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Infrastructure blog

IPW: South Africa approves National Infrastructure Plan – New Zealand tackles inflation

15 March 2022

In this week's Infrastructure Policy Watch, South Africa links infrastructure plans to national development, costs of construction rise in New Zealand and Australia examines regional infrastructure needs.

IPW: South Africa approves National Infrastructure Plan – New Zealand tackles inflation
South Africa’s government recognises infrastructure planning and investment is vital to achieving wider socio-economic goals. Image credit: Pixabay/Pexels

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

South Africa approves 2050 National Infrastructure Plan

South Africa’s government has approved the first phase of the country’s National Infrastructure Plan 2050 (NIP).

The NIP is intended to set a foundation for achieving the country’s broader vision of inclusive growth, linking the objectives set out in its National Development Plan to actionable steps and intermediate outcomes.

It prioritises strengthening the institutions responsible for infrastructure planning and delivery, and sets out strategies for capacity development, creating an enabling regulatory and institutional framework, and tackling crime and corruption, which can affect infrastructure projects.

The NIP will be developed in two stages, with the first focused on energy, water, freight transport and digital infrastructure. The second will address distributed infrastructure and related municipal services.

It is hoped that the plan will tackle some of South Africa’s most urgent infrastructure challenges. This includes reshaping an energy sector currently reliant on coal power and troubled by load shedding to deliver a reliable, low carbon energy supply.

With South Africa’s infrastructure finance gap estimated at R2.15 trillion (£109.5 billion) up to 2040, the NIP aims to create a thriving private infrastructure investment sector supported by an efficient public sector procurement framework.

The plan also articulates South Africa’s aim to shape a regional infrastructure agenda by strengthening cooperation and developing projects beneficial to the wider Africa region, including critical energy and water projects, transport corridors to ease trade and better digital connectivity.

ICE’s view

An effective strategic infrastructure planning process is essential to overcome uncertainty. It ensures the infrastructure system delivers sustainable outcomes in the long-term.

Getting infrastructure planning and investment right is vital to achieving wider socio-economic goals, and South Africa’s government is focused on achieving inclusive growth, eliminating poverty, and reducing unemployment and inequality.

New Zealand sees major rise in costs of construction

The cost of construction in New Zealand rose by over 10% last year according to the country’s Infrastructure Commission.

This is the largest increase in prices since before the 2008 global financial crisis, with similar rises expected again in 2022.

It means New Zealand currently has one of the highest construction price inflation rates in the OECD.

The commission cites record project demand combined with labour shortages, material supply chain bottlenecks and volatility of investment as factors in driving up costs.

While the Covid-19 pandemic has exacerbated the problems, the commission argues that they are long-term, systemic issues. These need to be addressed to build resilience into New Zealand’s infrastructure framework and enable it to deliver on long-term objectives.

The news follows a recent report showing that New Zealand also gets less value from its infrastructure spending than most high-income countries.

ICE’s view

While New Zealand has experienced more rapid construction price rises than most OECD countries, inflation is a global issue.

With many countries ramping up infrastructure investment, how they build resilience and flexibility into their systems will be crucial for delivery – not least because many of those projects are needed to achieve key long-term objectives such as the transition to low carbon economies.

Australia examines regional strengths and infrastructure gaps

A new report in Australia makes the case for infrastructure investment in the country’s regions.

The analysis by Infrastructure Australia (IA) looks beyond its major cities to examine regional strengths and infrastructure gaps.

Australia is experiencing record internal migration – 2019/20 saw an over 200% increase in net migration from capital cities to regional areas.

IA hopes the findings will help government, industry and communities ensure there’s sufficient infrastructure capacity to manage further regional growth.

ICE’s view

The long-term impact of the Covid-19 pandemic on population shifts is uncertain. However, the need to maximise regional strengths, improve quality of life and unlock productivity outside of major cities is a long-standing challenge for many countries.

The UK recently published its Levelling Up White Paper with the aim of rebalancing the country’s economy.

IA’s approach highlights the importance of strategic decision making on planned investment in regional growth. Developing a joined-up approach between national and local government, industry, businesses and communities will help direct infrastructure investment where it can have the most impact.

In case you missed it...

  • David McNaught, policy manager at ICE