Government announces $12b infrastructure spending,

The Government has announced $12 billion in infrastructure spending, but haven’t given a lot of details yet. Specifics won’t be revealed until next year.

$12 billion in extra infrastructure investment

The Government is lifting capital investment to the highest level in more than 20 years as it takes the next step to future-proof New Zealand.

Finance Minister Grant Robertson has announced $12 billion of new investment, with $8 billion for specific capital projects and $4 billion to be added to the multi-year capital allowance.

The $8 billion includes:

  • $6.8 billion for new transport projects, with a significant portion for roads and rail.
  • $400 million one-off increase to schools’ capital funding
  • $300 million for regional investment opportunities
  • $300 million for District Health Board asset renewal
  • $200 million for public estate decarbonisation

The specific projects will be announced in early 2020.

The extra $4 billion to be added to the multi-year capital allowance takes it to $8.4 billion, with allocation of that money to be announced over coming Budgets.

“The new investment is forecast to increase the size of the economy by a further $10 billion over five years, with further positive impacts on GDP beyond that period,” Grant Robertson says.

With debt low and borrowing costs at record lows, the conditions are right for the Government to invest to future-proof New Zealand.

So they intend borrowing to spend on infrastructure, but at the same time have announced a surplus of the same amount over the next four years.

Strong economy, careful spending gives $12bn of surpluses

The Government is forecast to run $12 billion worth of surpluses across the four years to 2023/24 as the economy continues to grow.

The surpluses will help fund day-to-day capital requirements each year. These include fixing leaky hospitals, building new classrooms to cover population growth and take pressure off class sizes, and putting aside savings in the Super Fund for future retirement costs.

The new forecasts are in the Treasury’s 2019 Half Year Economic and Fiscal Update. This was released alongside the Government’s $12 billion plan for new infrastructure investment to future-proof the economy, and the 2020 Budget priorities.

Across the four years from 2020/21 to 2023/24, the annual surplus is forecast to rise to 1.5% of GDP. This delivers a total of nearly $12 billion of surpluses.

“The Government has committed to running a sustainable surplus across an economic cycle, and today’s forecasts show we are delivering on that,” Finance Minister Grant Robertson says.

The Government inherited net debt at 22.9% of GDP. The forecasts show net debt of 21.5% of GDP in 2021/22, falling to 19.6% in 2023/24 – within the new 15%-25% range. This includes the impacts of the additional $12 billion infrastructure investment that the Government announced today to future-proof the economy through a package of new transport, education and health infrastructure.

But they are actually going to borrow $19 billion.

I guess the additional $7 billion will be for more election year spending.

But bragging about surpluses while announcing borrowing much more seems like a bit of a PR job.

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24 Comments

  1. The above picture was taken as Grant was pondering the news that Winston had demanded the a cabinet reshuffle that put Shane Jones in charge of infrastructure. And just who was this new engineering consultancy firm ‘Trotman, Henry and Co’ that Shane Jones was talking up?

    Reply
    • Ray

       /  12th December 2019

      Finally this Government does something to earn the moniker “Most Open and Transparent ”
      Because a blind person can see a pre-election bribe for what it is.

      Reply
  2. Gezza

     /  12th December 2019

    Even 1News at 6’s Katie Bradford was dubious because this announcement didn’t specify ANY particular big infrastructure projects that were ready to go & now had the funding to get started:

    Opinion: Katie Bradford, 1News
    Anyone hoping to hear the news today their desired local roading project will be funded in the Government’s promised big infrastructure spend will be sorely disappointed.

    The Finance Minister promised to splash the cash when the books were opened in the half year fiscal update.

    Grant Robertson is vowing to spend $12 billion more than planned on fixing neglected hospitals, schools, roads and rails. He insists there are “shovel ready projects” about to be funded and he’s just “dotting the I’s and crossing the Ts” before announcing them.

    But he’s failed to identify one single shovel ready project. Or even reveal how many of those will be started next year. Given the Infrastructure Commission has a list of over 500 projects, worth $21 billion, Mr Robertson could’ve plucked a few of those out of the hat and said work would be starting soon.

