Infrastructure handouts announced

$3 billion aimed at fast tracking infrastructure projects to try to boost recovery from the economic effects of the Covid-19 pandemic were announced yesterday.

Infrastructure investment to create jobs, kick-start COVID rebuild

A new package of infrastructure investments will help kick-start the post-COVID rebuild by creating more than 20,000 jobs and unlocking more than $5 billion of projects up and down New Zealand.

That is presumably an estimate of job numbers. There is no indication whether people with the right qualifications and skills  are available to do the jobs, or if they will need to be trained – which would take time.

Finance Minister Grant Robertson and Infrastructure Minister Shane Jones today outlined how the $3 billion infrastructure fund in the COVID Response and Recovery Fund will be allocated across regions, following extensive engagement with local councils and businesses.

The investment package includes about $210 million for climate resilience and flood protection projects, $155 million for transformative energy projects, about $180 million for large-scale construction projects and $50 million for enhanced regional digital connectivity.

The COVID Response and Recovery Fund (CRRF) set out in Budget 2020 earmarked $3 billion for infrastructure projects. Cabinet’s initial decisions on this allocation include:

  • Housing and urban development: $464m
  • Environmental: $460m
  • Community and social development: $670m
  • Transport (cycleways, walkways, ports and roads): $708m

The projects are in addition to the $12 billion New Zealand Upgrade Programme and existing Provincial Growth Fund investments.

Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.

Cabinet has now made initial decisions about key sectors it would like to support and general regional distribution of funds, with more than 150 projects worth $2.6 billion being approved in principal. Officials are now undertaking final due diligence to ensure projects are viable and offer the benefits stated by applicants.

That doesn’t sound like ‘immediate economic activity’.

About $400 million has been set aside as a contingency as the Government takes a responsible approach to managing spending on behalf of taxpayers. Funds not required in the contingency will be put towards further infrastructure projects, providing an incentive for local councils to deliver the approved projects on time and on budget, as this would unlock a further potential $400 million of investment.

Large infrastructure projects have a habit of running over budget, especially when the investigations and planning of them is rushed.

Rushing projects also raises the risks of them being ill-conceived and chosen so the Government is seen to be doling something.

And there are suggestions the announcements that the announcements are more timed for the election than practical progression of the projects. This announcement included government self promotion:

“This is about creating jobs as we recover and rebuild from the recession caused by the global COVID-19 pandemic. Because we went hard and early with our health response, we’ve been able to open up the economy quicker than other countries and get a head start on our recovery,” Finance Minister Grant Robertson said.

“This package will provide Kiwis with confidence that the Government is backing them in this challenging economic environment by creating new jobs and opportunities in communities around the country.”

Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.

“Both are critical to our economic and social recovery from the COVID-19 crisis,” Shane Jones said.

“Not only has this massive undertaking provided us with the largest stocktake of infrastructure projects we’ve ever had but it’s enabled us to partner with central and local government, the private sector and community groups to deliver projects for all Kiwis.

“The specific projects we’re announcing today are examples of the sort of projects we’re supporting – from nationwide investments in flood protection and better digital connectivity to civic facilities that we know form the bedrock of our communities.

“I am extremely proud of the depth and breadth of this unprecedented piece of work,” Shane Jones said.

Jones may also be hoping this unprecedented piece of work will help his electorate election chances, and Robertson may be hoping it helps Labour’s chances of being re-elected (but he may not be hoping for NZ First to interfere with them governing again next term).

It will be well after the election before the worth of the projects being pushed have been money well spent, or squandered.

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.

Nation: Shane Jones on Provincial Growth Fund spending

NZ Herald:  Shane Jones announces suite of regional funding worth more than $80m

More than $80 million from the $3 billion Provincial Growth Fund will boost rural broadband, expand a driver-training centre near Fielding, and look into building a new freight hub near Palmerston North.

Regional Economic Development Minister Shane Jones was in the Manawatū-Whanganui today to announce a number of new initiatives, most of which are for Manawatū-Whanganui region.

About half of the funding – $40m – will be used for a new regional freight hub near Palmerston North, a key staging point for domestic, imported and exported freight in the Lower North Island.

