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Castalia Overview
About Castalia
Castalia has more than 25 years’ experience advising on public policy, regulation, investment and
governance across a range of industries. Our team brings together skills in economics, finance,
law, public policy, and project management. A deep understanding of policy objectives and
economic interactions underpins our work, and we strive to apply and communicate a complete
understanding of the specific economic and financial issues facing our clients.
Castalia has offices in Wellington, Sydney, Washington D.C., Bogotá and Paris, and integrates
the expertise and knowledge of staff across all our offices. We also have experience in partnering
with other consultants and firms to ensure we have the complete skillset to deliver optimal
solutions.
Key Strengths
Castalia sets itself apart from other consultants in applying the following expertise:
 Analytical rigour–We apply our detailed knowledge of economic frameworks as
appropriate. This provides a strong basis for action; ensuring decision-makers are
equipped with the most appropriate (defendable) analysis.
 International reach–Our international presence and experience allows us to draw on
“best practice” knowing the specific context, which enables us to make informed
recommendations about whether and how such practices might be applied in a New
Zealand context.
 Knowledge of local industries and regulatory frameworks–Our knowledge of
major local industries in New Zealand (particularly those in the infrastructure sector),
and the New Zealand regulatory frameworks ensures our work is always applicable
and cognisant of the New Zealand context.
Our Value Add
We endeavour to understand the full set of interrelationships and a focus on areas with the
most impact. We also have considerable experience in assisting working groups. In these and
other projects, we draw on diverse perspectives to ensure a wide understanding and develop a
consensus.
We develop and apply robust analytical frameworks based on the latest economic thinking
and practice. We also undertake quality analysis with a clear intuitive basis, ensuring people can
understand why we have undertaken particular analysis, how this has been done, and why the
assumptions that are made have been made. This ensures findings are defensible and parties can
engage on the analysis.
We develop practical solutions based on the existing environment and dynamics. While basing
our analysis on the latest thinking we are also fully cognisant of the environment we work in and
focus on getting solutions that will be enduring and of value in practice.
We clearly communicate our findings in plain English. We clearly explain and draw insights
from our analysis, ensuring interested parties understand and engage with our work. Clients have
previously engaged Castalia to write or re-write consultation papers so that the logic, analysis and
arguments were more easily understood and are more engaging for readers.
Our primary value-add is by offering additional insights than originally envisaged. We, look at
projects from a wider context to ensure that interactions with related parties and responsibilities
are considered. This ensures the full set of options and solutions are considered.
Sub Category – Finance and Economics
Finance and Economics Service Offer
Below we succinctly outline the broad types of projects we have experience with in New Zealand:
 Appraisal of investment proposals, cost benefit analysis, and business case
development–Castalia led an evaluation for the Ministry of Education (MOE) of the
value for money of using a PPP method (for the first time) to procure schools in New
Zealand. We completed the stage one business case, which included a detailed cost benefit
assessment.
 Budgeting and investment optimisation–Castalia advised the New Zealand Transport
Agency (NZTA) on how it could deliver its intended capital projects in the most efficient
timeframe. We assessed opportunities for NZTA to use private capital to undertake
NZTA’s investment programme and manage funding constraints.
 Competition analysis–For example, Castalia assessed the level of competition and
market dynamics for Vector, and provided analytical support for Vector’s application to
the Commerce Commission to acquire Contact Energy’s gas metering business.
 Cost allocation and charging–Castalia advised the Ministry for Primary Industries on
how to allocate costs incurred for biosecurity readiness and response costs between
industry and government.
 Econometrics and statistical analysis–Castalia analysed forecasts for electricity and gas
distributors, assessing past performance and identifying alternative forecasting approaches
and data sources providing more accurate forecasts.
 Evaluation–Castalia regularly undertakes evaluations of policy, advice, investments,
processes, reporting, and regulatory or other proposals. For example, Castalia evaluated
the Reserve Bank’s proposal to require banks to pre-position their systems to apply a
procedure known as Open Bank Resolution in the event of insufficient bank solvency or
liquidity.
 Financial strategy and analysis –Castalia developed a financial model to advise on the
proposed merger of the Port of Tauranga and Port of Auckland.
 Forecasting/modelling–Castalia provided 25 year demand forecasts to investment
partners for the business case for the Ruataniwha Irrigation Project.
 Market dynamics and incentives–Castalia assessed the barriers to consumer’s switching
electricity retailers, looking at the incentives for retailers and consumers. We then advised
on the potential savings for consumers from switching retailers.
 Policy analysis–Castalia developed an issues paper for Local Government New Zealand
(LGNZ) summarising the issues arising out of a national survey of water providers in New
Zealand and then working with LGNZ on possible solutions.
 PPPs–Castalia has advised both MOE and NZTA on opportunities for using PPPs to
deliver intended projects (as discussed above) and have assisted governments in
developing PPP polices and regulatory frameworks internationally.
 Regulatory analysis and development–Castalia is advising the NZTA and the MOT on
the review of the Vehicle Dimension and Mass rule which govern the weight and
dimension of all vehicles on New Zealand roads. The analysis seeks to identify the optimal
rule that trades off vehicle efficiency with safety, environmental outcomes, and road
maintenance costs.
 Strategy–Castalia has advised clients on their business strategies as well as the financial
impacts, and their market positioning on major sector reforms or policies.