Kiwis concerned over funding of infrastructure

September 22, 2010

Media Release

New Zealanders want councils to use public-private funding for major new infrastructure projects

New Zealanders want their local councils to use Public Private Partnerships (PPPs) – provided they own the assets once they are paid for - to fund faster infrastructure development.

Some 65% of people are concerned over funding new long term infrastructure.

A new nationwide ShapeNZ survey finds PPPs are preferred to fund projects faster by 47% of the 2,480 respondents.

The second most preferred way of raising capital is through council bonds (35%).

Imposing a national 10 cents per litre motor fuel surcharge, to be spent on local projects, is supported by 19%.

The least preferred way of paying for projects is through higher rates, with just 4% support.

Residents of New Zealand’s first mega city, Auckland, most want to use PPPs to bring forward the start of infrastructure projects. The PPP method proposed involves a council deciding the project, the private partner building and operating it and transferring it back to the council when it has been paid for. Some 53% in Auckland support this method, compared with 47% nationwide. PPPs have least support in Dunedin (33%).

Some 48% of people in Wellington support PPPs. The capital also most supports using council bonds (45%, compared with 34% for all of New Zealand).

The weighted ShapeNZ survey was commissioned by the New Zealand Business Council for Sustainable Development to help guide people elected to councils at the October 9 local body elections. It has a maximum margin of error of +/- 1.6%.

Preferences by main cities are:

PPPs Council bonds Fuel tax Higher Rates None of these Don’t know NZ 47 34 19 4 16 17 Auckland super city 53 36 18 3 18 18 Wellington 48 45 31 9 6 14 Christchurch 45 30 22 10 15 16 Dunedin 33 25 19 0 23 26

Using PPPs to advance projects has the support of 57% of National voters at the last election. Among other parties support is: ACT 77%, United Future 53%, New Zealand First 52%, Green 47%, Labour 41%, Progressives 40%, Maori Party 33%, and other parties 52% . Business Council Chief Executive Peter Neilson says the research shows New Zealanders want to speed up infrastructure projects and are willing to look at harnessing capital and expertise from the private sector to help make this happen.

“Several of the major infrastructure projects being discussed in the new Auckland super city, for example, will require new sources of capital if they are to be brought forward – to more quickly ease traffic congestion and stimulate economic growth. They can’t be funded under current Government and council programmes without increasing rates. Kiwis are saying let’s find and use new capital sources,” Mr Neilson says.

Background:

Information provided with the questions at the national result

Local government infrastructure funding and priorities

For local councils to undertake large road, rail, tunnel, storm water, water supply and other projects more quickly than current funding will allow, other ways of providing the extra funding are being suggested.

These include:

• Public Private Partnerships (PPPs) through which a council decides what needs to be built (like roads, bridges, a conference centre), the private sector developer builds the facility, and is paid from a tolling charge or share of revenue guaranteed by the council. When the facility is paid for it is owned by the council.

• Bonds issued by councils – The council commissions a contractor to build the facility (like a road, bridge or conference centre) and issues bonds, which pay interest, to the public and financial institutions. The council guarantees the interest payments and repayment of the loan out of rates, toll charges or other revenue.

• A national surcharge on all motor fuel sales, of say 10 cents a litre, allocated to councils in proportion of their local motor fuel sales. This would be collected nationally but spent locally.

Ends

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