Jones also announced funding across the food and beverage, digital connectivity and tourism sectors in the Manawatū-Whanganui region, including:

• $2.8m to expand the National Driver Training Centre based at Manfeild, near Feilding, to train 700 drivers and machine operators annually
• A $400,000 investment to fund the first stage of an Advanced Aviation Hub at Whanganui Airport
• $100,000 to investigate FoodHQs development to assist food exporters
• $100,000 to assess alternative land utilisation choices in the Tararua District
• $98,000 towards Kaitahi Food & Innovation Factory
• $95,000 towards establishing an education, training and employment programme at the former site of Turakina Māori Girls’ College
• $60,000 towards the Tararua Tourism & Trails Strategy
• $50,000 to investigate education to employment pathways within Horowhenua

The projects are subject to funding contracts that will include a range of agreed commercial arrangements, targets, milestones and deliverables.

Tax cuts or debt reduction?

Today’s Herald editorial makes the case that Govt should use extra to cut debt, not taxes.

The Prime Minister, an endlessly agreeable politician, entertains talk of tax cuts whenever the Budget surplus turns out to be higher than expected. It is well past time that he stopped doing so and instead made the public better acquainted with its debt position.

John Key and his Government know very well that the reason they have managed to bring the economy through a recession and earthquakes in good shape owes just about everything to the very low debt left by the previous Government.

We have to hope the next economic “shock” does not happen before 2020, for it is not until then that National plans to have the debt back down to the level at which Labour left it.

Really? Government debt has risen from $10 billion in 2008 when National took office to $50 billion now. I don’t think there is any way our economy would allow for an average of $10b per year debt reduction for the next four years.

However reducing debt should now be a priority. But the Government still needs to spend, and they should seriously consider reversing the creeping personal tax increases we have had over the last eight years.

The calls for tax cuts today are not coming from opposition parties, nor from business lobbies who have seen how low public debt helped the economy weather the global financial crisis better than most others.

Business lobbies may well be happy that personal income tax increases while their rates remain static.

The Government should not base their tax decisions on who calls the loudest, they should do what is fair. And allowing personal tax rates to creep up is hardly fair on wage earners.

Repaying debt is important.

There is always pressure to spend more on things like health, social housing, education, crime – and some spending increases are unavoidable, like providing more prison beds.

But restoring personal tax parity should also be a serious consideration.

We can have both tax cuts and debt reduction from a fair and prudent Government.

What should the Government do?

Parliament is in recess so it’s not surprising that Opposition parties and lobby groups are busy blasting the Government for not spending enough money on all sorts of things.

Hospital doctors are threatening to strike over their work conditions. They often work very long hours and a lot of days without a break. Exhausted doctors mustn’t be conducive to the best possible care.

The only way of dealing with this is employing more doctors, which will cost more money.

More drugs and better healthcare are always on the ‘must do’ list.

Doctors strike symptom of health cuts

The notice of strike action issued by the junior doctors today is the result of years of National’s cuts to the health system, says Labour’s Associate Health spokesperson Dr David Clark.

Kids in poverty is getting a lot of attention. The ‘Government hates children’ brigade has been vocal again – John Key didn’t help when he compared counting kids in poverty to counting pests.

Labour has actually announced a policy, sort of – they would give ‘most’ new born kids $60 a week. At about 60,000 births a year that’s $150-200 million a year. If they kept giving that to all kids until they left school it would add up to over $3 billion a year.

I can’t find anything on Labour’s website on this. It may be policy by press, trying to jump on the bandwagon of the day.

Immigrants bad, refugees good?

‘Rich NZ’s poor attitude’

New Zealand should be taking more than three times the number of refugees, Amnesty NZ says.

That costs money. And gets criticised.

Demands continue for more action – and spending – on emergency housing and state housing and housing for poor people. And to upgrade housing – we can’t have kids in cold damp houses. Heaters and dehumidifiers and windows all cost money.

Trains and tracks and tunnels and bridges. Scrapping fossil fuels. Cycle ways. I’ve just seen “opposition parties calling for more ambitious government targets on climate change’. These all cost money.

New Zealand lags on aid targets

The National Government needs to live up to its commitments and allocate 0.7 per cent of Gross National Income on development assistance, says Labour’s spokesperson on Pacific Climate Change Su’a William Sio. 

More aid = more Government spending.

Opposition parties are also calling for free tertiary education, cleaning up rivers, the list goes on and always will go on, like the Opposition parties.

Is the Government heartless? Do they hate the poor and children and anyone who they aren’t giving more money to? That’s what some people actually say.

