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New Zealand Infrastructure Commission Publishes First Assessment Of The Value Of New Zealand's Infrastructure

Published: Fri 23 Feb 2024 08:47 AM
With our roads, water pipes and other essential infrastructure wearing out, New Zealand needs to spend around 60% of its infrastructure investment to look after what we already have, rather than building more.
This is a key finding of a new report from the New Zealand Infrastructure Commission, Te Waihanga, which provides the first comprehensive assessment of the value of New Zealand’s infrastructure.
"Using data from Statistics New Zealand, we found that our infrastructure assets, excluding land, were valued at $287 billion in 2022. Nearly three-quarters of our infrastructure assets are publicly owned through central and local government and over one-quarter are commercially or privately owned," says Peter Nunns, the New Zealand Infrastructure Commission’s Director of Economics.
"Infrastructure assets can have huge benefits for society, but they must be maintained, renewed, and repaired to ensure that they continue to provide those benefits - and that costs money.
"The question is: are we currently investing enough on renewals? In some areas, like electricity distribution, the data suggests that assets are being renewed at about the right rate. But in other areas, like state highways, local roads, and water infrastructure, renewal investment seems to be too low to ensure our assets are maintained for the long term. If this trend continues, the condition of our infrastructure will decline," Nunns says.
"What’s even more concerning is that in some sectors, like education, health, and justice infrastructure, we couldn’t find good data on maintenance and renewal spending. This is because central government, which owns most of these assets, does not compile and publicly report this data.
The New Zealand Infrastructure Strategy 2022-2052 recommends that central government infrastructure providers should be required to undertake and publish long-term investment plans and asset management plans. This information is needed to help ensure that infrastructure assets are managed sustainably for future generations.
"This research is an important step in helping us better understand trends in investment and depreciation across all of New Zealand’s infrastructure sectors. We expect it to help infrastructure providers plan and invest for today and tomorrow," Nunns says.Key findings from the research:
Around 60% of investment needs to go to renewing existing assets, not building more: Between 2013 and 2022, depreciation costs for infrastructure were equal to 58% of new capital investment. For every $10 we spent on new infrastructure, almost $6 of existing infrastructure wore out. If we want to maintain our existing infrastructure for future generations, that’s roughly how much we need to spend on renewal. That leaves $4 out of every $10 of investment available for new or improved infrastructure.
The value of our infrastructure assets is rising over time: The inflation-adjusted value of New Zealand’s infrastructure assets rose from $32,900 per person in 1990 to $55,800 per person in 2022. In 2022, our infrastructure assets, excluding land, were valued at $287 billion. 45% of this infrastructure is owned by central government, 26% is owned by local government, and 29% is commercially or privately owned.
Current investment rates signal likely future investment levels: Between 2003 and 2022, infrastructure investment averaged 5.8% of GDP. We spent an average of 3.4% of GDP on horizontal infrastructure such as transport, electricity, water and telecommunications networks. We spent 2.4% on vertical infrastructure such as education, hospitals, social housing, and defence infrastructure. Sustaining higher investment would require us to increase taxes, rates, or user charges, while lower investment would require us to accept less or lower-quality infrastructure.

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