Summary

• New Zealand’s infrastructure measures up well compared to countries with similarly small, dispersed populations, but we often achieve poorer value for money relative to how much we spend.
• The Forward Guidance produced by the Commission suggests infrastructure spending will increase from just over $20 billion a year to more than $40 billion by the 2050s, averaging around 6% of GDP annually.
• A growing share of spending will need to go towards renewing and maintaining existing assets as they wear out.
• Trends such as the ageing population and decarbonisation will drive proportionately higher investment in health and energy, while land transport and education spending is expected to moderate as demand stabilises.
• Funding network infrastructure like water and transport on a user-pays basis will enable more resources to be invested in social infrastructure such as hospitals and schools.
• Pricing should recover the full lifecycle costs of network infrastructure, guide efficient use and investment and distribute benefits fairly.
• The land transport funding system is unsustainable, with the most recent three-year plan requiring $12.8 billion of Crown loans and grants that could have gone to other priority areas, reflecting investment ambitions that significantly exceed user revenues.
• The system should return to a model where the cost of maintaining, renewing and enhancing the existing network is predominantly met by users. Coupled with strong independent oversight, transport providers should be given more independence to make investment choices and align investment with actual demand.
• Stronger assurance, value-for-money tests, and prioritisation of renewals are needed to improve efficiency and close the long-term transport funding gap.
• Overall household infrastructure costs should remain affordable under the Forward Guidance, though the mix of charges will change over time.