Key to infrastructure assets: public-private partnerships

CRAIG SIMCOX/Dominion Post

LISTEN UP: National Party leader John Key believes more long-term government debt and effective use of public-private partnerships will help build more infrastructure assets.

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National Party leader John Key believes more long-term government debt and effective use of public-private partnerships will help build more infrastructure assets.

Key told a Colliers International property briefing that New Zealand had failed to invest enough in infrastructure for several generations while successive governments concentrated on paying off debt.

He believed infrastructure investment needed to be boosted considerably to underpin economic growth and said this could be achieved in two ways.

"Unquestionably the Crown can invest more in infrastructure and it can do that with long- dated, intergenerational debt that's aligned to (the economic life of) the project," he said. "The second thing is that the private sector can play a really big role," and this could extend well beyond toll roads.

"There might be some toll roads that work, but not all over Auckland, because they are quite bitsy and no one wants to go through three or four toll booths to traverse Auckland. Where I think public-private partnerships can play a really big role is in the property sector, in areas like prisons, schools and hospitals, and I think that could be a really big growth area," he told the audience of mainly developers and investors.

These could take several forms. In some cases a property could be developed and owned by private investors and leased back to the government, "with the asset transferring back to the Crown after a period of time".

Or a private company could have a contract to manage a particular facility without owning the property in which it was based. However Key also said that not every development opportunity would be suitable for public-private partnerships.

"You have to look at things on a case by case basis. I don't think it will be a situation where numbers will add up for everything," he said.

Key said one of the most promising sources of capital for infrastructure investments was the huge pool of retirement savings which the country was building up.

- © Fairfax NZ News