A two-day summit aimed at wooing some of the world’s most powerful financial institutions kicks off in Auckland today, writes Catherine McGregor in today’s extract from The Bulletin.
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Global financial firms descend on Auckland for government summit
Today marks the kick-off of the government’s two-day NZ Infrastructure Investment Summit, bringing together around 100 international investors, infrastructure experts and government officials in Auckland. Representatives from major financial institutions including pension funds, sovereign wealth funds and major banks will be presented with the government’s “ambitious pipeline of projects” in fields such as transport, health, courts and education. As Luke Malpass notes in The Post (paywalled), “Labour’s finance spokesperson Barbara Edmonds will also be speaking on infrastructure as the Government seeks to impress upon investors that, despite differences in political stripes, investment is welcome in New Zealand.”
Iwi representatives will also attend to highlight upcoming investment opportunities in the Māori economy. For them, “the stakes go beyond economic growth,” writes Liam Rātana this morning on The Spinoff. “They are looking at what the infrastructure pipeline can offer Māori – and whether they will be treated as genuine investment partners or simply stakeholders with interests to be managed.” Rātana talks to some of those attending about what they hope to achieve, and why they’re going in with “eyes wide open”.
Pushing PPPs
The concept at the heart of the summit is public-private partnerships, or PPPs. As Oliver Lewis explains in BusinessDesk (paywalled), in a PPP, “the private sector partner designs, finances, builds and manages a public asset for a contracted period; the Government makes ongoing availability payments, and the asset returns to public control at the end of the contract period.” Only four PPPs are ready to be presented to investors at the summit, of which the largest by far is the Northland expressway. NZTA says that project may require more than $10 billion in investment, Lewis reports, which is “eight times as much as the $1.25b cost to build Transmission Gully (although the comparison doesn’t take into account inflation and other factors)”.
What the summit hopes to achieve
“The NZ Infrastructure Investment Summit is about saying to the world that we are ready to do business, ready for investment – and ready for jobs and growth,” writes infrastructure minister Chris Bishop in the Herald. The international investors attending this week collectively manage funds and assets worth around $6 trillion, Bishop says, and the government hopes it can tempt them to spend some of that on infrastructure projects here. In the Conversation, construction expert John Tookey warns that the process is a bit more complex than the government’s spin would suggest. As we become increasingly reliant on PPPs to fund infrastructure, “the real question is whether New Zealanders are comfortable with the dynamics of long-term contracts with substantial service charges that will last decades,” he writes. “Because today’s politicians will be writing contracts our grandchildren will still be bound by.”
Is that all there is?
Having brought a glittering array of global investors to NZ – at their own cost, as the government is keen to emphasise – it would seem less than ideal that only a handful of PPP options are ready to be presented at the summit. Along with the Northland expressway, the near-term PPPs on offer include prison, courts and army accommodation projects, but these “seem unlikely to meet the minimum size requirements for funders”, Tookey says.
Writing in the NZ Herald, Matthew Hooton is scathing about the event’s potential to be another “ultimately embarrassing prime ministerial summit”. “We’d all better hope BusinessDesk somehow has [the list of projects] terribly wrong because if that’s all New Zealand has to offer major allocators of global capital after 16-hour flights from New York or Dubai, our country will forever be blacklisted as a destination for their funds,” he writes.
“Not even the 24km expressway would meet most funds’ minimum investment thresholds for construction projects and it isn’t clear these are genuine PPPs anyway, but rather slightly more elaborate construction contracts.” Defending the government’s offer, Bishop says attendees will be “interested in the future pipeline as evidence that New Zealand is serious about infrastructure…. It’s not just about the short-term or quick fixes.”