Appendix 1: Guidance for making decisions about infrastructure investments

Making infrastructure investment decisions quickly.

This appendix outlines the requirements of the Investment Management System and other guidance relevant to how the government approaches significant investment decisions.

These requirements and guidance have informed our expectations of good decision-making processes. We reached the views we present in this report by comparing the evidence we collected through our audit with these expectations.

While our performance audit was in progress, the Treasury updated its advice on expediting investment decisions for officials and public organisations. The updated information on its website now includes guidance for officials on how to prepare for:

…occasions when decisions need to be made rapidly for reasons outside agency control – for example in order to keep attractive options open, or because Cabinet is directing officials to expedite decisions.

In Part 7, we discussed this updated guidance and commented about elements of decision-making processes that should be present even when rapid decisions are needed.

The Investment Management System's requirements

Government investment decision-making is meant to be guided by the requirements of the Investment Management System.

The Investment Management System is a Cabinet-mandated system that aims to optimise value from new and existing investments and assets. The Investment Management System is a mix of policy, process, rules, requirements, and expectations that are described in various documents (including the Cabinet Manual and Cabinet circulars) and summarised on the Treasury's website.

Policy and rules

When the NZUP and SRP investment decisions were made, the Cabinet Office Circular Investment management and asset performance in the state services set out Cabinet's expectations of how government departments, Crown entities, and certain Crown-owned companies manage investments.35

The aspects that were particularly relevant to decision-making in the NZUP and SRP included that:

  • government agencies must adopt and apply the Treasury's guidance – in particular, they must use business cases for all significant investment proposals, and high-risk investments are also subject to Gateway reviews (a Cabinet expectation);36
  • decision-makers, before committing to further continuing an investment, need to consider:
    • the capability and capacity of agencies or markets to successfully deliver the investment;
    • opportunities to scale, phase, or consolidate investments;
    • alternative ways of financing and funding investments; and
    • the impact of such actions on the expected value of the investment (a Cabinet expectation);
  • Ministers and chief executives will support each other to consider the broader implications of agency investments on other parts of the state sector (a Cabinet expectation); and
  • the Treasury will periodically report on the performance of all significant investments that have had or that require Cabinet-level consideration. The report will cover:
    • the status of current significant investment intentions;
    • an evaluation of actual benefits achieved compared with those expected from investments; and
    • the lessons learned from investment management practice (Cabinet circular expectation).

The Treasury told us that it is now making changes to the business case, reporting, and assurance requirements in the Investment Management System to reflect the requirements of Cabinet Office Circular CO (23) 9. This is an updated version of Cabinet Office Circular CO (19) 6, which applied at the time of the decision-making.

At the time, the Investment Management System was structured around four key phases of the investment life cycle: thinking, planning, doing, and reviewing. The thinking and planning phases are most relevant for this performance audit because they relate to how investment decisions are made.

The thinking phase was about understanding the factors influencing decision-making, identifying important assumptions, and exploring investment options and possibilities.

The planning phase was about further developing investment proposals, assessing these, and prioritising investments according to the value of the proposals – or, as the Treasury's guidance states, "translating the think to the do". A deeper examination of options through business case guidance and the government Budget process was expected during this phase.

Roles and responsibilities

Consistent with this policy and rules, individuals and organisations have specific roles and responsibilities in the Investment Management System. The following summarises the roles and responsibilities most relevant to this performance audit:

