Finance Minister Steven Joyce confirmed the $4B of new capital spending in the budget, calling it the “single biggest investment of new capital in one budget by any government in decades”. That takes the total infrastructure spend over the coming four years to $32.5B, including $1.7b via public private partnerships, with the capital allowance raised to $2.5b in the 2019 and 2020 fiscal years from $2b.
“The net result is that the government’s capital investment absorbs virtually all the cash generated from our operating surpluses over the next four years,” Joyce said.
Transport is the biggest target for investment with $9.2b over that timeframe, of which $4.8b will go into the National Land Transport Fund, $1b to rebuild links through Kaikoura, and $1.4b for the central government’s share of Auckland’s City Rail Link.
Joyce pre-announced the boost to infrastructure spending and name-checked the $812 million Kaikoura rebuild as a beneficiary of the capital spending, and today announced an extra $576m to boost the New Zealand Defence Force’s capability and $392.4m for building and upgrading schools.
Among other sectors to get a spending boost is $763.3m tagged to boost New Zealand’s prison capacity with the muster at stretching point and $450m for KiwiRail’s infrastructure and rolling stock.
Joyce said the government plans to make more out of public-private partnerships, such as the Transmission Gully and Puhoi to Warkworth road projects, and said he plans to make an announcement on that in the coming weeks.
Education will be the second biggest draw on the infrastructure spending with about 16%. About 13% of the future infrastructure spending hasn’t been allocated yet.
The Treasury’s forecasts project $2.2b of capital spending when contributions to the New Zealand Superannuation Fund are resumed in 2021, down from a forecast $3.1 contribution forecast in the December half-year economic and fiscal update.
©BusinessDesk
