidential roundtable, transport is one of the major sources of carbon emissions. There is no plausible path to net zero without significant emissions reductions across the sector.

It’s vital that transport policies work towards the long-term goals of climate mitigation and resilience. It’s therefore encouraging to see environmental sustainability being placed at the heart of South Africa’s national strategy.

Expanding road user charging is an option being explored by many governments looking to encourage modal shift. ICE has published a paper setting out several principles that could support a pay-as-you-go model.

In case you missed it:

  • Our recent presidential roundtable looked at the impact rising inflation is having on global infrastructure pipelines and how governments, developers and the supply chain might respond.
  • In this guest blog, ICE Fellows Tim Chapman and David Hirst look at what a switch to imperial units could mean for UK infrastructure projects.
  • At an ICE hosted All-Party Parliamentary Group on Infrastructure (APPGI) event, the UK’s rail minister gave an update on the Integrated Rail Plan. This article provides a summary of what he discussed.

Check back in a fortnight for the next edition of the ICE's Infrastructure Policy Watch.

You can also sign up to ICE Informs to get a monthly digest of the latest policy activities from ICE, including calls for evidence to support our ongoing advice to policymakers.

  • David McNaught, policy manager at ICE