Transforming New Zealand's Infrastructure: A Vision for Growth and Efficiency

Good morning, everyone.

It’s great to be here today at Building Nations 2025.

I’d like to thank Nick Leggett and his team at Infrastructure New Zealand for hosting this conference. I believe this is the big 20. Congratulations, and I look forward to the next 20.

Reflections Building Nations is always one of the highlights of my year, because it brings together nearly a thousand of our smartest people getting into a large room to talk infrastructure policy.

As Infrastructure Minister, this is what gets me up in the morning.

You know, as I know, that we need do much better as a community.

Getting infrastructure right is a must – not a nice to have – if we are serious about boosting economic growth and lifting the prosperity and living standards of all New Zealanders.

We are now over half-way into this Parliamentary term, and my biggest takeaway so far as Minister for Infrastructure is: That we make it too hard to deliver and maintain the infrastructure New Zealand needs.

Whether it’s roads, hospitals, schools, quarries, or wind farms – all are stuck in a gordian knot of rules, regulation, paper, and underperforming systems.

Building things used to be cheaper and easier. In fact, New Zealand used to be a world leader in infrastructure. In 1965, we built the longest submarine cable of its kind – the Cook Strait cable between Benmore and Lower Hutt, which is 610km long.

Now we find it difficult to consent a solar farm. Not even build it, just getting permission to build it.

We even find it difficult to get permission to build an 11 storey green office blocks right next to major new train stations. Instead, until recently, our planning system prioritised a heritage-protected gravel pit.

In my view, New Zealand is at an inflection point and we have two choices.

One option is we grow slowly – or not at all - muddle along, take years to make tough decisions, react to things as they come up, and just largely be OK with the status quo.

I call this managed mediocrity.

At worst, it is managed decline.

The other option is that we make tough decisions that successive governments have put in the too-hard basket – on planning, housing markets, transport pricing, and more.

We also take advantage of our extraordinary natural competitive advantages – like cheap, renewable energy – to accelerate growth; increasing our standard of living and making all New Zealanders so much better off than we are today.

Achieving this prosperous future won’t just magically happen.

As I’ve said before, we need to start saying ‘yes’ a lot more, and ‘no’ a lot less – this is especially true for infrastructure.

But simply throwing money at the problem won’t fix things because our current system is too inefficient.

Despite being in the top 10% of high-income countries for infrastructure spend over the last 20 or so years, we are in the bottom 10% for what we get for our spending.

In reality this looks like poor bang for our buck, funding gaps, cost overruns, delays, a growing infrastructure deficit, and – often – worn-down and failing assets that don’t do their job.

This isn’t good enough.

My priorities The only way to fix these problems is to get the underlying system settings right and that’s what I’ve focused on over the last 20 months as Minister for Infrastructure – Developing a National Infrastructure Plan, Establishing National Infrastructure Funding and Financing Ltd – or NIFFCo, Sorting out consenting and planning, Improving funding and financing, Improving health and education infrastructure, and Strengthening asset management.

These priorities reflect recommendations from the Infrastructure Commission’s 2022 Infrastructure Strategy and are also based on a big programme of work we undertook in opposition engaging with experts in New Zealand and overseas.

It’s been a big past 12 months.

We’ve established NIFFCo and it’s already adding value in the system.

We held an extremely successful NZ Infrastructure Investment Summit, attracting private capital from all over the world.

We’ve started a new Market-Led Proposal process with updated guidance and issued new Frameworks on Public Private Partnerships and Strategic Leasing.

We published the first Health Long-Term Investment Plan, We’ve made decisions to establish a separate School Property Agency, taking the building and management of school property away from the Ministry of Education Minister Stanford has driven the average cost of a classroom down from $1.2 million to about $600k.

We’ve also made decisions on better and new funding tools for councils to support housing growth.

But today, I want to go over the draft National Infrastructure Plan – or NIP.

I also want to announce important progress we are making on road pricing reform – in particular, a shift in our approach to road user charges.

Then, I will briefly go over where we are at on some of my other priorities.

National Infrastructure Plan (NIP) Last month, the Infrastructure Commission released the draft NIP.

As Minister for Infrastructure, I hear regularly that – what New Zealand needs is a long-term infrastructure plan that transcends political cycles.

