The infrastructure sector - 2022 in review and key themes for 2023
15 February 2023
2022 was a busy year for the infrastructure sector. The spotlight was well and truly on the Government and its policy making engine. We saw a steady stream of change last year, with the promise of more coming down the line in 2023.
In this update, we unpack a few of the key themes from 2022 that we anticipate will continue this year.
The Three Waters reform and its layers of complexities
Despite widespread acceptance that change is needed, and the passing of the Water Services Entities Act 2022, the Three Waters reform remains ongoing through the start of 2023 and continues to be highly controversial.
Setting politics aside, the key pressure to successful reform now is time. It is critical that the new Water Service Entities (WSEs) hit the ground running, but with a 1 July 2024 start date for the WSEs we are running quickly out of time. While officials are working hard, there remains much to be done, with a degree of urgency. Good policy takes time and with two bills currently before the Select Committee, and considerable implementation detail still to be developed, time is not on our side. Alongside a broader policy refocus the government has highlighted that it is considering changes the Three Waters programme. Any potential changes must be identified quickly so that councils, iwi/Māori and the DIA National Transitional Unit (with the establishment chief executives of the WSEs) can plan with certainty. This would allow the many governance arrangements and the myriad of guidance and planning documents to be thoroughly developed.
Being an election year will not make it any easier, but 2023 is the year for a short, sharp reconsideration, a change in narrative and a focus on delivery of the reform frameworks if the reforms are to realise their ambition.
The resource management reforms and enabling infrastructure
There was a continued focus on the provision of national direction in the resource management space in 2022. The need for affordable and diverse housing was a key focus, with councils needing to develop and notify their intensification planning processes to enable housing supply and several housing developments utilising the fast-track consenting process pursuant to the Covid-19 recovery legislation. In addition, we saw the commencement of the National Policy Statement (NPS) for Highly Productive Land, further discussion around the proposed NPS for Indigenous Biodiversity and further amendments to the NPS for Freshwater Management.
After much anticipation, the Natural and Built Environment and Spatial Planning bills were introduced into Parliament in November 2022 marking an important milestone in the reform of our planning and resource management system. It has been a busy and exciting start to 2023, with submissions on the bills closing and the select committee process to hear submissions underway. The final piece to the resource management reforms, the Climate Adaptation bill, is also anticipated this year.
The reform of the Resource Management Act 1991 is a once in a generation opportunity to shape the future of our natural, built and social environment. Widespread engagement in the process is critically important to ensuring we have a system that delivers on the outcomes sought by the reform and meets the needs of New Zealand now and into the future.
The need for greater fuel resiliency
Last year the Government had to take steps to reduce fuel costs and assure the public that we had enough fuel in the country. Coincidentally, the Government was considering the country's fuel supply resilience after Refining NZ transitioned Marsden Point Oil Refinery to an import terminal. As a result of its review, the Government announced a range of initiatives in November aimed at strengthening that resilience.
These initiatives largely adopt the Ministry of Business, Innovation and Employment's (MBIE) policies proposed last year of achieving onshore stock holding of 28 days' cover for diesel and petrol and 24 days’ cover for jet fuel at normal consumption levels. The Government has not been heavy handed on this issue to limit costs to the industry and consumers.
While the initiatives are an improvement on the status quo, mainly because they mandate importers (from 1 July 2024) to hold a specified amount of fuel onshore, this is only a marginal improvement as it is based on the national average of what they currently already hold (see our views about this here). However, it does mean that the Government plays a greater role in maintaining an appropriate level of fuel in New Zealand rather than leaving it to fuel suppliers - which is a good thing.
The increased importance of renewable energy and green infrastructure projects
2022 saw a sharp focus on renewable energy in the property and construction sectors, signalling the importance Aotearoa is placing on investing in sustainable infrastructure. In particular, we have seen an increase in geothermal, wind and solar farm development projects to aid the decarbonisation of our economy. This includes project financing structures including green loan facilities, securing land rights, commercial construction contracts, and resource management consenting processes.
We anticipate innovation within green infrastructure projects to continue in 2023 and beyond as businesses take a more targeted approach to achieving Aotearoa's climate change and sustainability goals.
2022 saw a myriad of demands and issues facing the infrastructure sector, and we anticipate 2023 will continue to challenge participants at every stage of infrastructure development. Aotearoa needs innovation, but with that innovation comes complexities that will challenge many industries, ultimately resulting in a more resilient and sustainable infrastructure sector.