    The latest 1 NEWS Colmar Brunton poll showed a massive majority of those polled wants the Government to spend on things like infrastructure, education and health. Seventy-seven per cent said go for it, while just 14 per cent of people want tax cuts.

    The infrastructure industry has been crying out for certainty around projects. They want spades in the ground, cranes in the sky and diggers working hard. Several big jobs will come to an end in the next 18 months and to keep workers and investors here – rather than heading across the ditch – the industry wants the Government to stop talking about what it’s going to do and get on and do it.

    Heading into an election year, voters too want and need to see action.

    If you live in Northland and you want a four-lane highway to help connect you to the rest of the country, even seeing work being started on that would make a huge difference to voter and business’ confidence.

    Most of this new money will be spent on roads and rail and as anyone waiting for the City Rail Link to be completed knows, these are not projects that are completed quickly. Delaying the start of these even further will just add to those frustrations.

    And what about housing and water? The country’s water infrastructure is neglected, rusty and in some areas putting people’s health at risk. Councils are crying out for more funding to fix their infrastructure, but there’s no money here to give them a helping hand.

    Funding new infrastructure is a good thing. No one is disputing that. This spending will be a boost to the economy and productivity, if it’s good quality spending. But promises aren’t enough, people need to see the benefits.

    Call me cynical but waiting until next year to announce these projects looks like an election year bribe. There’s no early Christmas for the country’s infrastructure this year.

    (Also, Katie needs to lay off the KFC or whatever else has packed on the kilos. Her neck’s disappeared.)

    Reply
    • It looks like they are rushing these announcements prematurely as a PR exercise. Must be concerned about how the polls are going.

      Reply
      • Duker

         /  12th December 2019

        No . The polls are stable, they dont have the precision you assume to say 1% is ‘up ‘ or ‘down’
        The reason is because its the end of year ‘fiscal update’ or what ever they call it. Roberston is the Minister of Finance not the Minister of Transport, or health etc
        “The new forecasts are in the Treasury’s 2019 Half Year Economic and Fiscal Update. This was released alongside the Government’s $12 billion plan for new infrastructure investment to future-proof the economy, and the 2020 Budget priorities.

        Across the four years from 2020/21 to 2023/24, the annual surplus is forecast to rise to 1.5% of GDP. This delivers a total of nearly $12 billion of surpluses.”

        Some people have said where are the details – here are the details
        “Finance Minister Grant Robertson has announced $12 billion of new investment, with $8 billion for specific capital projects and $4 billion to be added to the multi-year capital allowance.

        The $8 billion includes:

        $6.8 billion for new transport projects, with a significant portion for roads and rail.
        $400 million one-off increase to schools’ capital funding
        $300 million for regional investment opportunities
        $300 million for District Health Board asset renewal
        $200 million for public estate decarbonisation”

        Well we have had the $400 mill for the schools buildings ? Are people asking for ‘details’ like what a particular school is going to do with its ‘pot’ No they arent
        The reality is these sorts of things are spread out over time so to maximise publicity, even some specific projects get ‘announced multiple times’

        Reply
      • Gezza

         /  12th December 2019

        I’m convinced they are. On Q+A Jacinda brushed Jack Tame’s question aside & diverted immediately with glib platitudes when he asked what the fortnightly polls she told him she gets are saying after that last Colmar Brunton poll result.

        Reply
        • Duker

           /  12th December 2019

          Labour doesnt get ‘fortnightly polls’ You are confused by the National party who have their ‘poodle’ polling company Curia who did so weekly for Key( exclusively which arent released to others) , but maybe two weekly now.

          Reply
          • Gezza

             /  12th December 2019

            I see.

            So … when she says to Jack Tame, on Q+A, 2 December, (talking about the latest 1CBR poll):

            “I have a poll that comes to me every two weeks. And that shows something [she actually says ‘something’, not ‘sumpthink’, for a change] completely different”

            are you saying she is lying to Jack & to viewers? Or are you blowing it out your arse?