I agree. A plan will give the private sector more certainty so that they can invest in people and equipment.

But a plan is only as good as it’s execution. So, the NIP will only be successful if it is – at least in part – accepted and adopted across successive governments over the long term.

It’s worth noting that this isn’t our first plan.

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

Depressingly, some recommendations in these older plans are identical to those put forward in this Plan – over a decade later. I’m thinking of things like agencies completing 10-year capital plans and making better use of pricing tools and user-pays.

What differentiates this Plan is that it has been developed independently by the Infrastructure Commission – separate from the government of the day.

The NIP is not this government’s Plan, it’s New Zealand’s Plan.

Each political party in Parliament was offered a briefing on the NIP. I’m really pleased that most parties accepted the offer and have had one or more meetings with the Commission.

Building greater consensus on infrastructure is, unfortunately, not as simple as different political parties getting in a room and convincing each other of the other’s view.

That’s not realistic.

Instead, consensus will be enabled by strong systems and institutions, robust investment frameworks, high-quality evidence of our infrastructure needs, and advocacy for projects and policies from a better-informed public.

That’s what this Plan is about.

So, I encourage everyone here to give your feedback on the draft Plan.

I have also heard people say – we need a bipartisan infrastructure pipeline – as if that will solve all problems.

It’s my strong view we do have a robust infrastructure pipeline.

The Commission has been running it for over five years, and it’s been progressively improved over that time.

The Pipeline includes over 8,000 initiatives underway and in planning from 114 contributing organisations. It represents over $200 billion in investment value – with over $110 billion of the Pipeline having a funding source confirmed.

I suspect that almost all of the projects underway right now are supported by everyone in Parliament.

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.

We need to move away from the rhetoric of needing a bipartisan pipeline and instead build bipartisan consensus on the idea that governments of all flavours should use best-practice to plan, select, fund and finance, deliver, and look after infrastructure.

That’s not the case at the moment and it’s what I’m working so hard to fix.

The final NIP will be provided to me as Infrastructure Minister in December. Then, the Government will formally respond to the Plan in June next year.

I truly believe that politicians – and the public – should be having robust conversations about the future of New Zealand’s infrastructure system including what we need, where, when, and how much we are willing to pay.

So, similar to Budget, we will hold a special parliamentary debate on the NIP early next year, before the Government’s Response.

Improving Infrastructure Funding and Financing Let’s move onto improving infrastructure funding and financing.

Currently, infrastructure is primarily paid for by taxpayers or ratepayers. This makes sense for some infrastructure like schools and hospitals, but our reliance on this blunt approach has led to challenges like congestion, run-down assets, and the unresponsive provision of enabling infrastructure – contributing to unaffordable housing.

In 2024, the Government released a suite of frameworks and guidance – like Treasury’s Funding and Financing Framework and a new Market Led Proposal Process – to help Government be a smarter owner and purchaser of infrastructure services.

Earlier this year, I also announced five changes to New Zealand’s funding and financing toolkit including improving the IFF Act and shifting councils from Development Contributions to a new Development Levy system.

These changes to our toolkit will move us to a future state where councils can fully recover the costs of housing growth, and where infrastructure providers can recover costs of significant and city-shaping projects.

Shift in our approach to road user charges Next on my list for improving infrastructure funding is tackling how we pay for roads.

The rhetoric in New Zealand politics that the left hate roads and cars, and the right hate cycleways and light-rail, has distracted from this important question.

I will also say that the polarity is overstated.

For example, I am not opposed to light rail. Like most New Zealanders, I love visiting cities like Melbourne and Sydney and zipping around on their trams.

What I oppose is the $30 billion light-rail-metro-monstrosity that New Zealanders couldn’t afford.

I hope we all agree that New Zealand needs a mix of multiple modes to make our cities liveable, productive, and affordable.

I want commuters to have choices around how they get to work, and a transport network that delivers freight safely and quickly.

But the simple fact is – almost every mode requires roads. Buses need them. Cars need them. Trucks and freight need them. Bike lanes are often shared with them. Even some light-rail relies on them.

Roads are essential, and we need to get serious about delivering the ones we need and maintaining the ones we already have.

For a long time, New Zealand has operated on a user pays principle for our roading network. It’s a principle that has served us well, and one we need to utilise more effectively.

