The Government will continue to invest in infrastructure to make the economy more resilient to extreme weather, even as budgets are being reined in elsewhere.
In a pre-budget speech to Auckland businesses, Finance Minister Grant Robertson said this type of investment will be critical for both future growth and rebuilding from the storms.
This week, the North Island was again rocked by flooding which resulted in the death of one high school student. This follows four deaths in the Auckland Anniversary floods and 11 during Cyclone Gabrielle.
Treasury has estimated the combined economic damage of the two earlier events to be somewhere between $9 billion and $14.5 billion.
Robertson said Budget 2023 would include funding for more investment in the infrastructure rebuild from cyclone and floods, as well as “national resilience projects” to protect communities from future risks.
“I won’t say much more about this funding today, other [than] to say that this will be a down-payment on making sure our nationally strategic infrastructure is strong and resilient”.
As an example, the Finance Minister said the transport agency was working on upgrades to the transport network that would make NZ’s roads less vulnerable to weather.
“This is what they call the invisible component of our transport network, like culverts, slip protection, and water pumps,” he said.
This work will be funded separately from the annual road maintenance budgets and will be an ongoing process with only an initial set of projects announced in the budget next week.
Bridge deficit
Robertson said the country had an “extraordinary infrastructure deficit” which Treasury has estimated will require approximately $210 billion of investment across the next 30 years.
“Decades of failing to maintain and enhance our infrastructure has been exacerbated by failing to plan and build for population growth.
On top of that we are acutely aware that the infrastructure that we do invest in needs to be resilient to the ever more obvious impacts of climate change.”
In a speech to Wellington businesses on Thursday, Robertson signalled the government hadn’t used its balance sheet to its full potential.
This could suggest he would be more willing to tolerate higher debt levels than previous governments which have focused on paying down debt.
“New Zealand also comes out of the pandemic with some of the lowest public debt in the world. Our net debt sits at around 19% of GDP, well below the 30% ceiling that we indicated when we set the fiscal rules last year,” he said.
This is dramatically higher than prior to the pandemic—when years of surplus under both National and Labour had net debt levels down into single digits—but is still lower than many comparable countries.
Robertson said it was the Finance Minister’s job was to invest for the future and provide core services, while maintaining enough room on the balance sheet to respond to crises.
“[It means] ensuring the Government can always step up in times of need – that there is a buffer or capacity available to deal with the unexpected without having to drastically cut into the services that New Zealanders rely on in their everyday lives,” he said.
Government finances were currently in a position that allowed investment in infrastructure, while supporting the most vulnerable members of society.
Westport gets $23m
Meanwhile, Prime Minister Chris Hipkins travelled to Westport on Friday to announce $22.9 million of funding for flood defences.
The South Island town was hit by severe flooding this week, as well as in February, and in July last year — when 2000 people were evacuated from their homes and the NZ Army was called in to help.
Westport will use the money to build structural flood protection and relocate new development away from riskier areas.
“This funding has both an immediate and longer-term focus. It will help with design and delivery of flood protection, such as stop banks, and support people to protect their homes with property and community level resilience measures,” Hipkins said.
He said this demonstrated the government’s approach to its wider work building community resilience and rebuilding after the recent storms.
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