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Infrastructure blog

IPW: New Zealand struggles to get value for money

18 January 2022

In this fortnightly blog, ICE's Director of Policy Chris Richards looks at developing policy landscape for infrastructure, what decisions mean, and their implications, so that infrastructure professionals can play their part in shaping the discussion.

IPW: New Zealand struggles to get value for money
New Zealand’s efficiency rating for building infrastructure lies in the bottom 10% of high-income countries. Image credit: Liam S/Pexels

New Zealand infrastructure build is less efficient than its peers

A new report from the New Zealand Infrastructure Commission shows that the country ‘gets less value from its infrastructure spending than most other high-income countries’ such as the UK, Switzerland and Singapore. This is despite spending about the same as other countries on infrastructure.

The report Investment gap or efficiency gap? concludes that New Zealand’s efficiency rating for building infrastructure lies in the bottom 10% of high-income countries. Netherlands and Singapore are ranked as being the most efficient. The factors that support efficient delivery include population size, population density, institutional quality and stability in infrastructure investment.

The aspects that give rise to New Zealand’s low benchmark position are explored in the report, which concludes: “As a small country with a low average population density and challenging terrain, New Zealand faces some intrinsic challenges for investment efficiency".

However, there are factors in New Zealand’s control including “quality of institutions, planning frameworks, investment decisions, and management of cost and delivery pressures".

ICE’s view

The report explores in detail how New Zealand could get more bang for its infrastructure spend, and there are lessons for other countries both in terms of identifying the problem and putting in place solutions to fix it.

As countries worldwide start to ramp up infrastructure spending, this report is a good opener on how to make sure that spending delivers for the public.

Infrastructure Asia discusses priorities for ASEAN infrastructure post-Covid

Following set up in June 2021, the inaugural meeting of the Asia Sustainable Infrastructure Advisory Panel explored key post-pandemic infrastructure trends from ASEAN member states.

There were five trends presented at the meeting:

  1. Governments are planning infrastructure projects through the lenses of sustainability, resilience, inclusiveness, and long-term public benefit.
  2. The regional digital economy will grow significantly by 2025 due to improving living standards, demographic shifts, and enhanced digital connectivity.
  3. Finance and digital investment is needed to improve the resilience and efficiency of the logistics sector and supply chains, particularly ‘cold chains’ in pharmaceuticals and food.
  4. Finance markets have started to drive hard at mobilising cash for renewable energy, electrification and the transition to a lower carbon economy.
  5. Member states are actively seeking technical assistance, capacity building, and international infrastructure finance for project preparation and implementation in renewable energy deals.

The discussion, which featured ICE past President Professor Lord Robert Mair, explored how to adopt a systems-thinking approach to infrastructure development and ways to develop and integrate digital infrastructure and digital solutions to improve efficiency and deliver sustainable outcomes.

ICE’s view

Infrastructure development is a key pillar of the Master Plan on ASEAN Connectivity. The ASIA Panel inaugural meeting rightly sought to refocus effort on delivering the Master Plan once the pandemic threat recedes.

The meeting did this by focusing on areas where ASEAN member states were already prioritising effort. There are many quick wins, but securing finance in a more competitive environment will be critical – this is likely to be a common theme as countries all look to infrastructure development as part of their recovery.

In case you missed it...

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.

  • Chris Richards, director of policy at Institution of Civil Engineers