Govt to spend $17 billion on infrastructure

4 July 2011

http://www.infrastructure.govt.nz/plan/2011

The government will invest more than $17 billion in infrastructure during the next four years, Infrastructure Minister Bill English says.

However, little specific new information on exactly where much of that money is destined for was included in the government's National Infrastructure Plan 2011, released this afternoon by Mr English and Associate Infrastructure Minister Steven Joyce.

Much of that detail was still a work in progress, the aim of the plan instead being to set out the government's 20-year infrastructure strategy, along with future challenges and the government's priorities over the next three years.

Those priorities are the Canterbury infrastructure rebuild, providing a comprehensive approach to investment in Auckland, improving the management of government-owned social infrastructure, focusing on transport investment and improving the government's ability to monitor performance across all infrastructure sectors, Mr English said.

Of the $17 billion investment, $7.6 billion will go towards social assets like schools, hospitals, state houses and prisons, with another $6.5 billion on roads and about $1.5 billion each on broadband and rail, he said.

"In addition, we've set aside $5.5 billion to rebuild Canterbury and state-owned enterprises are spending billions more upgrading their own assets.”

When broken down further, the plan showed investment in the transport sector included up to $650 million a year for maintenance and renewal of local roads, passenger transport subsidies and infrastructure for walking and cycling.

On top of that another $750 million over three years has been committed to the KiwiRail Turnaround Plan, to help the rail operation achieve independent, commercial viability in the next 10 years.

The investment is based on projections of freight doubling by 2040, and growing recognition that road transport alone is unlikely to support the efficient movement of this in the long term.

A further $2.3 billion will go towards the development of the metro rail network in Auckland and Wellington that is already under way, funding new rolling stock, traction systems and signal systems.

Investment in telecommunications infrastructure set out in the plan, to the tune of $1.5 billion, involved the implementation of the ultra-fast and rural broadband Initiatives.

The document provided even less detail of actual spending on energy infrastructure, which is not surprising with the government considering selling minority stakes in four state-owned energy companies.

However, the plan noted that electricity demand is predicted to increase by about 3% over the next 20 years on the Treasury's current forecast economic growth.

The capital cost to meet that new demand is around $14 billion and could be as high as $21 billion.

On top of that Transpower, owner of the national grid that connects various generation sites to nearly 12,000km of transmission lines, estimated that it could spend between $5.5 and $7 billion to develop its assets over the next 20 years, with $3 billion already committed.

Information about actual future investment on water infrastructure was limited to the up to $10 million the Ministry of Health will allocate to drinking water subsidies to improve water quality in small communities between 2011 and 2016 and the $35 million over five years the Ministry of Agriculture has committed to the Irrigation Acceleration Fund to support the development of irrigation infrastructure.

Detail of proposed investment in social infrastructure was even more sketchy in the plan.

“The government is actively exploring how the current network of social infrastructure assets can respond to future pressure,” it said.

That meant better management of assets that are under pressure and examining whether those that are under-utilised could be retired.

The infrastructure plan is the second in a series of three. The first was published in March 2010 and the next is due in 2014.

The latest plan can be viewed online at www.infrastructure.govt.nz/plan/2011.