Government boosts productive infrastructure

  • Bill English
Budget 2009 Finance

New Zealand schools, telecommunications, roads and hospitals will be strengthened through substantial infrastructure funding announced in the Budget, Infrastructure Minister Bill English says.

Budget 2009 increases the capital spending allowance from $900 million to $1.45 billion – the first part of a planned $7.5 billion boost for infrastructure over the next five years. Under the plan capital spending allowances will remain at $1.45 billion for four years before rising to $1.65 billion in 2013/14.

“We were elected on a platform of unclogging the country's economic arteries and this budget is an important step in that direction,” Mr English says. “We believe increased investment in good quality productive infrastructure can boost productivity, unlock economic potential and lift non-inflationary growth.

“Alongside the Government's moves to simplify regulations, the increased investment will help create an environment where businesses can thrive. This is essential if we are to take advantage of the economic upswing when it comes.

“The increased infrastructure investment will support jobs, in the short-term through the construction of major projects and in the long-term by lifting economic growth. But the Government's approach to infrastructure is about more than just increasing investment,” Mr English says.

“It's also about improving the way we do things. We are developing a 20-year National Infrastructure Plan and more rigorous public sector asset management guidelines to ensure future capital spending is high quality and goes where New Zealand needs it most.”

Infrastructure spending outlined in Budget 2009 includes the following over the next four years:

  • Health - $245 million capital spending to address demographic pressures, particularly in Auckland, and to enable consideration of hospital upgrades, and dedicated elective theatres.
  • Broadband - $250 million capital and $56 million operating funding for telecommunications infrastructure. This includes $200 million as the Government’s first contribution towards its $1.5 billion ultra-fast broadband plan, $34 million to support schools to be broadband ready (previously announced as part of the infrastructure stimulus package in February), $48 million for better rural broadband and $16 million for the continuation of a high speed network for the tertiary education and research sectors. 
  • Education - $325.6 million capital and an additional $197.7 million operating funding for new schools and to upgrade and maintain existing ones. Of this, $172 million in capital funding was previously announced as part of the infrastructure stimulus package.
  • Housing - $124.5 million announced in February for the construction of 69 new state houses this year and to boost Housing New Zealand’s state house upgrade programme.
  • Transport - $142.4 million to fast-track several roading projects. This was announced as part of the February stimulus package.
  • Rail - $90 million operating subsidy for KiwiRail.

The Government has also expanded and realigned the National Land Transport Fund to focus on road corridors of national significance with $3 billion committed to the state highway network over the next three years.

Other previously announced infrastructure initiatives which have been charged against the Budget 2009 capital allowance include:

  • $258 million for funding of metro rail and rolling stock in Wellington.
  • A new loan facility for KiwiRail of $140 million, of which $75 million has been provided to buy new locomotives.
  • Establishing a National Infrastructure Unit to coordinate the Government’s infrastructure programme and develop a 20-year infrastructure plan.