The government's capital investment programme got even further behind in March, with new purchases of physical assets almost $1.4 billion below Treasury's December forecast.

The Labour-led coalition has made upgrading ageing infrastructure a key plank to its policy platform, planning a $42b spend over five years to restore assets that have been left to wither over successive years. The Treasury's December forecasts anticipated a cash spend of $10.67b in the year ending June 30, up from $7.67b in the 2018 financial year.

However, after nine months of the current financial year, the Crown has spent a net $6.26b buying physical assets, tracking $1.35b behind expectations. In the eight months through February, that shortfall had been $879 million.

The accounts show the Crown's total carrying value of property, plant and equipment at $161.856b as at March 31, with additions tracking $1.51b behind forecast at $6.75b. It had disposed of $434m of those assets, more than the $269m forecast in December.


The Crown's capital programme has been spearheaded by the Kiwibuild housing policy, which has fallen short of its initial targets. The $3b Provincial Growth Fund has backed a raft of projects, but most are still in their very early stages.

The government has been under pressure to loosen its purse-strings and ditch self-imposed fiscal discipline to provide a fiscal injection to the economy through an even greater infrastructure spend.

However, the unemployment rate was 4.3 per cent in December and employers have struggled to attract and retain staff in the current environment, putting a limit on what work can actually be achieved. Business surveys also show declining expectations among firms of their ability to increase their capacity utilisation.

Today's accounts are the last before Finance Minister Grant Robertson unveils his well-being budget on May 30. They show the operating balance before gains and losses to be in surplus by $2.52b for the nine months ended March 31. That's $329m more than forecast.

The Crown's tax take rose 5.1 per cent to $60.37b from a year earlier, although that was $542m below expectations due largely to the timing of GST refunds and lower corporate provisional tax estimates.

Core expenses rose 7.6 per cent to $63.55b, some $583m below forecast, with predicted education spending not occurring, a smaller welfare bill, and fewer impaired receivables.

"The well-being budget in May will outline the next steps in the government's plan to grow and support the economy, particularly given the international situation," Robertson said.

The Crown's residual cash deficit of $2.63b was $502m below forecast but in line with expectations, Treasury officials said.


Net debt of $60.51b, or 20.6 per cent of GDP, was $855m below forecast. The Crown's finance costs of $3.08b were $20m below forecast, and down from $3.15b a year earlier.

Low global interest rates are among the reasons some commentators are urging a bigger infrastructure programme. At its last bond tender, the New Zealand Debt Management Office sold $150m of 2037 notes paying annual interest of 2.75 per cent at an average yield of 2.34 per cent. In January, the same notes were sold at an average yield of 2.7 per cent.