Draft National Infrastructure Plan

4.1. Context: Central government sets the ‘rules of the game’ | Te Horopaki: Ka whakatau te kāwanatanga ā-motu i ngā 'ture o te kēmu'

The infrastructure sector is decentralised and complex. Many organisations, across central and local government and the private sector, are involved in funding, financing, or providing infrastructure. The operating environment for infrastructure is also complex, with many factors affecting how easy it is to build, maintain, and operate infrastructure.

Different infrastructure providers have different governance arrangements and funding models. This influences how they make decisions about investing in and operating their assets. Broadly speaking, we differentiate between infrastructure provided directly by central government, infrastructure provided directly by local government, and infrastructure provided by commercial entities, including state-owned enterprises and council-controlled companies. Sometimes, central or local government pays commercial entities to provide infrastructure assets or services to them.

Central government, local government and commercial entities all play important roles in investment. Central government accounts for a bit under half of total investment, and a similar share of total infrastructure assets (Figure 20). Commercial entities account for a bit under one-third of total investment and assets, and local government accounts for around one-quarter of the total.

Māori-Crown relationships play an important and evolving role in infrastructure. The Treaty of Waitangi / Te Tiriti o Waitangi is a significant part of these relationships. Our previous advice in the Infrastructure Strategy included recommendations aimed at strengthening partnerships with and opportunities for Māori. Māori entities have become increasingly involved as investors in infrastructure assets, such as the geothermal industry. This has enabled Māori to exercise their role as kaitiaki, ensuring the protection and sustainable use of natural resources, as well as securing strong commercial outcomes for their people.

Central government, local government, and commercial entities all undertake significant investment

Central government sets the ‘rules of the game’ for all infrastructure sectors. Its policy choices shape the operating environment for commercial entities and local government. Central government establishes oversight arrangements for other sectors, for instance by tasking the Commerce Commission with regulating infrastructure providers like electricity distribution businesses or council water service entities. It also writes resource management legislation and health and safety regulations that all infrastructure providers must comply with.

The operating environment must enable infrastructure providers to invest in the right things and deliver those investments efficiently. As outlined in Section 1, meeting New Zealanders’ current and future needs will require us to clear a path through complexity. This means ensuring that infrastructure providers have the funding they need; that they face oversight that makes them accountable to users; that they can coordinate with other parties where needed; and that they work within a stable and predictable policy environment that enables them to get on with investing over the long term.

This section presents recommendations to central government about steps to improve the operating environment for infrastructure investment. This builds upon our previous advice in the Infrastructure Strategy, which included various recommendations aimed at improving the operating environment for infrastructure. Rather than repeating previous recommendations we focus on identifying areas where additional recommendations are needed.