New Zealand’s population and its priorities are changing rapidly, driving a huge focus on local and national infrastructure set to continue for decades.
By 2050, our nation’s population will have increased by an estimated 1.7 million people to 6.8 million, of which 92 per cent are forecast to be based in urban centres. By 2035, Tāmaki Makaurau Auckland’s population will likely exceed two million.
As in many developed countries, New Zealand’s infrastructure is aging, presenting a complex challenge for both private and public infrastructure delivery. Te Waihanga New Zealand Infrastructure Commission (Te Waihanga) says we need to spend $60 in renewals for every $40 we spend on new infrastructure.
The challenges we face around climate resilience are also growing. Te Waihanga estimates that $5 billion of local council infrastructure is exposed to sea level rise. A major transition in our energy sector is required to decarbonise and adapt in the face of climate change. These trends have substantial implications for our infrastructure.
Auckland’s specific challenges include population growth and demographic changes; there’s increasing demand for housing, and our transportation network needs further development.
In this blog, we introduce recent developments and opportunities in this important sector across Tāmaki Makaurau Auckland.
New Zealand infrastructure strategy
New Zealand’s first comprehensive long-term infrastructure strategy was produced by Te Waihanga New Zealand infrastructure Commission in May 2022. The 30-year plan considers the challenges and sets out a vision for building a better and more resilient future. One of the clear starting points is that we can’t build our way out of this problem as we may have in the past, it would just be uneconomic. The strategy showed that it would cost $31 billion a year, roughly a tenth of New Zealand's GDP, to plug the infrastructure deficit and build for the future. Instead, we need to think about what could be done to better use existing infrastructure, while building new infrastructure for the future.
The strategy says there are three key areas that can have the greatest impact:
- We can leverage low-emissions energy resources, such as water, solar and wind.
- We need to plan for future generations by improving our resource management, growing workforce capacity and capability, and spreading the cost across generations.
- We can look into introducing user-pays pricing mechanisms, such as metering water and congestion charging on roads.
The strategy provides recommendations to central and local government, as well as the infrastructure sector. These include increasing housing opportunities in areas with good infrastructure access and enabling easier urban development through minimum levels of mixed-use zoning. The strategy also suggests reducing the amount of waste we create, particularly non-recyclables; increasing technology use, including greater uptake of real-time data about infrastructure for planning and maintenance; and streamlining consenting processes while reducing the regulatory burden on construction materials.
Infrastructure in Auckland
Billions of dollars are being invested in transport infrastructure work planned or underway in Auckland. There is a wide range of publicly and privately funded projects across the construction supply chain presenting multiple growth opportunities for building and infrastructure businesses and skilled workers. Adding to this, the focus on intensification is driving demand for more technology and development companies that have the skill and experience to design and build high-rise apartments at the pace of construction required. There is an opportunity for international companies with expertise and access to new technologies to address this gap in the market.
Auckland Light Rail and the Waitematā Harbour Connections
Two alliances will plan and design the next phases of the city’s largest infrastructure projects that will dramatically change the way people and freight move around the region: Waitematā Harbour Connections and ALR projects. The projects are at different phases of development.
The Waitematā Harbour Connections project will encompass all modes including light rail, buses, walking, cycling, vehicles and freight, along with determining the future use of the Auckland Harbour Bridge. It’s a complex, large-scale project, which is anticipated to take more than 15 years of design and construction work.
Waka Kotahi NZ Transport Agency (Waka Kotahi), Auckland Transport and Auckland Council have named an alliance of four companies as the preferred bidder for the Waitematā Harbour Connections project. Those companies are: WSP, Beca, SYSTRA and Cox Architecture.
Auckland Light Rail is the largest and most complex infrastructure project in New Zealand yet. The light rail will run in a tunnel from Wynyard Quarter to Mt Roskill, and then come to the surface and run alongside the SH20 motorway to the airport. The estimated cost is $14.6 billion and the alliance of Aurecon and Arup was chosen as the preferred bidder. According to Waka Kotahi, ALR is expected to stimulate the development of as many as 66,000 new homes by 2051, new business creation and some 97,000 new jobs, especially around stations. Tātaki Auckland Unlimited (TAU) is part of a team considering the economic sizing of the project, as well as opportunities arising from economic activation in the various catchments (areas around the train stations and the rail route).
Southern Auckland economic masterplan
Tātaki Auckland Unlimited continues to work with the public, iwi and private partners to create an economic masterplan for southern Auckland to identify a shared economic vision for the wider Drury region and align the disciplines of infrastructure, land use and economic development. This critical piece of work will build on Drury’s Future Economy, a 2021 report commissioned by Tātaki Auckland Unlimited, which considered the type of industries and jobs that could be based in the area to support economic and environmental outcomes for the region.
Renewable energy infrastructure
A multibillion-dollar investment in offshore wind projects in south Auckland and west Waikato has been announced by a consortium formed by BlueFloat Energy, Energy Estate and Elemental Group. Named the South Auckland-Waikato offshore wind project, it is intended to be developed in phases to generate capacity of up to 1.4 GW of power using both fixed and floating foundation technology and capable of powering around 700,000 homes.
Phase 1 of the project is for a ~250 MW development using fixed bottom technology 22 kilometres off the west coast of Waikato. The offshore position was chosen as it offers a direct route to the national grid and the potential to provide new supplies of clean energy to consumers and industry in the Waikato and greater Auckland area. With the development planned in southern Auckland, this presents opportunities for sustainable business, investment and skilled employment in the area.
The initial phase would create around 300 jobs in construction, operations and maintenance.
The government’s Energy in New Zealand 2022 report published in August finds renewables make up more than 40 per cent of the national energy supply, and of that, electricity generation now reached over 82 per cent. Improvements in technology and declining capital costs are driving increased interest in New Zealand from local and international solar farm developers. There is an opportunity for international technology businesses working in renewable energy, particularly for technologies that can be used in agriculture, and offshore wind farming companies.
Decarbonisation of Auckland’s transport system
The Ministry for the Environment released the Emissions Reduction Plan in May 2022, which included a goal for 30 per cent of all cars to be zero-emission by 2035. Meanwhile, the government allocated $650 million to help decarbonise industry; the money will be used for co-investment with the private sector to assist the sector’s transition from fossil fuels to renewable electricity and energy efficiency.
Many transport innovators are based in Auckland (for example, Wisk, Jolt, Swoop, Oceanflyer), and while there is considerable development underway, especially in the electrification of vehicle and ferry fleets, the good opportunity yet remains for further players to work in this space.
Find out more
For more information about infrastructure opportunities in Auckland, contact Investment Specialist Aldrin Thayalakal.
DISCLAIMER: This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Tātaki Auckland Unlimited. Tātaki Auckland Unlimited disclaims all liability in connection with any action that may be taken in reliance of this article, and for any error, deficiency, flaw or omission contained in it.