Govt to splash $12b on roads, rail, schools, healthcare

An ebullient Grant Robertson addresses the Labour Party Conference in the Dunedin Town Hall on...
Grant Robertson. Photo: Gerard O'Brien
The Government will spend an extra $12 billion on infrastructure, split across new roading, rail, schools and healthcare projects, Finance Minister Grant Robertson has revealed.

But details of these projects were not announced today.

Rather, Robertson said the Government would be announcing the specific projects in early to mid-2020.

Forecasts show the Government taking on an extra $19 billion of debt over the next five years to help pay for these projects.

The new spending is expected to increase the size of the economy by $10 billion over the next five years, providing a boost to GDP growth, which was lower than expected in the second half of this year.

Of the new spending announced today, $8 billion is for specific "shovel ready" projects, with a further $4 billion on hand for future spending.

This will lift capital spending to the highest level 20 years, Robertson said today at the Half Yearly Economic and Fiscal Update (HYEFU).

The lion's share of that $8 billion – $6.8 billion of the new spending – will be spent on transport projects with a "significant proportion" of that to be spent on roads and rail.

District Health Boards (DHBs) get $300 million for asset renewal and $300 million is for regional investment opportunities.

This money is on top of the $3 billion Provincial Growth Fund (PGF) and will be spent on projects which do not fit into the PGF remit.

Some $200 million will also be spent on "decarbonisation" of the public estate – for example replacing coal-fired boilers in schools and hospitals.

"We are continuing to adopt a fiscally responsible approach," Robertson said.

The $12 billion of new spending is in addition to the new spending that was promised in Budget 2019 and will be funded from the Government taking on more debt.

Net Core Crown debt is expected to increases to 21.5% as a percentage of GDP in 2022/23 – roughly $76 billion.

Robertson signalled this was the Government's intention at the Labour Party conference earlier this month.

"This package shows New Zealanders that this Government is serious about tack the infrastructure deficit we were left with."

The details on the more specific parts of the projects, such as where the money will be spent, will be unveiled in the coming months.

Robertson would not give much away, other than to say that roading rail projects would be the "dominate" part of the $8 billion new spending.

Robertson has also talked up the Government's future surpluses.

According to Treasury, the Government is forecast to run a $12 billion surplus over the next four years.

However, the data shows there is expected to be a small $1 billion deficit next year, due to ACC deficits and other one-off factors.

"A small deficit in the current year is not surprising; given the impacts that global headwinds are having on confidence here."

The $12 billion over the next four years compares to the $13 billion in surpluses over the last two years.

Meanwhile, the Treasury numbers show unemployment is expected to remain at 4.2% and wage growth is expected to grow at roughly 3.5%.

But, at 2.2%, economic growth this year is softer than had been expected.

That is, however, higher than Australia, the US and the UK.

Robertson said issues such as the US/China trade war and Brexit uncertainly had weighed on growth.

"No country that we compare ourselves to is growing at the rate they were three or four years ago."

Where is the new money going:

• $6.8 billion on new transport projects
• $400 million on one-off increases to schools' funding
• $300 million for regional investment opportunities
• $300 million for DHB asset renewal
• $200 million for public estate decarbonisation


Pleased to see Labour putting the money back to the essentials. This is why we voted National out, They let too many basic needs slip backwards. All we need now is something a bit more realistic than Kiwi Build. The housing policies need sorting, and quickly. But hey, we're heading in the right direction.

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