Budget 2017: Transport drives $32.5 billion infrastructure spend

New roads and rail upgrades will suck up about a third of the government's $32.5 billion infrastructure spending over the next four years, draining the coffers for the foreseeable future.

Finance Minister Steven Joyce confirmed the $4 billion of new capital spending in the budget, calling it the "single biggest investment of new capital in one budget by any government in decades". That takes the total infrastructure spend over the coming four years to $32.5 billion, including $1.7 billion via public private partnerships, with the capital allowance raised to $2.5 billion in the 2019 and 2020 fiscal years from $2 billion.

"The net result is that the government's capital investment absorbs virtually all the cash generated from our operating surpluses over the next four years," Joyce said.

Transport is the biggest target for investment with $9.2 billion over that timeframe, of which $4.8 billion will go into the National Land Transport Fund, $1 billion to rebuild links through Kaikoura, and $1.4 billion for the central government's share of Auckland's City Rail Link.

Joyce pre-announced the boost to infrastructure spending and name-checked the $812 million Kaikoura rebuild as a beneficiary of the capital spending, and today announced an extra $576 million to boost the New Zealand Defence Force's capability and $392.4 million for building and upgrading schools.

Among other sectors to get a spending boost is $763.3 million tagged to boost New Zealand's prison capacity with the muster at stretching point and $450 million for KiwiRail's infrastructure and rolling stock.

Joyce said the government plans to make more out of public-private partnerships, such as the Transmission Gully and Puhoi to Warkworth road projects, and said he plans to make an announcement on that in the coming weeks.

Education will be the second biggest draw on the infrastructure spending with about 16 percent. About 13 percent of the future infrastructure spending hasn't been allocated yet.

The Treasury's forecasts project $2.2 billion of capital spending when contributions to the New Zealand Superannuation Fund are resumed in 2021, down from a forecast $3.1 contribution forecast in the December half-year economic and fiscal update.

(BusinessDesk)