An extra $1.5b allocated from Future Fund

  • Bill English
  • Tony Ryall
Finance Budget 2013 State Owned Enterprises

Schools, Christchurch hospitals, KiwiRail and irrigation are four of the biggest recipients of new capital allocated from the Future Investment Fund in Budget 2013, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

Budget 2013 allocates $1.5 billion of new capital from the fund, which over the next few years is expected to receive and distribute between $5 billion and $7 billion in proceeds from the Government’s share offer programme. The $1.7 billion raised from last week’s successful float of 49 per cent of Mighty River Power provided the first tranche of money into the fund.

The Government is today announcing that it intends to sell up to 49 per cent of Meridian Energy later this year, if market conditions are suitable.

“These proceeds are only a small percentage of the Government’s overall spending,” Mr English says. “But without them, we would either have to borrow more money overseas, or go without some of the new or upgraded hospitals, schools and other infrastructure and investment that our communities require.

“The proceeds from the share offers provide another avenue to pay for those assets and I’m pleased that Budget 2013 allocates $1.5 billion of new capital from the fund. This is on top of $569 million allocated in last year’s Budget, bringing the total allocated so far to $2.1 billion.”

Future Investment Fund commitments confirmed in Budget 2013 include:

  • $426 million for the redevelopment of Christchurch and Burwood hospitals. As announced previously, this will be the single biggest building project in the history of New Zealand’s public health system.
  • $50 million to speed up the School Network Upgrade Project which enhances the technological capability of schools.
  • $94 million for the fourth year of KiwiRail’s Turnaround Plan.
  • $80 million for irrigation projects, as announced previously.

Budget 2013 also sets aside over $700 million in contingency for key projects, including:

  • Building new schools.
  • Christchurch’s new justice and emergency services precinct.
  • Supporting Canterbury tertiary institutions in their recovery from the effects of the earthquakes.

Because most of these projects will involve commercial negotiations, the exact breakdown of figures remains confidential.     

The Government has also agreed that over the life of the Future Investment Fund, $1 billion will be allocated to hospitals and other health projects,” Mr Ryall says. “This includes the $426 million for the Christchurch and Burwood hospitals redevelopment.”

The Government has previously said that $1 billion of the fund will be ring-fenced for modernising and transforming schools as part of the 21st Century Schools Programme. In total, $219 million of that amount has so far been allocated.

“The Government has also said it would support the rebuilding of Christchurch, and that is exactly what we are doing,” Mr Ryall says.

“Now estimated to cost $40 billion, it is the biggest building project in New Zealand’s history. This Budget allocates more than $900 million from the Future Investment Fund to support the rebuilding of Christchurch.

“It’s appropriate that some of the proceeds from the share offer programme are put towards building new assets that only the Government can pay for.”

Disclaimer:

The Crown is considering offering shares to the public in one or more of Genesis Power Limited, Meridian Energy Limited and Air New Zealand Limited. No money is currently being sought and no applications for shares will be accepted or money received until after an investment statement containing information about the relevant offer of shares is available.

The contents of this announcement are not permitted to be made available to persons in any country other than New Zealand. The Crown’s shares in Genesis Power Limited, Meridian Energy Limited and Air New Zealand Limited have not been and will not be registered under the United States Securities Act of 1933, as amended (the "United States Securities Act") or the securities laws of any state of the United States and may not be offered or sold in the United States unless the shares are registered under the United States Securities Act, or an exemption from the registration requirements of the United States Securities Act and applicable United States state securities laws is available.