New Zealand Government's Strategic Response to National Infrastructure Plan and Economic Challenges

Good morning, everyone.

It’s great to be here today.

I’d like to thank Katie Bradford for the warm welcome and Nick Leggett and his team at Infrastructure New Zealand for hosting today’s event.

Katie – congratulations on your new role, I look forward to seeing you continue to cover infrastructure at the NZ Herald.

I’d also like to acknowledge Labour Infrastructure spokesperson, Kieran McAnulty.

Last time we were are at an Infrastructure NZ event together we were wearing the same shoes – I hope that passes as bipartisanship.

In all seriousness, I do think we agree on the fundamentals – which is building consensus on the idea that governments of all stripes should use best practice to plan, select, fund and finance, deliver, and look after infrastructure.

I said it last year, Kieran said it in Parliament the other week, and I’m glad we are getting to this place.

Today, I’ll run through the how the Government intends to respond to the National Infrastructure Plan, then I’m happy to answer your questions.

But before I get into it, I want to briefly touch on the context we are operating in.

Context Over the last month, global events and uncertainty have impacted New Zealand’s economic recovery.

The conflict in the Middle East, and its resulting fallout is hurting all kiwis, particularly with higher fuel prices at the pump.

This has exposed an uncomfortable reality for kiwis – Not only do we face systemic, decades-in-the-making challenges like low productivity and an infrastructure deficit – we also face significant and more frequent shocks such as extreme weather events and offshore conflicts.

At the same time, Fitch recently put our AA+ credit rating on a negative outlook.

Currently, the interest bill on Government debt is $8.9 billion per annum and rising. In Wellington I’d say that’s six Transmission Gullys a year on interest payments alone, but here in Auckland maybe a better point of comparison is the City Rail Link project – we could get another 1.5 CRLs per year for that kind of money.

If New Zealand’s credit rating was downgraded and that led to higher bond yields, then our interest payments would go up even more.

Taken together, we effectively have triplet headwinds (1) long-standing systemic economic issues, (2) exposure to shocks, and (3) high debt.

While we don’t have the power to declare peace in the Middle East, we can and must control how we respond.

Support for hardworking families To start, we have moved quickly to provide extra support for low-to-middle-income working families.

From 7 April, about 143,000 working families with children will get an extra $50 a week through a boost to the in-work tax credit. The boost will also expand eligibility to around 14,000 additional working families.

The increase will be temporary, lasting for one year or until the price of 91 octane petrol drops below $3 a litre for four consecutive weeks.

This boost will deliver support to working families who are under significant cost-of-living pressure, without making inflation worse or further driving up Government debt as this $373m initiative is being paid for out of Budget 2026 operating allowances.

The COVID-19 Inquiry stressed that spending in response to crises should be timely, targeted, and temporary.

That’s what we’re doing.

The previous Government responded to COVID-19 through profligate, irresponsible spending – racking up debt. It’s clear some people have not learned from this and have called for this Government to make the same mistakes. But we won’t.

Throwing the kitchen sink at every event that happens is a recipe for fiscal disaster.

While it may sound simple and appealing, simply borrowing more could lead to a self-reinforcing vicious cycle where debt servicing takes up a large (and growing) share of government revenue.

That forces increased taxes and/or cuts to public services and infrastructure to pay for that debt, which in turn reduces long-term economic growth, which then puts downward pressure on Government revenue, making the debt even less manageable.

It is naive at best and economically-illiterate at worst to pretend that New Zealand can afford to run structural deficits.

The Coalition Government understands New Zealand’s fiscal reality, and we know we cannot live beyond our means in the long run.

We are committed to protecting people’s living standards, which depends on strong fiscal discipline. We also know that sometimes extra, targeted support is needed.

We can do both.

Fuel plan Right now, we know the conflict in the middle east is causing concerns across the country and across the world about supply of fuel.

As you know, Government has been keeping New Zealanders informed about our fuel supply situation.

We have sufficient stocks for now, and we are working hard across diplomatic, commercial, and industry channels to ensure that remains the case.

But this situation is also a reminder of something we already knew – New Zealand is exposed to international fuel markets in ways that carry real risk.

Around half our fuel comes from South Korea and nearly a third from Singapore.

When global supply chains are disrupted, as they are now, that exposure becomes very tangible for families and businesses who feel the pain at the pump.

We know higher fuel prices are hitting families and businesses hard. That's why we put in place the targeted cost-of-living relief for low- and middle-income families earlier this week.

But maintaining fuel supply is the most important thing we can do to protect Kiwis from the worst-case scenarios.

Later this week Nicola Willis – who is in charge of our response as a Government – will provide an update on the National Fuel Plan along with further detail around how we see some of the levels playing out in practice.

We all hope things improve quickly, but as the Prime Minister has said, hope is not a plan.

So, we’re doing the hard yards now to ensure New Zealand has a really solid fuel plan that gets us through whatever the international situation throws at us in the coming months.

Fixing the basics and building the future A key part of becoming more resilient to shocks is having strong institutions, functional regulation, and a high-performing economy.

As Paul Krugman observed – Productivity isn’t everything, but in the long run it is almost everything.

This Government is supporting growth through policies like Investment Boost and Fast-Track, getting on with building billions in infrastructure, and signing up to more free trade agreements.

