Finance Minister Bill English today announced changes to the way government manages its assets and makes infrastructure decisions.
From today, all Crown agencies proposing projects with a whole-of-life cost over $25 million will be required to consider a
Finance Minister Bill English today announced changes to the way government manages its assets and makes infrastructure decisions.
From today, all Crown agencies proposing projects with a whole-of-life cost over $25 million will be required to consider and evaluate public-private partnerships (PPPs) as an alternative procurement option.
Speaking at the New Zealand Council for Infrastructure Development Symposium in Auckland, Mr English said that PPPs will only be appropriate for some projects.
"But we believe putting this to the test will increase price competition and ensure that taxpayers get the best possible value for money.”
He acknowledged New Zealand's limited overall scope for PPP projects compared to Australia - where 50 PPPs since 2000, worth $30b, still make up just 20% of projects.
"New Zealand is smaller and this means there will be more small and medium-sized projects and there is unlikely to be the same constant pipeline of PPP projects there is in Australia."
Mr English has been impressed with market interest in New Zealand PPPs to date.
Raising accountability
Today's reform package also includes plans to regularly publish a government investment statement, as signalled in the budget, with the first to be published by the end of the year.
The statements will clearly set out the Crown's assets and liabilities, identify any emerging issues and state how the government plans to manage its large and growing investment in taxpayers' assets.
A third measure will give chief executives greater discretion to commit to projects with a whole-of-life cost of less than $15 million – but with a “tighter focus on getting results”.
"Agencies will have to take a more consistent approach to the development of their business case with a focus on clearly displaying the economic and financial rationale for any investment,” Mr English said.
"In addition, they will be required to explicitly report back to the cabinet on the results of major investments so the government can ensure it is getting the expected benefits."
The government holds about $220 billion of assets, forecast to grow by another $30 billion over the next four years.
"Despite those large sums, government knowledge and performance in this area has been poor," Mr English said today.
Engineering groups Caenz and Ipenz have both published recent research reports calling for improvements to infrastructure asset management and investment.
