MinterEllisonRuddWatts' infrastructure partner Sarah Sinclair.
MinterEllisonRuddWatts' infrastructure partner Sarah Sinclair.
MinterEllisonRuddWatts' infrastructure partners Sarah Sinclair and Tom Fail are supporting calls by Infrastructure New Zealand to establish an independent infrastructure body as a centre of excellence.
The time is now
"It's great to see activity across the infrastructure sector and encouraging to see new models coming to the fore, so now is the time to address key questions and challenge how New Zealand can best deliver the infrastructure we need," says Sinclair.
"We should be asking if the existing tools, such as contract models and procurement rules, are fit for purpose, to encourage the best bids and partners to deliver the projects?
"We see the value in an independent body providing arms' length advice to assist infrastructure decision making at a national level.
"We see independent agencies overseas, such as Canada and the UK, operating as centres of excellence and expertise, building on existing knowledge and working with governments to integrate thinking, build consensus and create better outcomes."
Sinclair says the opportunity for New Zealand to get considerable value from this approach is high.
"You don't have to look too far to find where an independent agency could add expertise and value.
"For example, consider light rail and its role as an urban regeneration project, the current debate on water infrastructure and the infrastructure pipeline for transport and health," says Sinclair.
"The Government knows what it wants to achieve, and it's critical that projects are delivered efficiently to provide value for money for New Zealanders.
"An independent infrastructure body could really shift the dial to help make this happen." What could this body look like?
Fail says an independent infrastructure body, funded by government and employing people full-time, is a good starting point.
"There's always the risk that setting it up might be seen as more bureaucracy. However, in our view it would be worthwhile as it would free up officials and lead to wider-ranging opportunities to generate ideas and efficiencies," he says.
The body would need a clearly understood purpose and roles, such as those underpinning successful organisations overseas like Scottish Futures Trust, and it needs to be staffed with the right experts.
"The ability of an independent body to think long-term and create institutional expertise, take learnings from overseas where useful, means it could play a highly supportive role to central and local infrastructure providers."
Sinclair and Fail say that three game-changing priorities should be the focus of the independent body's first 100 days.
1. Develop new funding models
"How we fund projects is front of mind for the infrastructure industry," says Fail.
"New infrastructure funding models have been launched, like the re-purposing of Crown Fibre Holdings into Crown Infrastructure Partners in July last year to enable it to investigate and implement commercial models, including co-investment from the private sector or any other sector.
MinterEllisonRuddWatts' infrastructure partner Tom Fail.
"The creation of the Provincial Growth Fund and the introduction of new petrol taxes are other examples."
He says traditional models are being challenged around the world, and need to be here. "We are always interested in ideas that will make projects go better or faster, and it's encouraging that the Government and industry are discussing new models to pass cost on to the ultimate user."
2. Define the economic benefits to support user-pays arguments
"There's a lot of 'who pays' talk, but it's not really clear how it will be applied, or how 'the user' or 'the beneficiary' is defined," says Fail.
"People understand that someone has to pay, but to take the example of light rail, what does 'user pays' or 'beneficiaries pay' actually mean? The benefits of light rail go further than transport and cover regeneration and unlocking economic benefits to the wider city. In that context, the user or the beneficiary is much wider than people riding light rail and that conversation with the public needs to start early," says Sinclair.
"No one likes to be told they need to pay extra for something, so if they are going to pay they need to understand the benefit, and the counterfactual position — no user or beneficiary funding means no project," adds Fail.
An urgent job for the new agency would be reviewing existing procurement tools, to ensure they are fit-for-purpose and creating opportunities for unsolicited bids.
"Let's get best use of the tools we have and add to that suite of tools," says Sinclair.
"As an example, we need a detailed and accepted framework to encourage unsolicited bids.
"There have been successful projects off the back of unsolicited bids overseas, but the framework for how they are assessed in New Zealand is not well developed, and is a barrier. We're missing out on potential opportunities to generate innovation and value.
"We can look at the range of tools that can be pulled under the PPP banner.
"Again Canada is a good example of where a broader range of funding and procurement models bring the private and public sectors together to efficiently deliver public sector infrastructure. We need options, as no one size fits all."
"New Zealand is playing an urgent game of catch up, however we are not alone in grappling with big infrastructure issues such as strategy, funding, governance and delivery," says Fail.
"Lessons can be learnt from overseas and we're all aligned in wanting to ensure infrastructure needs are met. If a single body was formed, it would create a major opportunity for change. It can help shape the right future for New Zealand."
