Infrastructure decline "must be addressed"

16 February 2006

Media Release

Infrastructure decline “must be addressed”

New Zealand’s ongoing inadequate supply of infrastructure is severely constraining this country’s ability to compete internationally.

That’s according to Bryan Gundersen, a Senior Partner in Kensington Swan’s Corporate Advisory business unit.

Mr Gundersen told the 6th annual Land Transport Summit in Auckland today that inadequate infrastructure investment had been a feature of the New Zealand economy since the 1970’s.

“A number of weaknesses have been identified in numerous reports, including security of supply and transmission of electricity, and roading infrastructure.

“To take an example, investment in transport and storage infrastructure tailed off from the mid-1970s to a state where in the 1990s it languished below 1% of GDP, much less than that of most of our competitors.

“Ongoing inadequate investment in infrastructure should cause concern as to whether the New Zealand economy is able to achieve meaningful and sustainable growth,” he said.

Bryan Gundersen said there are three options going forward if the public is going to continue fully funding all new infrastructure projects:

- Continue along the current path of under-investment, and further constrain the economy’s productive capacity.

- Raise taxes or cut Government spending in other areas.

- Government borrowing to finance investment and/or private sector financing.

“The government’s very recent issue of infrastructure bonds is welcome, but it is only a drop in the ocean and it must move to increase private sector investment.

“In addition, there needs to be direction by a committee of relevant heads of Department reporting to a Minister of Infrastructure.

“The objectives would include facilitating partnerships between government and the private sector, and strengthening longer term strategic planning and advice to Government.

“The committee would also design and manage finance and tax incentives relating to infrastructure, and deal with transparency and accountability issues in relation to major projects.

“One thing is clear: there is an urgent need for new direction to facilitate more investment in infrastructure.

“Whether politicians agree with the proposed new direction or not, we must do better than we are doing now,” said Mr Gundersen.

ENDS

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