Strategic Direction

12. Infrastructure is one of the priorities the government has identified in its aim to lift New Zealand’s economic performance. To support this, it has allocated $7.5 billion to new capital spending over the next five years. This is in addition to the transport spending funded by levies on users, business-as-usual spending by public sector entities and state-owned enterprises (typically around $5.3 billion capital expenditure annually), and the $30 billion that local authorities have indicated they will spend, predominantly on infrastructure, over the next 10 years. The government’s infrastructure priorities and strategic direction reflect this focus on economic performance, and therefore on infrastructure that is of national significance.

13. The four immediate priorities are: broadband; roads of national significance; electricity transmission; and the Rugby World Cup 2011. The Rugby World Cup represents an opportunity to lift the international profile of New Zealand. The unifying characteristic of the other three of immediate priorities is that they help to ‘make markets'. Roads enable the transport of goods to purchasers and workers to work. Transmission lines enable creation of a more effective market for electricity. And a national fibre optic network will allow ultra-fast transmission of information, creating a platform for new markets to emerge. These immediate priorities are the subject of current investment plans, as described below.

14. Three other priorities are in earlier stages of policy development. These are: the broader electricity market; water and irrigation; and the procurement and management of the government's own ‘social infrastructure' assets. The government has announced or is working on policy programmes in each of these areas. These will result in regulatory or other changes.

15. Finally, we identify two issues that the government expects may be nationally important over the longer term. The first is the relationship between Aucklandtransport planning and the urban form of Auckland. Second is the issue of efficient use of roads and the way we pay for them. These issues are raised in part as examples of the sorts of issues that the government wishes to identify as part of its infrastructure planning.

Immediate Priorities

Broadband

16. Modern economies are characterised by high degrees of connectivity. The ability to rapidly transfer large amounts of information enables a host of business and leisure activities. A number of new business models are emerging. For example, on-line auction sites and software as a service model (a.k.a. “cloud” computing). On-line purchase of music and travel is now commonplace. These new business models have emerged rapidly as Internet access has become widely available. However, access is not yet ubiquitous and speeds in many areas are still very modest. As access speeds and connections increase, one would expect the exploitation of this medium for business purposes to increase rapidly.

17. Recognising the current importance and future potential of broadband, the government has decided to invest in establishing the infrastructure for this. It is committing $1.5 billion to provide ultra-fast broadband, accessible to 75% of New Zealanders in the next 10 years. The investment will provide open access to a passive (‘dark’) fibre optic network. This infrastructure may then be used by commercial providers to supply high-speed network services.

18. This work programme is led by the Minister for Communications and Information Technology, Hon Steven Joyce, supported by MED.

Roads of national significance

19. While there is an increasing emphasis on virtual connections, physical connectivity will remain important. Highways provide the main links between our major business centres, facilitating the efficient transport of goods and people. Congestion creates inefficiency and makes it more difficult for businesses to operate and grow. The government has identified several highways as priorities for improvement over the next 10 years. These ‘roads of national significance’ are:

• Puhoi to Wellsford - SH1;
• Completion of the Auckland Western Ring Route - SH20/16/18;
• The Auckland Victoria Park bottleneck - SH1;
• The Waikato Expressway - SH1;
• The Tauranga Eastern Corridor - SH2;
• The Wellington Northern Corridor (Levin to Wellington) - SH1; and
• The Christchurch motorway projects.

20. The National Land Transport fund has been reprioritised to reflect this list. The government is also increasing road user charges and fuel levies to fund additional investment. This reprioritisation will enable forecast investment of $10.7 billion for state highway development over 10 years.

21. This work programme is led by the Minister of Transport, Hon Steven Joyce, supported by the Ministry of Transport and the New Zealand Transport Association.

Transmission

22. Transpower owns and manages the national power grid. The national grid facilitates the transmission of electricity from the generation site to local distribution networks, where retail companies then provide power to their customers.

23. Transmission is crucial to the efficient functioning of New Zealand’s electricity market. Current capacity constraints limit the efficient operation of the market and reduce resilience to accidents and equipment failure.

24. Since 2005, Transpower has obtained approvals for around $2.7 billion of investment, and a further $2.3 billion of upgrades are planned[5]. Major investments include[6]:

• The North Island Grid Upgrade Project ($818 million);
• The HVDC Grid Backbone Projects ($672 million);
• The North Auckland and Northland Grid Upgrade ($420 million); and
• The South Island Grid Upgrade Project ($82 million).

25. While significant investment is now underway, it is clear that grid performance has suffered from the undue delay of some work. This is in part due to structural and regulatory hurdles that resulted in difficulties in getting work approved. These issues are being addressed as part of the government’s electricity policy programme.

Rugby World Cup 2011

26. While projected demographic and economic growth generally provide the basis for identifying future infrastructure needs and investment, the Government is mindful of the need to ensure that significant national events such as the Rugby World Cup are also factored into infrastructure planning and provisioning by all infrastructure providers – private and government.

27. The Rugby World Cup will be one of the largest sporting events ever hosted in New Zealand. It will provide a significant boost to the international profile of New Zealand, and is expected to contribute over $500 million in additional GDP to the New Zealand economy. In addition to a significant television audience, a considerable influx of international tourists is expected. When combined with domestic interest in the World Cup, this will lead to pressure on transport and other infrastructure and provide a test of their capacity and resilience.

28. The government’s priorities are to ensure that New Zealand presents itself in the best possible light and that the event leaves a legacy for the nation by building our capability to host future major events, which in turn bring their own economic, social and cultural benefits. To this end the government has jointly purchased Auckland's Queens Wharf and is contributing $190 million to the significant Eden Park redevelopment programme. It is also assisting with upgrades to AMI Stadium (Christchurch), Trafalgar Park (Nelson) and Okara Park (Whangarei) and the development of a new stadium in Dunedin. It is also accelerating certain road investments (e.g. Newmarket viaduct upgrade) and upgrading the rail link to Kingsland and Morningside stations near Eden Park to cope with this increased pressure. This is in addition to costs incurred in developing the bid to host the RWC and in delivering the tournament with the NZRU.