The multi-year capital allowance allows greater oversight of the prioritisation and sequencing of capital funding to ensure affordability and achievability. This oversight will now be supported by the new Infrastructure Commission, Te Waihanga.
Figure 19, from the Treasury's He Puna Hao Pātiki – 2018 Investment Statement, shows the situation the Coalition Government inherited. It shows capital investment requirements from departments grew from 313 per cent of what the previous Government was prepared to invest at Budget 2015 to 448 per cent at Budget 2017. It also shows how little visibility there was for future capital investment requirements over the next 10 years.
Figure 19 – Pressures on the capital pipeline from Budget 2015-2027
Source: The Treasury
That is why we have set up the Infrastructure Commission, Te Waihanga, with funding from Budget 2019. Its work includes producing an infrastructure pipeline and working with central and local government, industry, and other stakeholders to develop a 30-year strategy for the long-term infrastructure requirements of New Zealand.
The Minister for Infrastructure has already announced a prototype pipeline which includes projects from five capital-intensive agencies: the ministries of Education and Health, the New Zealand Transport Agency, the New Zealand Defence Force and the Department of Corrections. Future iterations of the pipeline will include all central government agencies, as well as major projects from local government and the private sector.
Developing the projects was a priority identified by the Construction Industry Accord between Government and the sector. The Accord is about creating certainty for businesses so they have the confidence to plan ahead, invest and train their workforces.