Most drivers contribute through fuel excise duty – or FED – every time they buy petrol.

People using diesel, heavy vehicles, or electric vehicles pay through road user charges – or RUC – and is based on distance travelled.

Distanced travelled directly reflects how much someone uses the road.

For years, petrol tax has been a proxy for road usage. But the relationship between petrol consumption and road usage is fast breaking down.

For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements.

We are seeing a fast uptake of fuel-efficient petrol hybrid vehicles. In 2015, there were 12,000 on our roads, while today there are over 350,000. Which is great – we want more fuel-efficient, hybrid, and electric cars.

But the current system is regressive.

Lower income Kiwis don’t necessarily have the option to buy a new, efficient hybrid vehicle. Wealthier folk like me who can afford newer, more efficient cars pay relatively less.

As our vehicle fleet changes, so too must the way we fund our roads.

It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often.

This is why the Government has a plan to transition the entire 3.5 million vehicle fleet to a fairer electronic RUC system.

Essentially, the government will be abolishing petrol tax. People will pay for the roads based on how much they use them.

And, if we get this right, people will pay based on their vehicle type, the distance travelled, the location, and the time of use.

Doing this is a massive undertaking. It will be the biggest change to how we charge for our roads in 50 years.

So, we are taking this in stages. Today I want to outline a bit of detail about what Cabinet has agreed in terms of sequencing.

The first step is to modernise the law so we can facilitate private-sector innovation and competition.

The current RUC system is a hassle.

It’s manual and paper based. It requires you to constantly monitor your odometer and manually buy and display paper licences on the windscreen. That is not a system fit for today, let alone the future.

Imagine every driver in the country going from easily paying FED at the pump, to queuing up at their local VTNZ to fill in a bunch of forms. That would be a nightmare.

We need a RUC system that is fair and convenient.

So instead of expanding a clunky government system, we will reform the rules to allow the market to deliver innovative, user-friendly services for drivers.

A handful of E-RUC companies already do this for about half of our heavy vehicle fleet. Many of you in this room will be familiar with these systems and likely have them installed on your company fleets.

But there are several companies, both domestic and international, with innovative technology that could make complying with RUC cheaper and easier.

To help speed up this shift to E-RUC, we are progressing a package of legislative changes to prepare our outdated regulatory settings.

We will remove the requirement to display or carry RUC licenses and labels, both digital and electronic. People will just have to have a digital record of their RUC license status. This will make compliance easier for users and enable new business models.

We will reform the electronic device requirements. Many newer vehicles have built-in computers that can record and report distance, but legislation prevents using this technology for RUC. Providers need to be able to use a wider range of electronic RUC devices to provide cost effective options for light vehicles, including solutions that already exist in many cars already.

We will enable different business models better suited to light vehicles. The private sector needs flexibility in how it connects to the E-RUC system. Different providers will have different ideas about the best and most cost-effective technological solution, so we should enable them to compete on that.

Providers also need the ability to provide options such as post-pay and estimated billing. There are opportunities to make RUC more like an electricity bill, rather than something users need to proactively and manually purchased.

We will separate NZTA’s regulator and retailer roles. We have heard from potential new entrants that NZTA’s current role as both regulator and retailer limits the ability for competition and innovation. So, we will clarify how NZTA enables system access, to signal that third-party innovation is not just possible – it’s what the Government wants.

These changes will enable private providers to compete to offer New Zealanders flexible and convenient ways to pay for road use.

We will allow the collector of RUC to collect other transport charges as well. The current form of RUC as a pre-paid licence does not allow for varying location and time charges to be included in a single payment, as these can only be determined after travel.

With road tolling schemes, as well as time of use charging, providers of alternative payment schemes should have the ability to provide one bill to cover road users’ costs, such as in a single monthly payment.

So that’s quite a lot to do.

We expect to legislate for these changes in 2026, amend the regulations, and introduce an updated Code of Practice for RUC retailers and customer service providers.

Next year, we will go out to the market again to understand likely market solutions, costs, and timeframes.

This will build on a previous RFI run in late 2024, which received interest from 25 potential retailers and identified many of the regulatory barriers that I’ve just spoken about.

In parallel, NZTA will prepare corresponding changes to their internal systems and processes to support market participation and promote integrity. This will include work with the New Zealand Police to prepare their systems for RUC monitoring and enforcement once physical labels are removed.

