Quake rebuild ‘too hard’ for NZ Super

Adrian Orr has revealed he gave up trying to invest in Christchurch’s rebuild in frustration during his decade at the New Zealand Superannuation Fund.

Orr, who is now the governor of the Reserve Bank, made an enthusiastic plea for New Zealand to embrace ‘‘third-party capital’’ – a reference to public-private partnerships – as a means of boosting investment in infrastructure.

In recent days Orr has denied that his comment that business investment ‘‘should’’ increase constituted advice. But the central banker appeared perplexed that more money is not being spent on infrastructure.

‘‘This country, we’ve gone through the lowest ever global interest rates, we’re in good fiscal health. Why aren’t we investing?’’ Orr said in an interview.

‘‘Personally, as a citizen of New Zealand I’m very pleased to see public investment being planned and trying to get under way,’’ he said, ‘‘and I’m even more pleased as a citizen of the world that third-party capital is increasingly being allowed to be part of the public infrastructure investment.’’

Orr acknowledged he was giving a plug for his former employer, the NZ Super Fund, which the Government recently revealed had made an unsolicited approach asking to be involved in Auckland rail projects as a developer, funder and operator.

In more than 11 years at the helm of the fund, which has an unusually long investment horizon, Orr said he was unable to ever secure an infrastructure investment in New Zealand.

‘‘My single biggest frustration when I was at the Super Fund was the inability to be able to invest in New Zealand infrastructure,’’ he said.

‘‘We never got to spend a single penny in Christchurch. I stopped going down. It became too hard.’’

New Zealand needed to develop a programme of public infrastructure and establish a mechanism to consider which party may be the best one to help fund it, not necessarily the cheapest one, he said.

‘‘If you had well-understood pipelines of public infrastructure, very clear procurement frameworks for third-party capital to come and be involved and a mature capability to select that third party based on things other than just the lowest price.’’

He said an analysis of bids would ask potential partners the following: ‘‘Are you capable? Are you the obvious long-term owner? Are your incentives aligned with us? Will I marry you?’’

Orr said the recent troubles of Fletcher Building pointed to New Zealand’s troubles with infrastructure contracts.

The country’s largest construction company has lost hundreds of millions of dollars after winning a series of contracts on a fixed-price basis, in the middle of a major building boom that has seen construction costs surge.

‘‘We’ve really struggled around ‘Should we allow thirdparty capital?’ And then we haven’t had the capability to select third-party capital on things other than just price.’’

Orr took up the role at the Reserve Bank after 11 years as chief executive of the NZ Super Fund, which was designed to help address New Zealand’s looming pension bill.

At the end of March, the fund was valued at $37.8 billion.