Recovery and resilience
The COVID-19 pandemic and recent extreme weather events have demonstrated the importance of strengthening our resilience as a country, particularly as climate-related events become more common. Budget 2023 invests in support for communities affected by the North Island weather events to recover and rebuild, as well as a new National Resilience Plan to deliver the medium- and long-term infrastructure investments New Zealand needs. The Climate Change chapter (page 35) provides information on the Budget 2023 Climate Emergency Response Fund package, which further supports adaptation, reducing emissions, and cost of living pressures.
Budget 2023 also takes significant steps towards achieving the goals of our Economic Plan, for a high-wage, low-emissions economy that delivers economic security. We need to improve our economic resilience through investing in research, innovation and skills in particular.
Building for tomorrow
The Government has been making substantial investments into New Zealand’s infrastructure over recent years. We have been turning around decades of infrastructure deficit as well as looking at addressing the lack of long-term planning and funding. We have invested $45 billion in infrastructure projects over the past five years, and in 2019 established Te Waihanga – New Zealand Infrastructure Commission to look at how our infrastructure is planned and resourced.
Te Waihanga’s New Zealand Infrastructure Strategy, Rautaki Hanganga o Aotearoa identifies the challenges we will face over the next 30 years and the change needed in our approach to infrastructure. Alongside Budget 2023, we are releasing our Infrastructure Action Plan in response to the Strategy. This will be crucial to continuing to deliver the infrastructure transformation required.
The Government’s careful fiscal management has allowed us to commit a further $71 billion of infrastructure investment over the next five years, while keeping net debt well below the 30 percent of GDP. Long-term investment allows for long-term planning, and a clear pipeline of work will provide confidence and certainty to the infrastructure sector.
Budget 2023 provides a $10.7 billion total capital package for a range of projects, including:
- Housing: $3.1 billion total capital and $465 million total operating to build an additional 3,000 new public housing places by 30 June 2025. New Zealand’s housing crisis was never going to be fixed overnight, and requires ongoing investment after the previous Government’s sell-off of state houses. Due to the rising cost of building products and services around the world, Budget 2023 also invests $707 million total operating and $3.6 billion total capital to cover cost increases under the existing build programme funded through Budget 2020.
- Education: Key investments include $400 million total capital and $55.4 million total operating to continue the National Education Growth Plan, which will add approximately 6,600 student places to the school network and four new schools; and $112.5 million total capital and $21.9 million total operating to expand Māori medium education infrastructure across kura, which will support meeting the Government’s objective of 30 percent ākonga Māori learning in Māori medium education environments by 2040.
- Rail: New Zealand’s national rail network is critical for passenger transportation and rail freight services. It provides Kiwis with transport choice, reduces emissions, and benefits the economy. In Budget 2023, we are providing $369.2 million total operating to restore a resilient and reliable national rail service. This funding will enable KiwiRail to continue network services for all rail users and provide the platform for projected growth on rail. We are also investing $197 million total capital and $9.4 million total operating in the Auckland City Rail Link project, to address cost increases, including those due to COVID-19. Once completed, this project will provide a key link within Auckland’s public transport network, improving service frequency and travel times.
- Biosecurity: It is important that we protect New Zealand’s economy and unique biodiversity from pests and diseases. To support this goal, in Budget 2023 the Government is funding the establishment of a new plant health and environment laboratory in Auckland. This investment is critical to the management of current future biosecurity risks and supports future industry growth.
Te Whatu Ora reports on 110 of their key projects with a combined value of approximately $7.8 billion. This includes 75 projects in design and construction phases worth $6.2 billion. Two major projects that Te Whatu Ora is currently undertaking includes significant hospital redevelopments with New Dunedin Hospital ($1.6 billion) and Pihi Kaha – Whangārei Hospital ($759 million for Stage One). Careful management of cost pressures and prioritisation ensures that the health system continues to deliver projects in a challenging fiscal and construction environment.
National Resilience Plan
As the Infrastructure Action Plan lays out, we need to futureproof our infrastructure for New Zealand’s growing and changing population and climate change events, and to make use of developing technology available to us. The ability of infrastructure systems to function during adverse conditions and quickly recover after events is fundamental to the wellbeing of communities.
The North Island weather events have added a level of urgency to our infrastructure investment planning and highlighted the importance of resilience in the face of climate change and increasing extreme weather events.
In addition to the $71 billion committed of infrastructure investment over the next five years, we are funding the initial phase of a National Resilience Plan to support significant medium- and long-term infrastructure investments which focus on the resilience of New Zealand’s critical infrastructure and support the Infrastructure Action Plan. We are committing an initial $6 billion to the programme, with plans for further funding in future Budgets. Given recent weather events,the programme will first focus on projects that support recovery and building back better. Priority will be given to reinstating road, rail, and local infrastructure as well as telecommunications and electricity transmission investments.
As indicated at Budget 2022, the change to the debt ceiling as part of the Government’s fiscal strategy means we can use our balance sheet more effectively to support long-term productive investments, such as, the National Resilience Plan.