Election 2020: National Election Promise: Crown-owned Bank Will Finance Infrastructure Projects

National promises to create a single Crown-owned bank to streamline and finance infrastructure projects if elected to government.

The Crown Financial Institution would combine several entities into a single agency called the National Infrastructure Bank, which would advise and finance local and central government projects.

It would act as a “careful steward” of the infrastructure and provide clear lines of responsibility, National says.

The Bank would consolidate:

• New Zealand Green Investment Finance Limited

• Residual interests in Crown Irrigation Investments Limited

• Loans made by the Provincial Growth Fund

• Other loan portfolios on the Crown balance sheet, where applicable

In its policy document, National said that infrastructure banks provide a “long-term perspective” on infrastructure financing and development, act as a bridge between government and private investment, and increase the availability of financing for infrastructure projects. infrastructure.

The infrastructure bank would also be an opportunity for institutional investors, such as ACC, KiwiSaver providers, NZ Super Fund and Australian pension funds, to take the risk of investing in local assets.

It would be governed by an independent board “appointed for its expertise in infrastructure financing and public sector debt management” and would hire professionals with valuable technical, legal, financial and economic evaluation skills.

“A long-term intergenerational approach will be needed to finance infrastructure in New Zealand,” the policy document said.

National finance spokesman Paul Goldsmith used the example of the three-water grid reforms as a project that would cost several billion dollars over the next decade.

That project would require a “coordinated and disciplined approach to planning and financing,” Goldsmith said.

“We recognize the need for effective management of the vast amounts of borrowed debt to ensure that it is managed with care and used correctly.

“Our infrastructure bank will provide clear lines of responsibility not only to ensure value for money, but will also offer tangible assets that support future development in the form of schools, health services, roads, water supplies and better housing. means”.

National said other projects the Bank could support include financing new toll roads through long-term bond financing in collaboration with NZTA, financing green projects, co-financing for schools, and helping city councils to unlock commercial and housing development with loans tied to specific rates and development contributions. .

The Bank would maintain a nominal amount of government capital stock and the existing capital would be reallocated from the organizations it would consolidate.

Funding for the bank would come from a consolidation of benchmark funds from various entities, including $ 8 million from Crown Infrastructure Partners and $ 5 million per year for the Green Investment Fund.

Full costs would be decided following the final operating design, National said.

The party’s infrastructure spokesman, Chris Bishop, said the Labor-led government had taken “a clumsy and incompetent approach to infrastructure investment.”

“Just look at the Provincial Growth Fund, the lack of delivery in the Green Investment Fund, and the lack of clarity about ready-to-go infrastructure projects. The loans have been paid off without any plan or purpose.

“Our infrastructure bank will act as a careful steward of our infrastructure program, providing vital leadership and capacity in the public sector as these intergenerational assets develop.”

National leader Judith Collins today announced the policy at Forsyth Barr in Wellington.

“A key part of National’s plan to deal with the current economic and jobs crisis is to deliver world-class infrastructure that grows our economy and puts Kiwis back to work.

“To do that we have to invest, and every dollar borrowed must be spent wisely on projects that improve our economy and generate productivity.”

National said the infrastructure bank:

• Provide leadership and capacity in the public sector for long-term infrastructure development.

• Finance new infrastructure projects for the Crown and the local government.

• Provide opportunities for institutional investors and iwi to invest in the financing of long-term infrastructure assets.

• Develop a portfolio approach to manage infrastructure debt and associated risks, in partnership with the Treasury.

• Provide advice and experience to the Crown on infrastructure financing models.

• Ensure that the Crown receives value for money from its infrastructure financing structures.

• Actively monitor the debt portfolio and the recycling of funds over time.

• Develop and implement business models that unlock co-investment.