Grant Robertson: 'They wanted certainty, we've given them certainty'

Finance Minister Grant Robertson says the Government's big infrastructure announcement will boost the economy. Photo / Mark Mitchell

Finance minister Grant Robertson says he is confident that industry can deliver the Government's big new infrastructure projects, despite fears that the economy lacks the capacity.

"They wanted certainty, we've given them certainty. This means they can retain and recruit the workforce they need, with broader capacity around plant and equipment, they now have the confidence to invest."

The package was "in may ways a response to what the industry wanted", he said.

"We've done our bit of the bargain and we are now going to keep working with them on those capacity constraints."

The Government today announced $6.8 billion worth of new transport spending and along with funding for upgrades to schools, hospitals, a move that has been welcomed by business and infrastructure groups.

"It will be a boost to the economy," Robertson said.

The election year spend-up may not be over yet, with $4b of today's $12b New Zealand Upgrade Programme still to be allocated.

Speaking to the Herald after the announcement Robertson explained that the remaining $4b had been allocated to the Government's multi-year capital allowance.

That would provide more funding flexibility in areas like schools, hospitals and other day-to-day needs.

But it could also mean new projects if required.

"What you saw today was $8b of additional spending that we wouldn't have seen otherwise. That is outside of the Budget process," he said.

The new transport spending included the green light for roads of national significance such as the Penlink (peninsula link road) alternative route between the Whangaparaoa Peninsula and State Highway 1 and the upgrade of the Redoubt-Mill Rd corridor from Manukau and Flat Bush to Papakura and Drury

These roads had been planned by the previous government but were put on hold after the election.

National finance spokesman Paul Goldsmith accused the Government of "waving the white flag on its own transport policies and copying National's after initially putting its roading projects on hold.

"So we've wasted two and a half years," he said. "The workforce has dispersed for those roading projects. It's very easy to turn these things off but not so easy to turn them back on. We've now got to start the whole process again and it's a lot of wasted time."

Robertson rejected that, saying the road projects on National's agenda had not been funded by them and that they had now been rescoped and improved to include plans for public transport and cycling lanes.

The Government today announced $6.8 billion worth of new transport spending. Photo / File

Economic conditions had also changed even in the past two years and there was more acceptance of fiscal stimulus as a strategy to promote growth in tandem with monetary policy, Robertson said.

"I think the tide's turned on that, even in the time I've been involved as Labour Party finance spokesman," he said.

"The World Bank and the IMF have both encouraged governments to get into boosting productivity through infrastructure and being comfortable about taking on debt to do that," he said.

The new investments have been funded through additional borrowing which takes Government core crown debt to 21.5 per cent of GDP.

"I meet regularly with the rating agencies that come to New Zealand and they are all very relaxed about the fact that New Zealand's debt levels are low."

EMA Head of Advocacy and Strategy, Alan McDonald, said he was pleased with the package.

"It is a nice start. We like the approach where they've integrated projects, the joined up thinking," he said. "

But ultimately it just scratched the surface of the nation's infrastructure deficit,

McDonald said he'd like to have seen a fourth rail line in south Auckland to create room for an airport express train and he was disappointed by the "piecemeal approach" to the road to Whangarei.

"Let's just get on and do the whole thing because that will unlock that region. There's so much potential up there," he said.

There was also no mention at all of the [Auckland] east/west corridor and there was some urgent attention need to the corridors north and south of Hamilton, he said.

The corridor north of Tauranga should also have gone all the way to Katikati.

He agreed with Goldsmith's concern that time had been wasted by putting roads on hold but said New Zealand's infrastructure deficit had really been built up over decades.

"It's an underspend by both sides over a considerable period of time," he said "Its not just the last three, nine or even 15 years, its more like 30."

Delivery would be an issue for industry but he was optimistic that, if the planning moved quickly, work could flow on from projects such as Transmission Gully and the Puhoi to Warkworth extension, which were winding up.