For a host of reasons successive Governments in New Zealand, over the decades, have under-invested in infrastructure – roads, other forms of transport, schools, pipes etc. And, after a long period of strong growth, particularly in Auckland, we’re all feeling the effects of it.
Major road and rail projects take years and in the building of them, they make congestion worse, as we’re seeing currently on the trip to the airport, in the CBD and on the Southern Motorway.
This National Government has, from the start, been an infrastructure government. We’ve invested heavily to catch up. In our area we’ve seen the Victoria Park Tunnel, the Newmarket viaduct replacement, the Waterview Tunnel which is almost completed, as well as the electrification of trains, and building projects at just about every school.
In the 2017 Budget we’re lifting our investment to an entirely new level, announcing $11 billion of new capital infrastructure to be allocated over the next four Budgets.
This new investment will extend our run-rate significantly, and includes new investment in the justice and defence sectors. It represents the biggest addition to our capital stock in decades. It will hasten projects such as the East-West Link, which will better connect Auckland’s eastern suburbs with the airport.
To put the new $11 billion investment into context, the net new capital allocated in the last four Budgets was $4.8 billion, of which $4.1 billion was funded through the proceeds of the mixed ownership model programme (selling 49 per cent of some state owned electricity companies).
In Budget 2016 we were forecasting just $3.6 billion in new capital spend between Budget 2017 and Budget 2020 compared to $11 billion now. And that $11 billion is on top of investments already planned by the Government, such as our share of the CBD rail loop.
These are colossal figures. We can only do this because we have the government’s day to day spending under control, in surplus, with a plan to reduce debt as a percentage of GDP. Good management of the Government books gives us options.
We want to leverage that $11 billion further, with greater use of public-private partnerships, and joint ventures between central and local government and private investors.
As a country we are now growing a bit like South-East Queensland or Sydney, when in the past we grew in fits and starts. That’s great because we used to send our kids to South-East Queensland and Sydney to work, and now they come back here.
We just need to invest in the infrastructure required to maintain that growth. Budget 2017 will show we are committed to doing just that.