The Government isn’t doing nothing. They budget huge amounts every year. They also dish out bits and pieces between budgets, for example:

Govt launches $15.3m employment scheme to reduce reoffending for released prisoners

Minister Anne Tolley said the new scheme would give offenders and their families a chance to lead successful lives and steer them away from a return to crime.

Jobs and more money for poor families, reduced crime and reduced prison costs sounds like a positive aim, bu the Opposition will either say it’s not enough or will ignore it in their quest for highlighting negative news.

Asking for the Government to spend more money is fine, that’s a part of the Opposition job.

But condemning the Government as uncaring kid haters is a bit pathetic and is hardly likely to lead to any improvements.

Opposition parties and lobby groups seem to be more intent of grabbing headlines through shock and horror – but they have to compete, ironically, with rich celebrity crap.

Governments must always strive to better for it’s people. In the main they do try hard to please most of the people most of the time.

Over the top attacks are easier to ignore than well thought through well argued campaigns.

“The giant transport money-go-round”

PartisanZ posted a comment yesterday about New Zealand’s “giant transport money-go-round” regarding transport funding and spending. This is worth more exposure here.

In the Winter 2016 edition of ‘AA Directions’ magazine there’s an excellent article “Taxing Truths” by Peter King about “the giant transport money-go-round”, with additional information & stats by Mark Stockdale.

While “the numbers are enormous”, as they say – $10bn allocated from vehicle taxes + $3.9bn from rates revenue June 2015 – June 2018 – an MoT survey shows “79% of trip choices and travelling time is either driving or riding in a motor vehicle.” Walking comprises 17%, public transport 2.8% and cycling 1.2%.

Our spend-up is not extravagant by international standards. Of 48 nations in the international transport forum, NZ’s spend as a proportion of our economy is 46th.

The stats regarding funding sources are fascinating to me. Public Transport Users = $320m, Tax Payers $460m, Rate Payers $1.6bn and Motorists $3bn. Of the Motorists contribution, Rego = $183m, while Petrol Tax – which makes up $1.00 of a litre of petrol costing $2.00 – total = $1.6bn. Around 65% of this goes to the National Land Transport Fund.

As the owner of a ‘Light Diesel’, what strikes me as a possible ‘funding source’ discrepancy is RUC’s at $410m for Light Vehicles and only $790m for Heavy Vehicles? I believe heavy vehicles do more than twice the damage to our roads? If the U.S. data is relevant this is true – “Jun 2, 2009 – Freight trucks cause 99% of wear-and-tear on US roads, but only pay for 35% of the maintenance.”

And an exhaustive NZ study pdf, which seems to support the idea – e.g. axle passes – although I haven’t read it carefully – (80 pages) –

The spend is also interesting – Roads (includes footpaths and bus lanes) = $3.546bn, Public Transport = $1.61bn, Policing and Education = $390m and Walking & Cycling = $27m
So public transport’s spend clearly outweighs its preferred usage, although perhaps it must be offset by whatever reductions are achieved in fuel consumption, congestion and pollution?

The article is spiked with comments from politicians, ranging from National’s Simon Bridges, “We’re focused on enabling economic growth rather than simply responding to it.” through Labour’s Sue Moroney, “… this doesn’t look like a winning strategy to me. NZ needs a smart, integrated transport system to get things moving.” to The Green’s Julie Anne Genter, ” … National … putting up fuel taxes to pay for a few eye wateringly expensive highway projects, which will actually make congestion worse, and lock people into paying higher fuel taxes … if they spent the same amount on public transport and rail and sea for freight, the roads would be safer … and we’d have a world-class transport system.”

Finally, three examples of ‘typical’ annual contributions. A family of 5 in Auckland with 2 vehicles, own home = $2,621.51, a Uni Student in Wellington, renting, who uses PT and owns a scooter = $290.77, and a retired couple in Nelson, own home, with one vehicle + PT = $873.98

King finishes well IMHO, “But this huge money-go-round is going to have to change … the future is electric … any solution will require robust discussion about who pays for what and who gets subsidised by whom.”

Drive safely everyone …

PartisanZ added:

Major changes coming in the transport realm though. Fuel tax has apparently been rising partly (or mostly?) as a result of increased fuel economy? As vehicles become electric and to a lesser extent hybrid this form of funding – and tax increase – will be impossible to justify.

