$1 trillion to bring NZ infrastructure up to standard

By earthnews
9 months Ago

$1 trillion to bring NZ infrastructure up to standard

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Public transport is integral to a nation’s infrastructure.
Photo: RNZ / Felix Walton

One of the big four banks says New Zealand is facing a bill of up to $1 trillion over the next 30 years to bring the country’s infrastructure up to scratch.

ASB bank’s infrastructure report suggests a new approach to building and maintaining infrastructure is needed to boost the country’s economic performance over the long-term.

ASB senior economist Mark Smith said New Zealand had underinvested in core infrastructure for many years, which led to a current infrastructure deficit of about $200 billion.

He said past investments have been about 6 percent of gross domestic product (GDP), which was well below the Organisation for Economic Co-operation and Development (OECD) average.

“Infrastructure is not so much a nice to have, it’s a must have for the economy in general.

“If we do improve our infrastructure, that will go some ways towards closing the gap productivity-wise with other OECD countries and with higher incomes in time.

“However, there will be a cost and it will be reasonably significant.”

He said the cost of doing nothing would increase the risk to New Zealand’s economic wellbeing, with increasing risks associated with climate change, for example.

“It’s not coincidental that New Zealand’s productivity performance and incomes are also well below OECD norms,” Smith said.

“While it’s commonly acknowledged that more infrastructure is needed, there are several challenges.”

He said public private partnerships (PPPs) could work, but were not without risks, and would need careful consideration.

“Infrastructure investment is inherently risky and expensive.

“New Zealand also lacks funding, expertise and resources and there is considerable uncertainty around the size of our future infrastructure needs.”

He said population growth would put further pressure on the infrastructure deficit, with a wide estimate of between half a million and two million people expected in the next 30 years, which would require an additional 175,000 to 700,000 dwellings.

Smith said it was important to get a better forecast on population growth so New Zealand could improve its plannning and make better decisiosn about what will be required.

“There’s too much uncertainty out there. So anything that can increase some certainty in terms of future demand, would certainly be welcome.”