Government's $11 billion infrastructure commitment a big step forward
"The announcement that Budget 2017 will allocate a further $11 billion in new capital infrastructure is very welcome. It will be essential that this new funding unlocks local and private capital to accelerate much needed infrastructure investment," says Stephen Selwood CEO of Infrastructure New Zealand.
"The Government’s announcement today increases planned new capital investment to 2020 from $3.6 billion to $11 billion, but leaves details of project priorities till the May Budget.
"This is a massive increase and the largest capital investment commitment by any Government since the 1970s.
"But it must be said that New Zealand’s growth challenge is the highest it has ever been and meeting population demands requires the services for a city larger than Nelson to be added every year.
"Added to the growth challenge is New Zealand’s historic under-investment in infrastructure. The reality is that it would not be difficult to spend $11 billion in 2017 alone.
"The Government’s commitment to the Kaikoura rebuild, along with its $1.5 billion contribution to the CRL, a further $1.5 billion in the East-West link, a billion more on each of Mill Rd, the northern busway extension and the northwestern busway, $400 million on Penlink, plus state highway improvements in the regions is enough to consume all $11 billion, let alone much needed investment in health, education and housing nationwide.
"To get full value out of national resources, the Government is going to need to use its funding to unlock private investment.
"A shift to debt funding strategic projects represents good fiscal management and in this regard it is pleasing to see the Government looking further at public-private partnerships.
"ACC, NZ Super, iwi and domestic and international institutions are looking to invest in New Zealand’s infrastructure and it makes sense to accelerate projects which meet demand for housing and services.
"In addition, the Government has already demonstrated the value of capital recycling, via the partial sale of the energy generation companies in particular, and a similar strategy could be adopted by Auckland, Christchurch and other councils to bridge the infrastructure funding backlog.
"Priority should also be given to projects where developers and land owners who benefit from land value increases contribute to infrastructure investments.
"The combination of public and private capital is central to delivering the infrastructure needed to support New Zealand's growth," Selwood says.
For further information and comment contact Stephen Selwood on 021 791 209