The Government’s infrastructure announcement is criticised as “ghost money” with no new investments.
Hospital and roading upgrades form the bulk of infrastructure projects the coalition plans to start before Christmas.
More than 31,000 jobs have been lost in two years, especially among youth.
In 2011, the New Zealand Government put out an advert designed to stop people from drinking and driving. A phrase from the ad that became popular was, “Bro, you know I can’t grab your ghost chips”. Fourteen years later, the Government appears to be revisiting this ad –only not for driving. We saw Finance Minister Nicola Willis and Infrastructure Minister Chris Bishop don high-vis jackets to tell everyone that the Government was delivering infrastructure to help the economy. Only it’s ghost money – it’s nothing new.
Right now, the economy could do with a boost. The next quarter will likely see New Zealand return to economic decline. The Reserve Bank’s forecast is now at -0.3%, the Treasury had estimated at Budget 25 that growth would be around +0.8% right now. Unemployment is on the rise. Over the past two years, New Zealand has lost more than 31,000 filled jobs. In the past 12 months alone, more than 20,000 fewer jobs have been filled by young people.
So, what is the Government doing? According to the press release, “Billions of dollars’ worth of infrastructure projects are getting under way in the next few months”. Around $6 billion to be exact. The problem is that there are always billions of dollars of investment in the next few months. Capital spending by the Government will average $10b a year over the next five years, according to the Treasury.
There is nothing new here. All the money was already planned for in the Budget. That means no new jobs or economic growth are being delivered that weren’t already in the Budget. A Budget after which unemployment rose by 24,000 by June 2025. This isn’t a stimulus to the economy because there is no extra investment beyond that already being planned – meaning no extra GDP. It’s a Clayton’s announcement.
Critics urge a genuine, long-term infrastructure strategy, emphasising collaboration and addressing urgent economic and social needs. Photo / Sylvie Whinray
Given the fact that 16,000 fewer people are working in construction than this time last year, you would think this would be the ideal time to boost investment. ANZ reported this week that, “it appears residential builders are giving up on a recovery any time soon”.
You would think that now would be an excellent opportunity to build new state housing. Alas, no such announcements were made.
As the famous quote goes, ministers are finding that “winning is easy, governing is hard”. The initial decisions made to cut investment in areas such as ferries, housing and Dunedin Hospital have sapped confidence in the economy. The impact of tax cuts promised at the last election has long since gone. The likelihood of further interest rate cuts is diminishing as inflation creeps towards 3% and above. It’s time for a different approach.
Our economy, our productivity and our public realm don’t benefit when the Government changes long-term infrastructure planning like this. It doesn’t help when ministers use infrastructure announcements as a means of political advertising.
Chris Bishop claimed he wanted a “cross-party consensus” on infrastructure, but critics question whether he’s truly engaging with a broad range of voices beyond his own. Photo / Sylvie Whinray
That’s made even harder when the announcements don’t mean anything. We need a long-term approach to tackling this problem – one that will work across Parliaments. An approach that doesn’t put one form in infrastructure – roads – ahead of everything else.
In December last year, Bishop said he genuinely wanted to build a “cross-party consensus” on how we build infrastructure in New Zealand. That’s great in theory, but when your idea of a consensus is everyone agreeing with you, that’s not going anywhere. Building a true consensus would involve working with much wider groups. When was the last time Bishop sat down with trade unions to discuss infrastructure? When did he last sit down with child poverty advocates to talk about our housing that puts kids in hospital?
New Zealand’s economy is struggling. The US President has just slapped 15% tariffs on our exports – and it’s our second-biggest export market. We are losing a generation of people who are voting with their feet because they can’t see a future here in Aotearoa. Nurses are on strike. Yet our Government is concerned with changing the name on the front of a passport. It’s dangerously out of touch with the real needs of New Zealanders.
When we invest in New Zealand, we invest in ourselves and we reap the dividends. The Government is pretending to invest right now, dressing up old investments as new.
There is a ghost plan for the economy. It’s time for a real one.
