Infrastructure NZ chief executive Paul Blair sees reinstatement of depreciation deductions as an opportunity far greater than simply accepting a windfall.
The Government reinstated these deductions in its Covid-19 package on Tuesday, and Mr Blair said this had created the opportunity for building owners to inject that money into building upgrades & maintenance.
Infrastructure NZ estimated the policy change would allow building owners to retain about $2.1 billion, but he said building owners could do a lot more with that money than simply keep it: “If building owners can take advantage of slack in the employment sector & taxpayer assistance, New Zealand could emerge from this crisis with greener, safer & healthier buildings. We’ll be more efficient, more sustainable & more resilient.
“The big opportunity, however, is in the third & as-yet-unannounced component of the Government’s response – the broader recovery package.
“If the Government gets it right, New Zealand will seize this opportunity to unlock constraints to our social, economic, cultural & environmental progress which have built up over many years, allowing our economy & people to bounce back quickly.
“Infrastructure NZ has developed 10 recovery priorities to ensure New Zealand comes out of this crisis stronger than it went in:
- Fund local transport & water projects – many councils have consented, shovel-ready projects across every town in New Zealand that are ready to go today and don’t need big workforces. Infrastructure NZ’s Building Regions proposal aligns well with the Crown’s unfunded urban growth partnerships – the May Budget must introduce a new co-funding regime to get these projects done
- Rapidly mobilise the Infrastructure Commission – some councils don’t even need money to invest in long overdue water & transport projects, just capability. The faster we bring the Infrastructure Commission’s project advisory team on board, the more central & local projects we can unlock
- Double down on housing growth – Kainga Ora & the Government’s urban growth agenda must build on progress to address the housing crisis and support urban land supply
- Let the NZ Transport Agency borrow – it doesn’t currently have its own borrowing capacity, but it does have a reliable revenue stream & big asset base. If NZTA could borrow in the same way as Kainga Ora, multi-year transport programmes could be funded. If NZTA has funding certainty it will also enable councils to spend 100% of their transport capex programmes – today these are often underspent as NZTA doesn’t have sufficient funding
- Invest in green energy – we’ll never again have the opportunity to tackle emissions & climate change that we have today. A number of major renewable electricity projects are consented & awaiting transmission investment, but Transpower is unable to invest ahead of demand. Bring the energy programme forward to accelerate the shift away from oil
- Consenting & design – not all projects need shovels and there are thousands of skilled workers who will slip onto welfare if the pipeline stops. We may need infrastructure spend to be a fiscal lever for us in the months ahead – why not design, consent & build business cases now to create a ‘shovel-ready’ pipeline for the future?
- Streamlined Resource Management Act consents & Public Works Act initiatives – the progress New Zealand made to recover from the devastating Christchurch & Kaikoura earthquakes was enabled by streamlining RMA processes. Let’s use these extraordinary times to ensure projects of national significance get consented, or Public Works Act interventions are made, to cut through excessive delays
- Alliance contracting & open-book project delivery partnerships – we can cut down on the time it takes to tender & procure work by signing longer-term & bundled project contracts. An open book approach can ensure the taxpayer gets value for money and give employers confidence to keep & take on staff
- Apprenticeships – some sectors of New Zealand’s workforce will be hit hard. The Government can & should attach conditions to infrastructure delivery which require training, upskilling & apprenticeships of those looking for a new career
- Risk – not taking risks in the current environment, is taking risks. The Government is going to have to move quickly & responsively to a situation moving much faster than any infrastructure project. Some decisions will turn out to be wrong, others right. It will be no different for business owners. The Government must continue to exploit its size, authority & balance sheet to de-risk private sector investment and back New Zealand.
“If we implement these measures, New Zealand can tackle longstanding, costly & damaging impacts from many years of high growth & weak investment. Never waste a good crisis,” Mr Blair said.
Attribution: Infrastructure NZ release.