Long-awaited draft National Infrastructure Plan says NZ not getting ‘bang for buck’

Wednesday, 25 June 2025

The Infrastructure Commission - the quango responsible for advising the Government on the infrastructure system - has released its first 30-year draft infrastructure plan at a symposium at Parliament this morning.

The document - long awaited within the sector - paints a bleak picture of infrastructure provision in New Zealand. This country collectively spends over $1.3 billion per year on consenting new infrastructure, and spends in the top 10% of OECD countries as a share of GDP, yet has very little to show for it. And what infrastructure central government does build and own is very poorly maintained.

The report says that 5% to 7% of gross domestic product should be spent on infrastructure each year into the future, saying that New Zealand has “a formidable number of infrastructure needs”.

New Zealand is currently spending 5.8% of GDP on infrastructure - $4500 per year for each person in the country, which places it in the top 10% of OECD spenders for the size of the economy. Yet the report also found that the New Zealand is in the bottom 10% of the OECD when it comes to “bang for buck” for infrastructure spending.

“Based on what infrastructure we’ve already got, around 60% of investment should be directed towards renewing and replacing existing infrastructure as it wears out. That leaves around 2% to 3% of GDP for new infrastructure, including around 1% of GDP spent by central government,” the report said.

“In the future, renewals are likely to take up a larger share of the budget, especially in places that experience slowing population growth. Long-term trends will boost demand for some types of infrastructure and flatten it for others. For example, an ageing population will need more hospitals and fewer schools, relative to a younger population.”

The report, which runs to over 160 pages, contained many recommendations and analyses of different areas of infrastructure.

One of the bigger recommendations in the report is for user-pays to be implemented in most areas aside from social infrastructure. The Commission separates out infrastructure that can pay for itself -such as networks and roads - and those that cannot, such as schools and hospitals.

The report says that funding tools should be “matched to asset type (user-pays for network infrastructure, commercial self-funding for economic-development assets, and tax funding for social infrastructure) to keep the overall capital envelope affordable.”

“User-pricing principles are applied across all network sectors so user charges fully fund investment, guide efficient use of networks and distribute the benefits of network provision.”

In transport specifically, it recommends that user charges be increased to cover the whole cost of the land transport networks.

The plans also calls for political consensus around infrastructure.

The plan, which will now go out to consultation, has drawn the praise of Minister for Infrastructure Chris Bishop, who encouraged New Zealanders to have their say and submit on the draft plan.

“As the Commission says, we need to ‘lift our game’ and there are many draft recommendations in the draft plan that will help drive better value for money from public investment,” Bishop said.

He also said that he was pleased the report made recommendations which align with “existing Government priorities, such as making better use of user pricing to fund investment, adopting spatial planning, prioritising infrastructure through the resource management system, and drastically improving asset management and maintenance”.

“The Government will continue to advance these policy priorities and will be informed by the Commission’s final report due later in the year,” he said.

The report now goes out for consultation and the final version is expected near the end of the year.

‘Plan is not this Government’s plan, it is New Zealand’s plan’

Infrastructure Minister Chris Bishop, speaking at a symposium at Parliament on Wednesday morning as the plan was released, said he agreed that the country’s infrastructure plan needed to transcend political cycles.

The plan would only be successful if it was, at least partly, accepted and adopted by successive governments, long term.

“What differentiates this plan is that it has been developed independently by the Infrastructure Commission – separate from the government of the day,” Bishop told an audience at the Looking Ahead Infrastructure Symposium: Building Common Ground.

“The [national infrastructure plan] is not this Government’s plan, it is New Zealand’s plan.”

But he emphasised that there might be more cross party consenus than people might guess.

“I can’t claim to speak for all the parties in Parliament, but I suspect that almost all of the projects underway right now are supported by everyone.

“It’s the high profile and high-cost disagreements that make the headlines. But it’s the low profile and often low-cost projects that actually make New Zealand.”