I wonder what people think the possible solutions are? Cheaper fuel and more Local Govt road tax? Toll roads? Some kind of combined registration and RUC’s for all vehicles? The technology exists to do almost anything nowadays …


I am interested that the authors have picked a win with the statement that the future is electric. I would have thought hydrogen power cars might be a significant contender..

The amount of tax on a litre of petrol is truly eye watering and is incredibly regressive have a disproportionate impact on the poor segments of society.


Yes, both hydrogen powered – with the hydrogen produced elsewhere – and perhaps water-powered, where water is converted to HHO or “Brown’s Gas” onboard? [I know almost nothing about the chemistry or technology – I’m not that way inclined]. – claims “Water4Gas HHO and Brown’s gas are frauds and scams”

Brown Gas Generator – Alibaba › … › generator › gas generator

Other more sustainable options should be competing with electricity in a so-called ‘free market’, although both access to water and electricity production surely have their environmental and geopolitical implications too?

Years ago I read a tiny news item in the Herald or Star about a Kiwi man arrested at Auckland airport trying to leave the country carrying trade secrets. He apparently worked for a company which produced and sold welding equipment based on Brown’s Gas – or similar – where the one set of equipment could do all forms of welding? [My remembered details are sketchy]. The same technology could apparently be applied to an internal combustion engine with very few modifications?


Might have been something like this PZ

Or maybe this, which looks a little more credible

My understanding is that they are just very efficient electrolysers. Instead of using a constant DC power source, like we did at school, they use electronics to deliver pulsed DC at just the right frequency.

As for powering a car with one, well you would need a big battery that you would still have to charge from an outside source.

A little further reading:

Plague on health cuts

Green Party spokesperson on health Kevin Hague is a long time critic of the plague of underspending on health, which is a perpetual problem. He wrote on his Facebook page:

Readers of my Facebook posts will know I have been going on about the underfunding of health services for years. It’s great that others are taking up the call. Key points:

  1. Health funding cuts in real terms mean more and more unmet need
  2. Health services have been asked to find “efficiencies” every year under both Labour and National. There just aren’t substantial efficiencies left, without compromising service quality
  3. While the Government tries to justify underfunding by saying there’s been a global financial crisis and everyone has to tighten their belts, the fact is that Government has chosen to spend billions of dollars on other things, such as tax cuts for the wealthiest, roads of ‘National’ significance etc. It’s not that there isn’t enough money. It’s that this government chooses to spend it on other things.

An important role in Opposition is to question and challenge spending priorities, especially on things like health.

We will always have a problem with not having enough money to spend on health care and hospitals. Getting the best value from available funds is a difficult balancing act.

And getting the best balance out of the country’s overall budget is also very difficult and will always be open to disagreement.

Health is a particularly sensitive issue because it can affect us so much. What care is available can be the difference between life and death, for our parents, our children, and ourselves.

I’ve seen some very good aspects to our health care, which is the best it has ever been in New Zealand and comparable to some of the best in the world.

I’ve also experienced and seen some of the frustrations, deficiencies and personal costs.

But when our health and our lives are at stake we will always want better and more.

Hague mentions tax cuts for the wealthiest and roads of ‘National’ significance. I need to travel by road to get to the doctor or the hospital.

“Tax cuts for the wealthiest” was actually tax cuts for many of us. It may have made health insurance more affordable for some.

That the better off can afford premium health cover and can afford to pay for private tests, treatment and operations creates a two tier health system which to some will appear to be unfair – life can be unfair, ask anyone who gets cancer – but it has wider benefits for al of us – if more people can afford their own private health care then it eases the pressure on public health provision for those that rely on that.

Should we proportionally increase health spending?

Is it more important than roads? How many people get heart attacks from Auckland traffic induced stress and poor lifestyle (like eating/drinking junk on the road)?

Is it more important than big city rail links?

Is it more important than feeding all kids at school?

Is it more important than subsidising the Christchurch rebuild?

Is it more important than free tertiary education that will increase the number of futile degrees and diplomas?

Is it more important than increasing minimum wages?

Is it more important than bloated political PR departments?

Is it more important than Citizen Initiated Referenda used by parties for political purposes?

I have no argument with Hague continually raising the issue of health spending priorities, even though he is a bit selective and catch-phrasy with his comparisons.

But we will always have arguments over what is the most deserving recipient of our tax dollars. Especially when our lives may depend on it.

More spending for better health?

