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Draft National Infrastructure Plan
4.5. Ensure a predictable policy environment | Te mātua whakarite i tētahi taiao kaupapahere horopū
4.5.1. Context
There are many reasons why the future is uncertain. This includes factors that we have limited control over, like population growth, technological change, and how rapidly and severely climate change will affect us. Infrastructure providers in all sectors must anticipate and adapt to these uncertainties. Sometimes, this means adopting a ‘wait and see’ approach and delaying investment decisions until demand for a service is clear. Alternatively, it can mean investing incrementally to avoid the trap of large investments with commensurate maintenance bills for infrastructure assets that are under used.
When policies and regulations are uncertain or unstable, it is harder to invest. This is because central government sets the ‘rules of the game’ for all infrastructure providers. It establishes regulations that control how infrastructure can be built, maintained and operated. It also implements policies that shape demand for infrastructure in many sectors. For example, central government decisions about the Emissions Trading Scheme affect the relative cost of using fossil energy or renewable electricity, which then influences how much renewable electricity investment is demanded. When there is uncertainty about these policies, we may end up with less investment than is needed. A consistent, predictable approach is needed to ensure that central government policies enable us to meet our infrastructure needs in a timely and efficient manner.
4.5.2. Strategic directions
The regulatory environment better serves New Zealanders
We need an efficient legislative and regulatory system. Well-designed and consistently implemented regulation makes it easier for infrastructure providers to invest in and operate infrastructure. It also helps build social licence for infrastructure investment by establishing confidence that the broader impacts of new and existing infrastructure (to communities or the environment) are understood and well managed.
The costs of regulation should be proportionate to the benefits they achieve. In some areas evidence exists of increasing costs of compliance (Box 10). This can disproportionately affect small infrastructure projects, where compliance costs are high relative to the project budget. Our research on resource consents highlighted high costs (almost $1.3 billion each year getting infrastructure projects consented), disproportionately higher costs (16%) for smaller infrastructure projects, and the time taken to make decisions increasing by as much as 150%.[58]
Processes for consulting on, establishing and reviewing regulations should be predictable to avoid setting back project planning and delivery. It can take several years to plan and design a large project. If regulations and design requirements have changed significantly during that time, it can result in added costs and delays to redesign the project around new requirements. This also makes it hard to repeat standard designs and learn how to build them more cost effectively.
Many types of regulations affect infrastructure providers. These are set under a variety of legislation and overseen and implemented by multiple organisations. These points apply across multiple areas of regulation.
Source: ‘Report on findings: Assessment of costs of carrying out works in the road corridor for electricity distribution businesses. Prepared for Electricity Networks Aotearoa by Beca Limited. (2024).
Figure 26: Average temporary traffic management cost per day, 2019 – 2024
Box 10
The cost of temporary traffic management
Temporary traffic management is needed to keep workers and road users safe when work is happening in the road corridor. Requirements have increased over the last decade, following the Health and Safety at Work Act 2015 and subsequent changes to the New Zealand Transport Agency’s Code of Practice for Temporary Traffic Management.
These changes have safety benefits but also increase costs for routine infrastructure maintenance and construction. Electricity Networks Aotearoa estimates that the per-day cost of temporary traffic management for electricity lines work tripled between 2019 and 2024 (Figure 26). These costs fall most heavily on small electricity line maintenance projects, and, in some cases exceed 20% of project budgets. Their research did not analyse changes in safety outcomes, however.
The previous Code of Practice was recently superseded by the New Zealand Guide to Temporary Traffic Management, which takes a less prescriptive and more risk-based approach. It is too early to understand the outcomes achieved by the new regime.
Resource management legislation is stable and enables infrastructure
Well-functioning resource management legislation is important for building, maintaining, and operating infrastructure. Resource management legislation sets out the decision-making process for the use of natural resources. Infrastructure providers must navigate the resource management system to gain approval to build, maintain, and operate infrastructure. This can affect delivery cost and timeframes.
Resource management legislation should be enabling of infrastructure. Large infrastructure projects sometimes require complex approvals due to their significant impacts on natural environments. They need a path through the consenting system that allows them to operate while managing negative impacts on the environment. Small infrastructure projects tend to be less complex but they also need cost-effective consenting pathways.
