Budget 2012: Asset sale funds to be pumped into KiwiRail

Investors keen on owning a share of Mighty River Power - owner of the Nga Awa Purua Geothermal Power Station - can now visit the new website to get more information on sale plans. Photo / Supplied

The Government will use a big chunk of cash it will raise from the sale of Mighty River Power this year to pay for the KiwiRail turnaround plan which was announced three years ago.

Budget figures released today show the "Future Investment Fund" which is to reinvest the proceeds of the assets sales programme is expected to allocate $559 million in the 2012/2013 year.

"We would expect a significantly larger contribution from the fund in Budget 2103", Mr English said this afternoon.

Later this year Mighty River Power will be the first of the publicly owned power companies to be partly sold to private sector investors.

The biggest allocation of cash from the Future Investment Fund announced today is "a further $250 million" towards the KiwiRail turnaround plan.

The $750 million rail plan was announced in Budget 2010 and has already received $500 million in funding.

"The Government is committed to investing in modern infrastructure that helps build a faster-growing economy with more exports and more real jobs, without borrowing from overseas investors", Mr English said.

Other allocations from the Future Investment Fund - which Mr English today
acknowledged was a "notional" entity - included $76 million for the capital costs of establishing the Advanced Technology Institute.

That spending is part of the total of $166 million the Government will spend on the institute over the next four years including $90 million in additional operational funding for the organisation which is essentially a rejigged version of the Crown's Industrial Research Ltd.

The new institute will focus on transforming academic research in commercially saleable products and services.

The Budget further emphasises the Government's spending on research and innovation with what it says is an extra $60 million over four years on National Science Challenges "to find innovative solutions to some of the most fundamental issues New Zealand faces".

Other "additional" over the next four years included $100 million on the existing Performance-Based Research Fund to support research in universities, and an extra $59 million for tertiary sector science and engineering courses.

Meanwhile during the Budget period, $88.1 million of the Future Investment Fund will go into health spending - mostly hospital developments and $34 million to fit out schools to enable them to utilise the new ultrafast broadband services.