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Australia/New Zealand  
 
 

EXAMINING INFRASTRUCTURE FUNDING MODELS TO MEET GROWING DEMANDS IN CHRISTCHURCH

Building resilient cities of the future involves grappling with soaring demand and using innovating funding mechanisms to fuel economic growth. Like all growing cities, Christchurch will need to quickly adapt robust and innovative funding mechanisms to meet demand and realise ambitious infrastructure plans of the future.

 

WSP sponsored a Property Council breakfast on 5 July, which featured a discussion on parallels that could be drawn from Australia about the role of private equity and challenges facing the New Zealand (NZ) public sector, particularly in terms of demand shocks presented in the recent past.

Christchurch’s ever-increasing demand for tourism coupled with the city’s population growth projections (22.4 per cent growth in the next 25 years) requires innovative methods of funding, to balance traditional public funding to ensure that Christchurch’s infrastructure has the capacity to accommodate for and moreover, provide a prosperous and liveable city for the future.

The Government of NZ has committed $102 million over the next four years towards developing tourism infrastructure nationwide. And whilst this aligns with the strategic objectives of Christchurch City Council to boost tourism, there are challenges around the adequacy of funding which call for alternative sources to keep the momentum going. Offering a unique perspective on the issue of infrastructure funding was one of the key speakers at the Infrastructure Breakfast, Steven Proctor from HRL Morrison. As an experienced investor and financial advisor, he spoke about the underutilisation of private and international investors in NZ.

Christchurch local and WSP Associate Director Buildings, Graeme Smith also sees private and international investment as an opportunity for exponential growth in Christchurch’s infrastructure sector.

Mr Smith said, “It is evident that the current funding model for building infrastructure will benefit from additional funding to meet the future needs of the city. There is an opportunity to better utilise Public Private Partnership (PPP) models and international investor funding in NZ. These models have been proven to work well in many countries around the world. Take the UK as an example. The PPP model has been used there for 25 years through the use of private finance; and in that time, more than 630 PPP projects have been delivered.  

“PPPs and similar models that utilise private investment bring a number of benefits. Critical infrastructure can be built sooner as private companies have greater incentive to complete construction ahead of time because payment usually comes after construction is complete. In Australia, PPP projects are delivered three percent ahead of estimated completion date compared to non-PPP projects which are delivered 24 percent behind estimated completion date when measured on a value-weighted average basis. Private partners also bring expertise, innovation and efficient methods in construction, operations and maintenance of infrastructure assets.”

Mr Smith added, “Private funding models can work in New Zealand. With robust strategies put in place, drawing funds and expertise from such investors can benefit the city bringing greater innovation and economic growth.”

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Sources

https://www.beehive.govt.nz/release/1b-fund-accelerate-housing-infrastructure
http://www.lgnz.co.nz/news-and-media/2017-media-releases/tourism-infrastructure-assessment-shows-sustainable-funding-needed/
https://ourauckland.aucklandcouncil.govt.nz/media/12630/aeq-infrastructure-funding-may-2017.pdf
https://ccc.govt.nz/culture-and-community/christchurch/statistics-and-facts/facts-stats-and-figures/population/
https://hrlmorrison.com/assets/attachments-folder/MCO-Craigs-launch-Social-Infrastructure-Fund.pdf
http://www.governmentnews.com.au/2016/01/public-private-partnerships/