Govt Introduces Strategic Leasing Guidance to Optimize Infrastructure Use and Cost Efficiency

New Framework Supports Private Sector Partnerships for Flexible and Cost-Effective Public Infrastructure.

The government is rolling out new strategic leasing guidance to enhance the efficient use of taxpayer funds by leveraging private sector ownership and management of infrastructure assets, according to Infrastructure Under-Secretary Simon Court. The move is part of a broader strategy to modernize public infrastructure delivery and optimize spending.

“At its core, strategic leasing resembles conventional government leasing, such as office accommodations,” said Mr. Court. “However, this new framework broadens the scope to include a wider variety of assets, such as health centers or temporary accommodations following natural disasters.”

Key Advantages of Strategic Leasing

Strategic leasing offers flexibility and efficiency by enabling government agencies to tailor leasing arrangements to specific needs. It focuses on situations where the government can avoid long-term asset ownership, particularly when service demands are short-term or subject to change.

“Strategic leasing ensures we have access to the right assets when and where we need them while allowing flexibility as needs evolve,” Mr. Court explained. “It’s like a ‘PPP-lite,’ incorporating the financial discipline and performance-driven incentives of public-private partnerships without requiring the government to fully own the asset.”

Under the guidance, lease payments are tied to the delivery and performance of assets, ensuring strong incentives for timely delivery and maintenance. Strategic leasing is best suited for assets that:

• Serve short-term or variable service needs.
• Are less complex or specialized.
• Have comparable private-sector demand.
• Do not require private delivery of core public services, where more sophisticated models like PPPs are preferable.

Opportunities in Health Infrastructure

The guidance places particular emphasis on health infrastructure, a sector identified as a priority under the ACT-National coalition agreement. Mr. Court highlighted the potential for strategic leasing to address pressing needs in health services by enabling timely and cost-effective access to facilities like medical centers and diagnostic hubs.

“Health infrastructure presents a great opportunity for strategic leasing to deliver high-value outcomes without burdening taxpayers with the full cost of ownership,” said Mr. Court.

Part of a Comprehensive Infrastructure Strategy

The strategic leasing initiative complements a suite of government efforts to improve infrastructure funding and delivery, including:

• Funding and Financing Framework: Outlines diverse funding options to support critical infrastructure projects.
• Market-Led Proposals Guidance: Encourages innovative private-sector proposals for public infrastructure development.
• Refreshed PPP Framework: Released in November, this updated framework enhances collaboration between public and private sectors on large-scale projects.

Together, these initiatives aim to maximize the utility of public infrastructure while delivering better value for taxpayers.

“This guidance is a step toward ensuring New Zealanders get the infrastructure they need to thrive,” Mr. Court stated. “By leveraging private-sector expertise and resources, we’re driving innovation, improving service delivery, and ensuring that taxpayer dollars are used effectively.”

The government expects the strategic leasing framework to play a key role in addressing infrastructure gaps, particularly as demand continues to rise across sectors such as healthcare, transportation, and disaster recovery.