More health psending doesn’t nor necessarily pay off with better health outcomes, according to The Economist.

America’s big spending on healthcare doesn’t pay off

AMERICA remains the world’s most profligate spender on health care, according to a report published on November 4th by the OECD, a club of 34 mostly rich countries.

In 2013 America spent, on average, $8,713 per person—two and a half times as much as the OECD average. Yet the average American dies 1.7 years earlier than the average OECD citizen. This longevity gap has grown by a year since 2003.

Americans have the same life expectancy as Chileans, even though Chile spends less than a fifth of what America spends on health care per person.

New Zealand per capita total spending (PPP Int $): 2,447 (2006)

From what I can find life expectancy looks to be similar to Britain as well, so the Britain bar looks about right for New Zealand.

The US has a very expensive insurance based health system which inflates costs substantially but means that people who are fiancially poor are also likely to be health poor relatively.

The chart shows that the level of spending does not necessarily equate to the level of care.

National’s by-election campaigning costs

National have offered voters of Northland many millions of taxpayer funded pork to try and rescue the electorate from a Peters and media onslaught.

They have also piled probably unprecedented resources into the campaign itself, with a swarm of Ministers including the Prime Minister using a significant state funded travel advantage.

Rob Salmond at Polity claims:

National has poured massive, massive resources into Northland, most of which won’t show up in the financial returns. Polling, focus-grouping, canvassing, MP visits, Ministerial cars, taxpayer bribes, flying squads to drive people to the polls. All of it is off the by-election books. I have heard rumours that National’s total outlay is close to $250,000, not to mention the bill the taxpayer will carry.

They have a huge financial and organisational advantage. Comments add to this. George D:

If National’s outlay is in the order of $250,000 then there are surely things that should come to the attention of the Electoral Commission?

Deborah Russell:

Lots of things aren’t caught by the rules. Venue hire, MPs’ time, ministers’ time, petrol, polling, focus groups, paying organisers’ wages, wood for billboards, wages for people to put them up. I can see how the costs could mount up very quickly. I might find it a little hard to get to $250,000, but even so, I can see how lots and lots and lots of money could be spent.

So what are the spending rules:


6.2 Expenditure limit

The regulated period for the 2014 General Election will start on Friday 20 June 2014, and will end with the close of the day before election day (Friday 19 September 2014).

An electorate candidate’s election expenses during the regulated period must not exceed $25,700 (including GST).  It is a serious offence to spend more than this.

If you are representing a registered party, you should stay in touch with your party secretary on advertising.  This is because there can be boundary problems between advertising by candidates and advertising by the party, with consequential effects on the expenditure limits and expenditure returns of the candidate and the party.

The election expense regime does not apply to people who are list candidates only.  Any spending by those candidates promoting the party is an election expense of the party and must be authorised by the party secretary.


6.2 Expenditure limit

An electorate candidate’s election expenses during the regulated period must not exceed $25,700 (including GST).  It is a serious offence to spend more than this.

This is for a general election but I presume it applies to a by-election as well.

6.3 Election expenses

A candidate’s election expenses are the costs of advertising in any medium that:

  • may reasonably be regarded as either encouraging voters to vote for the candidate, or discouraging voters from voting for another candidate, or both (whether or not the name of the candidate(s) are mentioned),
  • is published, or continues to be published, during the regulated period (from 20 June to 19 September 2014), and
  • is promoted by the candidate or any person (including a registered promoter) authorised by the candidate.

[See section 205 of the Electoral Act].

Candidate election expenses include:

  • the cost incurred in the preparation, design, composition, printing, postage and publication of the advertisement,
  • the reasonable market value of any materials used for the advertisement, including materials provided to the candidate for free or below reasonable market value,
  • the apportioned costs for advertisements that promote two or more candidates, or a party and a candidate  (see paragraph 6.5 below for further information on apportionment).

[See section 3E of the Electoral Act].

A candidate’s deposit or the costs of food, hall hire, surveys or opinion polls, free labour, or replacing materials destroyed through no fault of the candidate are not election expenses.  The cost of any framework that supports a hoarding (other than a commercial framework) is no longer an advertising expense.

So National have a huge financial advantage in general.

But it’s not all going their way. Winston Peters has had a huge and free amount of support from the media, getting effectively promotional that money can’t buy but can be priceless in a campaign.

Such is the corruption of our electoral system. Money and media rules.