  • Cabinet has investment decision-making rights on all investment proposals where the investment needs new Crown funding or support. Cabinet must also be given the opportunity to consider investment proposals that have significant fiscal and policy implications that can affect the government's reputation in the marketplace.
  • Ministers help create the conditions for effective investment management by setting, and where necessary reconciling, government priorities; supporting chief executives to show system leadership, take a system-wide view, and respect the Investment Management System's objectives, processes, and authorities; challenging prevailing thinking about problems and solutions; and reinforcing expectations of state sector leaders to carry out collaborative investments and work together to support priority agency and cross-agency initiatives to succeed.
  • The Treasury is the Government's primary economic and financial advisor. It oversees the Investment Management System and is responsible for establishing and maintaining the Investment Management System's integrity. It has a range of responsibilities and actions, including providing guidance material. The Treasury performs its role in consultation with relevant agencies, as appropriate.
  • Department chief executives must ensure that agencies adopt and apply, as good management practice, the Treasury's guidance on the Investment Management System. They can also help create the conditions for effective investment by supporting Ministers to take a system-wide view.
  • Boards of Crown entities and companies should adopt and apply, as good management practice, the Treasury's guidance on the Investment Management System.
  • The New Zealand Infrastructure Commission, Te Waihanga, has a role to lift the quality of infrastructure strategy, planning, procurement, and decision-making. It provides advice on infrastructure strategy and planning to the government, and to agencies and local authorities responsible for planning, procuring, and delivering major infrastructure projects (and any innovative and non-traditional approaches to procurement, alternative financing arrangements, or public private partnerships).

Other relevant government requirements

The Cabinet Manual

The Cabinet Manual is the authoritative guide to central government decision-making for Ministers, their offices, and those working in the public service.37

Cabinet consultation

Sections 5.11-5.38 of the Cabinet Manual set out the principles of Cabinet decision-making, the types of matters that Ministers must submit to Cabinet for consideration, and how policy proposals should be developed.

Section 5.12(c) provides that proposals that affect the government's financial position or important financial commitments, including proposals seeking additional financial resources, must be submitted to Cabinet (through the appropriate committee).


Sections 8.104-8.124 of the Cabinet Manual set out how Ministers should manage public records. Ministers are required to create full and accurate records of their Ministerial affairs, in accordance with normal prudent business practice.38

Systems must be put in place to ensure that all information that a Minister creates or receives in their official capacity is treated as a public record according to the requirements of the Public Records Act 2005. This means that records are organised and maintained in a way that allows them to be accessed for as long as they are needed and that they are disposed of in a way authorised by the Chief Archivist.

Free and frank advice

The Investment Management System is underpinned by "free and frank" advice. Sections 3.10-3.11, 3.69, and 3.78-3.80 of the Cabinet Manual discuss the provision of free and frank advice from officials. The provision of free and frank advice allows Ministers to make decisions based on the best available evidence and an appreciation of the expected major benefits, costs, risks, and issues.

Ministers have a duty to give fair consideration and due weight to free and frank advice provided by the public service. In the end, it is Ministers who decide on policy, and, once a decision is made, the public service should implement that decision as effectively as possible.

Conflicts of interest

When making and implementing investment decisions, Ministers and officials are expected to identify and manage any conflicts of interest. This is because the public needs to be able to be confident that the people making decisions and spending public funds on their behalf are doing so in the public interest, not to benefit their family, friends, business associates, or themselves.

Chapter 2 of the Cabinet Manual outlines the requirement for Ministers to identify and manage conflicts of interest. The requirement for officials to identify and manage their conflicts of interest is outlined in various legal and policy documents. Various guidance is available on how officials might do that, including Managing conflicts of interest: A guide for the public sector at

The Government's Investment Strategy

The Government's Investment Strategy informed the key Cabinet Office Circular CO (19) 6: Investment management and assets performance in the state services. The Investment Strategy:

… outlines the expectations that Cabinet has for the State Sector to manage the Crown's portfolio of assets. It contains 11 principles that are to be used by decision makers and those managing the Government's significant assets across Government. It guides the selection, decision-making, and management of the Government's investment portfolio. The intent is to direct government resources to where they create the most value.

Ministers are expected to use this strategy to guide their approach to selecting, making decisions about, and managing the government's investment portfolio.

Similarly, chief executives, boards, investment decision-makers, and asset managers are also expected to use the strategy in the same way as Ministers, albeit for their agencies' investment portfolio.

35: The Treasury (2019), Cabinet Office Circular CO (19) 6: Investment management and asset performance in the state services, at

36: Gateway is an assurance methodology for major investments that the United Kingdom's Office of Government Commerce developed in 2001.

37: See the Department of the Prime Minister and Cabinet (2023), Cabinet Manual 2023, at

38: See paragraph 8.108 of the Cabinet Manual, at