We are also tackling long-standing systemic issues that have accumulated and festered for 20 to 30 years.

I’m thinking of things like RMA reform, infrastructure funding and financing reform, sorting the Holidays Act, reversing wealth destructive earthquake prone building legislation, opening up competition in building materials, and more.

I strongly believe that if we get these things right, maintain fiscal discipline, and keep momentum going, the 2030s will be New Zealand’s decade.

National Infrastructure Plan Now, I want to touch on how the Government intends to respond to the National Infrastructure Plan.

The Infrastructure Commission released the final Plan on 17 February.

I’d like to acknowledge Raveen, Geoff, and the team at the Commission for their hard work on this.

The Plan does not sugar coat things: New Zealand has real challenges ahead.

We spend a lot on infrastructure – around 5.8% of GDP annually, one of the highest in the OECD – yet we rank towards the bottom for efficiency, and we are fourth to last in for asset management.

Many government agencies do not properly understand what they own nor have long-term investment plans. The assurance system for new projects is also weak and not focused on giving Ministers confidence that we are getting good value for money.

New Zealand’s future prosperity depends on high quality infrastructure. It is central to our quality of life.

It’s been clear to me since I became Minister that change is needed, and this is what the Plan will help us do.

The Plan puts forward 16 recommendations that sit under four key themes.

Those four themes are: Planning what we can afford Looking after what we’ve got Prioritising the right projects Making it easier to build better Many of the recommendations the Commission suggests are long-term system shifts including legislating requirements for long-term investment and asset management plans.

Now, it’s worth noting that this isn’t the first time we’ve seen some of these recommendations.

This isn’t even the country’s first infrastructure plan.

New Zealand actually had plans in 2010, 2011, and 2015.

Some recommendations in these older plans are identical to the ones in this Plan!

My theory of the case is: Previous Governments completed these reports, looked at the recommendations, and said oh that’s nice, that could be ok, let’s look into that a bit more – then, ultimately, pushed the boat out on hard changes.

I am not going to do that.

This Government is up for big changes, and we thank the Commission for their challenges and for their recommendations.

We will be studying these recommendations thoughtfully and carefully.

Then, we are statutorily required to respond to the Plan in mid-June this year.

I know many people in this room are keen to see more bipartisanship in the infrastructure sector. To the extent that that’s possible, I’m up for it.

That’s why all parties in Parliament were offered briefings from the Commission on the Plan.

We also held a Special Debate on the Plan once it was finalised.

I can’t claim to speak for all parties, 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.

I’ve long held the view that we should move away from the rhetoric of needing a bipartisan pipeline and instead build bipartisan consensus on the idea that governments of all stripes should use best practice to plan, select, fund and finance, deliver, and look after infrastructure.

It was really nice to hear Kieran McAnulty, who is here today say something similar in Parliament the other day.

He said: Surely we can make genuine efforts to agree on the settings by which infrastructure is assessed and funded and delivered in this country. I agree, I think we can do that.

He also said: If all Crown infrastructure went through the independent assurance process that the Infrastructure Commission has set up, then we will go a long way to avoiding the cancellation of projects that we have seen in the past.

On this, I also largely agree with Mr McAnulty, and I will have more to say on that soon.

I intend to engage with other political parties in Parliament before finalising the Government’s response in June.

Other improvements to Investment Management System Before I finish, I just want to quickly go over initial work we have done to improve data and transparency as it relates to Crown infrastructure.

Last year’s announcement of ‘$7 billion of Government-funded infrastructure projects entering construction’ actually came about because one day I noticed there were quite a few projects starting in the couple of months.

So, I asked for a list of projects starting construction in the next six months.

It took about a month to collect this information centrally, which is emblematic of the system not providing Ministers the information we need in the form we need it.

If I’m honest, Ministers also didn’t have good visibility of agencies’ investment activity and performance.

This made it difficult to signal to the sector when projects were coming to market, and to intervene when agencies are off-track with a project, aren’t meeting their requirements, have significant lag times between being funded and signing contracts, or – worse – are systemically underperforming across multiple metrics.

This was not acceptable.

The public deserve to know that their tax dollars are being spent responsibly and effectively.

To better hold agencies to account and to make sure Ministers can act on issues earlier, we have strengthened Quarterly Investment Reporting.

Now, each quarter we know key metrics, like how much spend is going out the door and the ratio of agencies’ actual versus planned expenditure.

New Zealand has long struggled to turn funding into construction quickly, and the market has made it clear that they want higher quality information on upcoming construction activity. The improved QIR now makes it clear which agencies are behind.

The Minister of Finance and I have stressed to Portfolio Ministers the need for accurate reporting and forecasting. It’s early days, but we’re closely monitoring whether underspend improves in 2026.

Conclusion Thanks again to Nick and the team at Infrastructure New Zealand for inviting me to speak.

It’s great to see so many people here passionate about getting infrastructure right in New Zealand – like Kieran, who I will be talking to shortly about the Government’s response to the National Infrastructure Plan.

I welcome everyone’s feedback on what else the Government should do to improve the system.

Because ultimately, I think we’re all in this room because we believe in a better New Zealand with higher living standards for all kiwis – backed by high-quality public services and well-maintained infrastructure.

Thank you.