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Industry calls for better infrastructure decisions

Engineers and economists are calling for an improved analysis toolbox to assist infrastructure decisions.
Last night at Parliament, Transport, Communications and Associate Infrastructure Minister Steven Joyce launched a major Centre for Advanced Engineer

Nina Fowler
Wed, 11 Aug 2010

Engineers and economists are calling for an improved analysis toolbox to assist infrastructure decisions.

Last night at Parliament, Transport, Communications and Associate Infrastructure Minister Steven Joyce launched a major Centre for Advanced Engineering (Caenz) report supporting better decision-making on infrastructure investments.

The launch preceded Finance Minister Bill English’s announcement this morning on asset management reform – including a requirement for Crown agencies to consider PPPs for projects worth more than $25 million.

Stephen Selwood, chief executive of major backer NZ Council for Infrastructure Development (NZCID), said that the Caenz report offers a more balanced and robust approach to cost-benefit analysis.

“We haven’t been very strong in understanding the benefits and costs of wider economic, environmental and social imperatives,” he said.

It recommends a standardised toolbox for assessing these wider effects (including business confidence and the benefits of increased national connectivity) alongside directly monetised costs and benefits.

Mr Selwood expected this to enable better decision-making across sectors, support long-term strategic planning, and help speed up Environment Court hearings.

Caenz enlisted the help of some big guns for its project, with contributions from Motu Economics, BERL, Opus and Dialogue Consultants and 11 leading public and private sector decision-makers.

Ipenz has carried out complementary research on the financial reporting of infrastructure organisations, as featured in last week’s NBR.

Minister not yet convinced

Mr Joyce stopped short of directly endorsing Caenz’ recommendations.

In his speech launching the report, Mr Joyce applauded its attempt to further best practise but made it clear that there are limits to the benefits of analytical work.

“At some point you actually have to make a call, and often those are political calls, so we have to remember that as we go through the process as well.”

Later, speaking to NBR, Mr Joyce said he thought standard cost-benefit analysis had worked “reasonably well,” particularly in experienced capital-intensive sectors like transport and electricity transmission.

He said the government had identified room for improvement in analysis of social infrastructure projects such as housing and schools.

Nina Fowler
Wed, 11 Aug 2010
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Industry calls for better infrastructure decisions
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