In May 2024, Cabinet endorsed the Improving Infrastructure Funding and Financing cross-agency work programme. This cross-agency work programme sought to support the Crown and councils to make better use of existing assets, and sustainability address New Zealand’s infrastructure deficit.
- Cabinet Paper ECO-24-SUB-0076: Improving Infrastructure Funding and Financing
- Cabinet Minute ECO-24-MIN-0076: Improving Infrastructure Funding and Financing
The Treasury are the Minister for Infrastructure’s lead advisors for this work programme as well as leading several specific deliverables. These included the Funding and Financing Framework, Strategic Leasing Guidance and Guidelines for Market-led Proposals[1]. The Treasury were also key contributors in the NZ PPP Policy refresh deliverable and is responsible for NZ PPP policy as at 1 December 2024.
Also, part of this programme is a review of the Infrastructure Funding and Financing Act 2020 being led by the Ministry of Housing and Urban Development with support from the Treasury.
In November 2024, Cabinet endorsed the Funding and Financing Framework, Strategic Leasing Guidance, and Guidelines for Market-led Proposals.
- Cabinet Paper ECO-24-SUB-0264: Improving Infrastructure Funding and Financing Report-back
- Cabinet Minute ECO-24-MIN-0264: Improving Infrastructure Funding and Financing Report-back
Funding and Financing Framework
The Treasury has developed a Framework consisting of a set of Principles and a Decision Process to guide the Crown’s choices around how it structures its funding and/or financing support. The objectives of the Framework are to:
- broaden the funding base for investments and utilise private capital, where efficient
- apply commercial disciplines to the Crown’s approach to the provision of public capital.
The Framework is a key tool to support the Crown in efficiently and effectively managing its balance sheet capacity – in line with the intent signalled in the Public Finance Act 1989. A well-managed balance sheet contributes to higher living standards by supporting the provision of public services while also underpinning the economy’s overall performance.
Guidelines for Market-led Proposals
The new guidelines aim to outline a transparent and streamlined process to facilitate collaboration between the public and private sectors, and enhance potential opportunities associated with proposals that include innovation, improved identification of projects, and improved project delivery efficiency.
NZ PPP Policy
From 1 December 2024, the Treasury is responsible for the development and stewardship of PPP policies, including the commercial principles, standard form agreement and model schedules.
The New Zealand PPP Framework: A Blueprint for Future Transactions outlines a series of enhancements to the government’s approach to planning, procuring and delivering future PPP projects, designed to ensure that PPP remains a useful and relevant construction tool for New Zealand infrastructure.
Strategic Leasing Guidance
The Strategic Leasing Guidance provides the policy and project circumstances for which leasing could provide improved outcomes and be a viable option for public sector entities to consider for their physical asset requirements. The objective of the Guidance is to:
- assist procuring entities’ consideration of whether leasing is an appropriate approach to acquire the use of physical assets needed for the delivery of public services, and
- provide procuring entities with best practice technical and commercial considerations for their leasing arrangements.
Public sector entities should consider this Guidance at the strategic stage of their decision making process.
Infrastructure Funding and Financing Act 2020
The Infrastructure Funding and Financing Act 2020 (IFFA) is an alternative funding and financing tool developed to tackle the issue of housing and associated infrastructure being outpaced by population growth. Uptake of the IFFA has been low and the Ministry of Housing and Urban Development are providing advice to the Minister of Housing on how to improve the functioning of the IFFA.
For information on this funding and financing tool, visit the Ministry of Housing and Urban Development’s The Infrastructure Funding and Financing Act 2020
Note
- [1] These were originally labelled Funding and Financing Principles, Long-term Leasing and Unsolicited Proposals in the Cabinet paper.