Quality framework key to building successful firms

New Zealand's growth performance depends on our ongoing efforts to raise the quality and market-responsiveness of infrastructure networks says Vicky Robertson. Photo / Brett Phibbs.

We all know what a successful company looks like when we see one.

It is consistently expanding and innovating, meeting the ever-changing needs of its targeted markets, and employing more and better paid skilled workers.

When you take a look at the list of the world's top performing firms it highlights something that perhaps we do not pay enough attention to.

Clusters of innovative, successful firms are much more likely to be concentrated in geographic locations serviced by world-class infrastructure than those regions with poor infrastructure.

The quality of transport and communication systems, and the standards set by generation and distribution networks, (such as energy, telecommunications and roading networks) matter a great deal to the overall success of an economy and are critical to its living standards

Quality infrastructure acts as a catalyst for national growth by providing the supporting networks required by successful firms. The quality of infrastructure shapes business investment decisions, determining where a business will locate and the kinds and extent of activities or sectors that can develop.

New Zealand's growth performance depends on our ongoing efforts to raise the quality and market-responsiveness of infrastructure networks so they can more efficiently contribute to connecting our businesses with each other and with markets and potential markets.

The connection between quality infrastructure and successful business means the government rightfully takes a strategic approach to infrastructure planning and investment.

Last year, the government published the 2011 National Infrastructure Plan to provide common direction for how we plan, fund, build and use economic and social infrastructure. (An update, the National State of Infrastructure Report 2012, will be published in the next six weeks or so).

The 2011 Plan set out a 20-year vision and a programme of work, overseen by the National Infrastructure Unit (NIU) at the Treasury, involving a range of agencies, sectors and firms.

Over the past year, much of the infrastructure unit's work has been in responding to the challenges identified in the 2011 Plan and improving our game based on the feedback from firms and local government.

This feedback has really helped our understanding and knowledge of some critical issues.

It has informed our work to improve how the Crown, for example, plans and manages its own use of its scarce investment capital.

The past year has seen continued investment on the transmission grid, the Ultra-Fast Broadband and Rural Broadband initiatives, Roads of National Significance and commuter rail upgrades in Auckland and Wellington. The private sector has invested in the energy, telecommunications and water sectors.

The Government is progressing policy work on oil security and a long-term solution for gas supply into Auckland and the north, the Canterbury rebuild, further exploration of possible Crown Investment in water and the next phase of Resource Management Act reforms.

The Public Private Partnerships programme, with two live projects in Wiri Prison and Hobsonville Schools, has assisted a change in thinking across the public sector and increased clarity on the outcomes and performance expectations from new investments. While acknowledging progress, the reality is that we are still on a learning curve.

A common theme we have heard from infrastructure investors over the past year has been doubt around the longer-term infrastructure horizon. Have we got a sufficient handle of future needs? What more can we do to ensure best practice financial and regulatory settings will attract future investment?

One year on from the release of the 2011 Plan, we have a better understanding than we did last year on where we need progress to turn perceptions around.

We know we need to make progress in three areas, as we need a greater evidence-based understanding of:

The key drivers that will determine our future infrastructure needs and what the evidence is telling us;

Our current infrastructure investment stock and how it is performing (are we getting the best bang for our buck or could we do things better?)

The quality of our funding options and regulatory settings for delivering what will be required in the future.

Clearly, there will be different perspectives but having the debate in a co-ordinated way and looking across sectors will help us to have a solid understanding of issues, the range of responses that might be available and the timing of decisions.

Treasury is determined to make progress in developing ways we can measure all this information, particularly across the energy, telecommunications and transport sectors.

Working alongside others who also appreciate the connection between economic growth and quality infrastructure the Treasury seeks to make a meaningful contribution to help to raise the living standards of New Zealanders.

On the agenda

* Oil security

* A long-term solution for gas supply into Auckland and the north

* The Canterbury rebuild

* Further exploration of possible Crown investment in water

* The next phase of Resource Management Act reforms

Vicky Robertson is acting deputy chief executive of the Treasury