Transtasman investors put off by ‘negative perceptions’
Lack of competition in
New Zealand’s building materials market, inconsistent procurement processes, and no clear pipeline of future work are all factors putting off potential Australian infrastructure investors, Cabinet papers show.
The issues emerged during Infrastructure Minis- ter Shane Jones’ trip across the Tasman in April where he went searching for ideas on how to improve management of New Zealand’s major projects.
Jones wants an independent infrastructure body to provide advice on the state of the nation’s assets but ultimately leave decisions in the hands of ministers. He tasked officials to ensure New Zealand makes the most of investment opportunities from Australia, including getting closer to the market across the ditch.
A Cabinet paper shows their ongoing commercial interest in providing New Zealand infrastructure was tempered by a number of negative perceptions, such as a lack of a clear and coherent pipeline of work beyond the transport sector. Among those concerns were inconsistent procurement processes and inflated project costs arising from New Zealand’s highly concentrated materials sector, the paper said. Local government regulatory settings and the perception that having a New Zealand partner was an unofficial prerequisite also put investors off.
A 2012 Productivity Commission report into housing affordability found there was a lack of competition in the local building materials market, which was compounded by firms’ inability to achieve economies of scale due to their size.
The Government yesterday called for feedback on how a new infrastructure body should be set up and where it should sit in the framework. It is likely to be set up in the second half of next year.