- Hon Nicola Willis
- Hon Chris Bishop
The Government is improving how it selects infrastructure projects by making a series of changes to the Investment Management System, to ensure infrastructure meets New Zealanders' needs, represents value for money, and can be successfully delivered, Infrastructure Minister Chris Bishop and Finance Minister Nicola Willis say.
The changes include transferring responsibility for infrastructure project assurance from The Treasury to the independent NZ Infrastructure Commission.
"We're improving the information Ministers receive and making sure there is proper scrutiny of major projects to support Ministers in making good investment decisions on behalf of New Zealanders," Ms Willis says.
"Since coming into Government, the Minister for Infrastructure and I have been concerned by the quality of information provided on infrastructure including what we own and its condition, the forward investment pipeline, assurance on projects, and agency performance.
"When it comes to assurance, there are multiple project review tools across the investment system that serve slightly different purposes and have different assessors, information requirements, reporting formats, and outputs.
"However, none of these tools provide Ministers with unapologetically strong, clear, and actionable assurance that is focused on substance as opposed to bureaucracy, so that we can make well-informed investment decisions.
"What ministers need is clear, frankly expressed 'go/no go' expert advice on each project."
"Instead, the current state allows investments to move through the system and lets bad projects gain momentum - until it's too late - wasting tens or hundreds of millions of taxpayer dollars on Business Cases and early design and feasibility on phantom projects.
"Multiple external assurance products like the Treasury's Gateway Review and Infrastructure Commission's Infrastructure Priorities Programme are also causing duplication and overcomplication for both Ministers and agencies.
"Put simply, there are too many external assurance and project review tools but none of them do what is needed - support Ministers to make good decisions.
"This is alarming considering its Ministers who ultimately make these large investment decisions. It's clear change is needed, and that's what we are doing."
Cabinet has agreed to five key changes to the Investment Management System:
- Stronger investor-focused assurance: External investment assurance will be focused on what Ministers need to make good decisions on behalf of New Zealanders. This means simplifying the assurance space by consolidating existing products like the Infrastructure Priorities Programme (IPP) and Gateway - taking the best elements of both.
- Better use of specialist expertise: Responsibility for coordinating external assurance on central government-funded infrastructure projects will shift from the Treasury to the independent NZ Infrastructure Commission, removing duplication of assurance products and ensuring the Commission's expertise is used to its full advantage. This means the Commission will look over major infrastructure proposals long before decisions are made, giving Ministers independent, expert advice on whether the investment meets a need, represents value for money and is deliverable. When it comes to the NZ Transport Agency, high-risk projects or those outside of the National Land Transport Fund, will be subject to this assurance
- Clearer advice to Ministers: For all Business Cases seeking Cabinet endorsement, Treasury will introduce a standardised two-page 'Fitness Assessment' for major investment decisions. This assessment will also play a strategic role by putting the project in context of the entity's past performance and the fiscal landscape.
- New assurance for asset management and long-term investment plans: A dedicated assurance function will be established for capital-intensive agencies, covering asset management and long-term investment planning. The Commission will be responsible for providing assurance on these plans and Treasury will lead policy.
- Greater Ministerial oversight of major projects: The Infrastructure and Investment Ministers Group will review High-Profile High-Risk investments and long-term investment plans before they go to Cabinet, and monitor delivery after decisions are made.
"These changes directly respond to and accept recommendations in the National Infrastructure Plan under the theme of prioritising the right projects, and are part of the Government's wider work to lift economic growth and improve the performance of public investment," Mr Bishop says.
"For Ministers, this will mean they can confidently say 'yes' or 'no' to projects, asset management plans, and long-term capital plans - early - knowing that their decisions are informed by strong evidence and independent, expert advice.
"For taxpayers, these changes mean more projects that meet their needs and represent good value for money. Stronger assurance can also be a tool for the public to hold Ministers to account. If a government funds a project that did not receive a favourable assessment, then that's a good basis for questions and scrutiny.
"For the sector, these changes will mean less stopping and starting of projects as good projects rise to the top, and unrealistic and unfunded projects quickly sink to the bottom.
"Central government agencies will need to up their game on asset management plans, long-term investment plans, and Business Cases - which likely requires getting more capacity and capability in these areas.
"Central Government already holds regulated utilities and local government to these standards, and it's time we held ourselves to that same standard.
"At the end of the day, this is about getting better infrastructure for New Zealanders. Roads that last, schools and hospitals that meet needs, and projects that are delivered on time and on budget."
Ms Willis says Ministers need clearer, more consistent information to make good decisions about billions of dollars of public investment.
"For too long, decisions have been made with patchy or inconsistent information, and with too little visibility of delivery risk," Ms Willis says.
"These changes put Ministers back in the driver's seat as investors, with better tools to assess whether projects stack up and whether agencies are ready to deliver them."