Institutional strengthening and building capability in the resource management system is needed, not just legislative change. Critical success factors for effective infrastructure provision in the new system include: an entity with clear accountability to develop and maintain a set of national infrastructure standards; investment in data about the natural environment and hazards to support spatial planning; guidance to support planning practice, and pooling expertise to strengthen compliance, monitoring and enforcement in the system.
Resource management legislation needs to maintain social license to build infrastructure. New Zealanders are concerned about environmental quality and prefer an approach that will improve the environment, rather than worsen it (Box 11). Managing the environmental and community impacts of new projects is therefore important for ensuring a good operating environment for infrastructure.
There is broad agreement on the challenges with our existing resource management legislation. Case-by-case consenting processes under the Resource Management Act 1991 are costly for participants, but not necessarily effective at delivering a consistent standard of environmental protection. Despite this, it has proved harder to agree on how to fundamentally reform the legislation.
Reform proposals have been advanced by the previous and current Government.[59] Common features are evident across both proposals, such as a focus on enabling regional spatial planning, consolidating district plans into a smaller number of regional plans, and setting environmental limits. However, important differences also exist between the two pieces of legislation, such as the degree to which they narrow the scope of participation in resource management processes, the role of property rights and the role of Te Tiriti o Waitangi.
A stable approach to reform, supported by broad public and political consensus, is needed. Reforming resource management legislation is costly and disruptive. An opportunity is available to develop a significant component of the current reform package with consensus in mind, while allowing scope for changes to reflect other political and societal values over time. Infrastructure projects can help improve the environment, such as generating renewable electricity, or treating wastewater to higher standards. Further areas of consensus include long-term spatial planning and making the consenting of public infrastructure more efficient and with greater use of standardisation across the country. This is critical for infrastructure projects that span multiple regions.
Source: ‘Getting what we need: Public agreement and community expectations around infrastructure’. New Zealand Infrastructure Commission. (2025).
Figure 27: Public perceptions about the future of the environment
Box 11
Greater consensus on infrastructure that enables environmental outcomes
New Zealanders value infrastructure, and most are also concerned about environmental quality. Public opinion surveys often highlight significant concern around environmental issues, particularly water shortage and pollution, and climate change. A healthy environment is an essential underpinning of our aspirations for growth and development.
Most New Zealanders say that they disagree or strongly disagree that ‘we worry too much about the future of the environment and not enough about prices and jobs today’ (Figure x). In this context, ensuring that infrastructure projects are seen to benefit the environment, rather than damage it, is likely to be important for sustaining social license for investment.
Policies affecting demand for infrastructure investment are consistent and predictable
Infrastructure providers benefit from predictable processes for reviewing and changing policies. This is because demand for infrastructure is often affected by policy changes. When infrastructure providers have a better idea about what might change in the future, they can make the right investments at the right time.
Demand for investment is shaped by policy factors. Many examples can be found. How we price network infrastructure affects how much demand there is for new infrastructure, and where that infrastructure is demanded. How much unpaved green space we choose to provide in towns and cities affects how much stormwater infrastructure we need to build to channel runoff away from homes and businesses.[60] Service standards for social infrastructure affect how much of it we must build.
Policies must continuously evolve in response to technological and demand changes. When this happens, consistent processes for reviewing existing policies and consulting on policy changes can help. Independent regulators tend to take a predictable, consultative approach. For example, the Electricity Authority’s commitment to public consultation and transparency, as well as its efforts to test regulations before formal launch, provides early signals to the sector to inform the Authority’s investment plans.
Local government currently faces significant policy uncertainty. Policy and regulatory settings for local government have been subject to many reviews and reforms in recent years. Core functions in relation to water, building control, resource management and economic development are currently undergoing reform, leading to increased costs for local governments.[61]
The electricity sector has a consistent policy environment
Electricity is critical to the operation of all types of infrastructure. Affordable and reliable electricity is needed to meet our economic and environmental goals.
We expect to need more electricity in the future. The New Zealand Government has committed to achieving net zero greenhouse gas emissions by 2050 through its international agreements and the Climate Change Response (Zero Carbon) Amendment Act 2019. Broad agreement has been reached that achieving this target will require a significant increase in affordable and reliable low-carbon electricity generation to displace fossil energy sources. Both sector and government forecasts show a substantial rise in electricity demand in coming decades. This is reflected in our outlook for future electricity investment demand (Section 3).
