Identifying New Zealand’s infrastructure needs – for today and tomorrow

Today, we have published our report Paying it forward: Understanding our long-term infrastructure needs. This report shares our emerging thinking on what will drive future infrastructure spending demands.

“One of the roles of the Commission is to provide a long-term view on New Zealand’s infrastructure needs. This is a key part of our work on developing the National infrastructure Plan,” says Peter Nunns, Acting General Manager – Strategy, the New Zealand Infrastructure Commission.

“Our work identifies eight drivers of future infrastructure investment, including population growth and demographic changes, decarbonising our economy, and building resilience to natural hazards.

“While the future is uncertain, some pressures on our networks are easier to foresee than others. For instance, so long as we have good information on the size and condition of existing assets, we can forecast what we will need to spend to maintain and replace them.

“Other future drivers, like population growth and demographic change, are harder to predict. Looking back, we estimate that population growth and population ageing accounted for over 60% of the growth in our public infrastructure networks from 1960 to 2019,” says Nunns.

“Looking forward, we know that New Zealand’s demographic future will be different than its past, but it’s hard to be certain about how, where, and when we will see the impacts. Declining fertility rates mean overall population growth is expected to slow, and that it will be increasingly driven by migration, which is difficult to predict.

“Our population is also ageing and diversifying. This affects not only how much we need to invest in infrastructure in the future, but what types of infrastructure we need to invest in. For instance, older people use hospital and medical facilities more, whereas schools and universities are used mainly by younger people. This has implications for what we’re thinking about building today and how we’re preparing for tomorrow,” says Nunns.

“We also need to be realistic about how much money we have to invest. Over the last 20 years, we’ve opted to spend around 5.0% to 6.5% of our GDP on all types of infrastructure. To give a sense of scale for the year 2024, 5.8% of GDP, the average we’ve spent since 2003, is around $24 billion.

“However, not all of this money is available to build new infrastructure. After accounting for what we need to spend replacing and renewing existing infrastructure that is reaching the end of its life, this leaves around $10 billion for new or improved infrastructure across all levels of government and the private sector. While this is a lot of money, given how extensive and valuable our networks are, it is not big enough to avoid thinking about trade-offs,” says Nunns.

“So, we need to carefully consider how we will address our infrastructure challenges. The work we’re doing on this will feed into the National Infrastructure Plan and help us begin to spotlight the types of infrastructure investment that can help meet our needs and represent strong and credible investments in New Zealand’s future.”