I expect the legislative and operational changes to be in place by the end of 2026.

In 2027, the RUC system will be open for business, with innovative tech and a range of retail offerings able to operate and compete in the market. A transparent and consistent approval process for RUC retailers will also be in place.

But this is just the beginning. The full transition of the light vehicle fleet will come later – once the market is ready. I am not going to put a date on that today, intentionally – we are choosing to get this right, not to do it fast.

This is the right thing to do. It is the fair thing to do. And it will ensure that New Zealand’s roading network is future proofed to keep delivering for Kiwis for years to come.

Improving the consenting framework Now, let me briefly mention a few of my other priorities.

Arguably, the biggest improvement we are making to the infrastructure system is fixing the Resource Management Act.

You all know that consenting takes too long, costs too much, and makes delivering the infrastructure we need too difficult.

We are on track to replace the RMA with new legislation next year. Our new system will be effects-based, embrace standardised zoning, and be far more permissive and enabling – while also protecting the environment.

An independent analysis by Castalia estimated the new system could reduce compliance and administrative costs by $14.8 billion – potentially removing about 10 Transmission Gullys worth of red tape from the economy.

It will be a game changer.

We’re on track for two new Bills to be in the House in November.

In the meantime, our second RMA Amendment Bill will pass into law next week. It makes a range of sensible amendments for infrastructure and renewable energy.

The consultation on our national direction package – including New Zealand’s first ever National Policy Statement for Infrastructure and a much stronger National Policy Statement on Renewable Energy – also just closed. And, we will be making decisions on this package shortly.

Let’s not forget about fast track. There are 12 projects before expert panels, all due for decisions by the end of this year. A draft decision has been released for the Port of Auckland expansion signalling it will be approved shortly. I’m told what could have taken five years took instead just five months.

Strengthening asset management and resilience Another huge change to the system will be asset management.

Everyone knows if you don’t paint the weatherboards on your house, the wood will rot. And billion-dollar infrastructure is fundamentally no different.

Unfortunately, due to decades of diverted maintenance spending, lack of asset registers, and lack of asset management plans - we have schools with leaking roofs, sewage leaks in hospitals, asbestos in police stations, service outages on commuter rail, and mouldy defence accommodation.

In May this year, we started a work programme that will improve asset management in central government.

We are considering fundamental changes such as legislatively requiring agencies to prepare and publish long-term Asset Management and Investment Plans, and to report on their performance.

Regulated utilities and local government are legislatively required to do these things – I don’t see why central government thinks it should hold others to a higher standard than it does itself.

Conclusion Building Nations is a good time to reflect on successes, failures, and frustrations.

A few weeks ago, the Minister for Economic Growth and I released an update showing that over $6 billion of government-funded infrastructure is due to start construction between now and Christmas.

Workers will start construction on $3.9 billion of roading projects – like Melling and Ōtaki to north of Levin, $800 million of school property projects, and a range of health projects and other government buildings.

You’d be surprised, I think, at how difficult this data was to pull together. It’s not rocket science. It’s just a list of projects.

But our central government infrastructure system is incredibly disaggregated. There is a lack of quality data flowing to the market. If you think it’s bad, try being me!

It often takes an age for projects to get to market, and this has been a long-standing problem. Governments appropriate money, but there can be a long lag time between funding approval and construction. Often this is because governments fund projects before they are actually ready.

This was notable with the NZ Upgrade projects, for which funding was approved in early 2020 – and some of these projects are only just beginning construction now (with large cost overruns).

The Minister of Finance and I are determined to change this. It’s not working for Ministers and it’s clearly not working for the sector.

So, we are reorienting the system to be more focused on delivery and making smarter investment decisions. This means making changes to Treasury’s Investment Management System and their Quarterly Investment Reporting.

One key improvement is that Treasury will now report on quarterly capital expenditure by government entity, as well as metrics such as planned versus actual spend, and time enter delivery.

I welcome your feedback on what else we need to do to improve the system.

Because ultimately, we’re all here because we believe in a better New Zealand, powered by high-quality and well-maintained infrastructure.

That’s what gets me up in the morning.

So, I look forward to checking in – same time next year. I hear there’s another big event late next year too. Hopefully I’ll be back in 2027.

Thank you.