Electricity is a commercial sector facing the potential for significant demand growth. However, it is also facing challenges, such as uncertainty about the pace of demand growth and current challenges around the affordability and reliability of electricity.
Consistent energy policy is needed to ensure that investment proceeds at the required pace. This means ensuring a competitive market where electricity generators have an enabling consenting environment and don’t face excessive demand or price uncertainty due to policy changes. Electricity transmission and distribution investment must be done in a timely and cost-effective manner, because these costs are passed on to consumers through regulated revenue allowances overseen by the Commerce Commission. It will be easier to decarbonise if we can defer unnecessary network investment driven by the need to meet peak demand. Considerable investment will be needed but there may be ways to better manage demand,[62] reducing system load at peak times, that could provide $6.9 billion of net benefits.[63]
In the long term, greater electrification of the economy could be good for consumers. It can enable cheaper electricity to displace thermal fuels in the economy. However, there is a risk that medium-term investment in network infrastructure will lead to higher electricity prices in the coming years, raising some affordability and equity challenges, and hindering the uptake of electric vehicles and appliances.
Our dry year risk challenge needs close monitoring. Policies to mitigate the ‘dry year risk[64]’ and improve energy security will continue to merit significant attention. Transpower’s annual modelling suggests power firms could have too little capacity to meet demand for electricity in the winter of 2026, with a significant change being the forecast reduction in gas available for power generation. This is likely to mean a strong focus on ensuring thermal plant is available for back up, and careful management of hydro storage. Current proposals under consideration by the Electricity Authority that may allow new entrants to purchase ‘firming capacity’[65] from large electricity generation companies may be a positive development. Further measures to support investment in ‘firming’ generation may also need attention, with a focus on how to reduce prices for industrial and domestic consumers, and reap the benefits of wider electrification of the economy (Box 12).
Energy market policies are under review. Significant policy work is currently under way, given the implications not just for the functioning of our energy infrastructure and market, but for wider economic activity. It will be important to assess the findings and response to the Review of Electricity Market Performance[66] and the Energy Competition Task Force.[67]
Box 12
Important factors affecting electricity investment
The electricity sector faces uncertainty about future demand forecasts. These are driven by the difficulty in understanding the uptake of new technologies[68] and uncertainty about policy approaches to decarbonising the economy. The National Infrastructure Pipeline, consenting applications, and a recent Transpower monitoring report[69] point to an uplift in new generation, and growth in electrification of the economy, though noting some ‘policy headwinds’ and transition pains that require a continued watching brief.
Supply and demand side uncertainties are also inherent, such as diminishing gas reserves, and the impact of large users in the market such as Methanex, and the New Zealand Aluminium Smelter, both of whom have made decisions that provide some short- and longer-term stability. Measures to reduce project delivery costs and barriers (such as easing resource consenting) will remain important.
Previous policies such as the Lake Onslow project, the 100% renewable electricity target and reversing policies that incentivised investments in decarbonisation, have been cited by industry experts as undermining investment certainty. Similarly, measures to overcome declining local natural gas supply, for instance a shift to importing liquefied natural gas, would require assessment to identify the impact on energy sector investment over the coming decades.
4.5.3. Recommendations
Infrastructure providers require a stable and enabling policy environment. We make two main recommendations to address this. The first relates to improving resource management legislation while the second addresses the need for a stable policy environment for electricity investment.
These recommendations are important for enabling investment to happen in a timely way.
Recommendation 9
An enabling environment: The resource management system enables infrastructure with national and regional benefits, while managing interactions with surrounding land uses and negative impacts on the natural environment.
This recommendation would need to be implemented in an enduring way through resource management reforms, including a new national policy statement on infrastructure. To address identified issues, we expect the resource management system to include infrastructure-specific tools and pathways to enable infrastructure with national and regional benefits to be built and operated, while managing interactions with surrounding land uses and negative impacts on the natural environment. New legislation is currently under development and the Commission is inputting into the design of the new system.
Recommendation 10
Policy stability: Energy investors have predictable policy and consenting settings that support affordability, security of supply, and the decarbonisation of the economy.
This recommendation would need to be implemented through policy and operational changes, which we are investigating further.