            Reply
  3. Zedd

     /  12th December 2019

    Natl MPs are singing from the same song sheet (paraphrased)
    ‘The country & economy are falling apart’.. even though the country saw 8 years ? (of 9) in deficit under Key/English.. so far this Lab-led Govt. are reversing this trend

    Meanwhile this MMP Govt. are just getting on with it.. by investing in infrastructure builds & looking after ALL kiwis, rather than giving TAX-cuts to the wealthiest 50.1% ! 😦

    Reply
    • Deficits inherited from Labour, which National erased.

      Reply
      • Corky

         /  12th December 2019

        And will have to erase again. We are in debt again. Projected economic indicators muddling.
        Typical socialists..they can’t keep their wallet in their pocket.

        Reply
        • duperez

           /  12th December 2019

          “Typical socialists..they can’t keep their wallet in their pocket,” is similar to what a mate says.
          He has a three point plan to get National in and to follow when they get in:
          1 Cut taxes
          2 Get someone else to spend on the infrastructure
          3. Cut taxes
          🙃

          Reply
          • Corky

             /  12th December 2019

            Sounds good for my back pocket. And they are letting people keep more of their OWN MONEY!

            Ah , yes. I see the problem.😒

            Reply
      • Duker

         /  12th December 2019

        “Deficits inherited from Labour, which National erased.”
        It was the GFC remember , the world wide recession lasted well into Nationals term , which they financed by blowing out government borrowing from around $20 bill to nearly $90 bill.
        Bill was still borrowing with Joyces help right up to the 2017 election around $7 bill or so

        Reply
        • Back in surplus by 2016 though.

          Reply
          • Duker

             /  12th December 2019

            You are clearly confused by ‘budget surplus’ which excludes capital spending and yearly borrowing which is to fund ‘all expenditure’
            Like I said English and Joyce were still borrowing to fund ‘all expenditure’ in their last budget.
            There are two ways to look at the budget numbers – accrual accounting which ‘produces’ surplus and cash accounting which doesnt

            The slowdown in NZ for 2007 was due to Reserve Bank steeply raising interest rates to provide a ‘soft landing’. We didnt get into .
            The first negative or recession quarter wasnt until Mar 2009 – after the election.
            This according to RBNZ excel figures
            https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-real-gdp
            And the economy was back into growth for a full year in 2011.

            Reply
            • Let me clarify for you: A budget surplus is where you spend less than you take in. A budget deficit is the opposite.

              National ran a surplus, Labour said they’d run a surplus until Grant googled the word and realised he would be doing the exact opposite. He hasn’t let the rest of cabinet know because of all the hard words and difficult ideas involved.

            • Your graph by the way doesn’t show surpluses or deficits. It’s about GDP a different concept altogether.

            • Duker

               /  12th December 2019

              GDP is covered in more detail later.
              The infrastructure spending wont change the accrual surplus much though. ( capital spending is excluded from accrual deficits) remember the $12 bill spending is over many years.
              Dont forget Nationals target at budget 2011 was to return to ‘surplus by 2014/15. They didnt achieve that either till 2017 or so.

        • Trevors_elbow

           /  12th December 2019

          No the economy was already in recession under Clark/Cullen government… thanks Michael…the GFC just made a bad situation way, way worse.

          But you knew that cause it gets pointed out time and again…

          Reply
          • Duker

             /  12th December 2019

            No thats not so . Economy didnt come into recession or negative growth till 2009 .
            Some say its 2 consecutive negative quarters that would be Mar 09 -1.0 and Jul 09 -1.6
            RBNZ quarter by quarter figures since 1990 call you a liar
            https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-real-gdp
            look to the excel tables at bottom.

            Notice also the rest of the world economys falling like a stone around that time. Except Australia under Labour Government

            Reply
            • Duker

               /  12th December 2019

              The other thing that National ‘inherited’ in 2009 was ‘nett zero’ Government debt and the Cullen Fund , now worth $40 bill.
              How much debt did national leave even when the economy was out of recession by late 2010 -2011 AND they increased GST AND increased borrowing AND loaded up immigration

          • Blazer

             /  12th December 2019

            your pants are flaming…again.

            Reply

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