From plans to projects

This paper looks at the performance of central government investment and asset management against the International Monetary Fund’s best practice assessment framework. The findings have provided some of the evidence which underpins several of the recommendations in the National Infrastructure Plan, specifically looking at how we can get better value and performance from our infrastructure investments.

Our ‘self-assessment’ against the Public Investment Management Assessment (PIMA) tool found that there are some areas where New Zealand performs well. Our government sets clear fiscal targets  and central government debt-to-GDP ratios have generally met targets, helping ensure long-term certainty about fiscally sustainable public investment. New Zealand also ensures that funding is made available and released in a timely manner, but we perform poorly in several key areas, including long-term planning, project appraisal and selection, and funding sufficient maintenance and renewals to look after the infrastructure we already have.

The PIMA assessment highlights that there are inconsistent approaches to long-term investment planning by central government agencies. Whilst there are legislated requirements for local government and the regulated sector to develop long-term investment plans, no such requirements exist for central government. As a result of this, we don’t know if we are spending enough to maintain and renew existing infrastructure. It appears that we are facing a significant maintenance backlog and that agencies lack critical and necessary information about their assets, although the evidence base is weak as there is little publicly available data on the state of central government infrastructure. We have also found that decision-makers lack quality information when choosing projects to invest in.

Key findings

• our overall fiscal framework is reasonable
• agencies take inconsistent approaches to long-term investment planning
• the government doesn’t always fully assess projects before funding them
• central and local government planning is not well coordinated
• the annual budget is comprehensive and backed by a robust legislative framework
• the annual budget cycle gives agencies limited certainty about future funding
• we don’t know if we spend enough to maintain and renew assets
• decision makers lack quality information when choosing projects to invest in
• the government manages its cash flows and pays its suppliers promptly
• many central government agencies do not have good asset data
• there are gaps in project leadership, assurance and monitoring.