Ascending or stalled? What will Budget 2025 mean for future infrastructure?
As the Government prepares to unveil its next Budget, all eyes are on how it will address the nation's pressing infrastructure needs.
With Minister of Finance Nicola Willis emphasising long-term investments and sustainable growth at a time when the Government is having to slash its operating allowance, the stakes are high for delivering on the promises made during the election campaign.
Infrastructure is the backbone of any thriving economy, and New Zealand's challenges in this area are no secret. From ageing transport networks to the urgent need for climate-resilient infrastructure, the 2026 horizon presents both opportunities and hurdles.
The question is: how can the Government ensure the best bang for its buck while staying true to its priorities?
Priorities and promises
The Budget Policy Statement outlines four key priorities: lifting economic growth, addressing productivity challenges, implementing a social investment approach, and developing a sustainable pipeline of infrastructure investment.
These priorities align with the Government's campaign promises, but translating them into actionable and impactful initiatives requires strategic and targeted allocation of limited resources.
The case for targeted investment
To maximise outcomes, the Government must focus on prioritising projects that deliver both immediate and long-term benefits, and value for the taxpayer dollar.
Areas where targeted investments could deliver tangible benefits to society include:
1. Healthcare
Targeted spending within the health system could improve access to essential services, reduce pressure on existing hospitals, and ultimately create a more resilient system that meets the needs and expectations of the public. Health Minister Simeon Brown has said Health New Zealand needs support from major partners to help deliver infrastructure in the regions as well as for other health system projects.
2. Education
Spending on education would help deliver more modern and future-focused learning environments in New Zealand’s schools. The Government has already announced it is redirecting $100 million towards a new school in Auckland and more classrooms in areas that have growing rolls.
3. Transport
Targeted investments in New Zealand’s transport infrastructure could also bring significant benefits to the country, by improving connectivity, improving travel times, and boosting economic growth through higher productivity. Upgrading existing networks would also support safer and more sustainable movements of people and goods, while strategic investment can also unlock new housing developments and create jobs.
4. Justice
A targeted spend on justice infrastructure would help create a modern, efficient and accessible justice system. The Ministry of Justice currently has a plan for a 30-year pipeline of investment opportunities and is seeking ideas on how to accelerate that programme.
5. Social housing
Targeted investments in social housing would mean safer and more affordable homes for more families. This would support more sustainable communities and thus ensure better health and education outcomes for people currently living in insecure or sub-standard housing.
6. Climate-resilient infrastructure
New Zealand has been counting the significant cost of extreme weather events in recent times. Targeted spending on more climate-resilient infrastructure would help communities better withstand these events and adapt to the changing environment. Strengthening flood protections, upgrading stormwater systems and building more resilient roads and utilities would help reduce the risk of costly climate-related damage.
Public-Private Partnerships: A key to unlocking potential
Public-private partnerships (PPPs) are expected to play an important role as these collaborations allow the Government to leverage private sector expertise and resources and accelerate project delivery.
By sharing risks and rewards with private entities, PPPs can ensure efficient use of taxpayer money while fostering innovation. However, transparency and accountability will be crucial to avoid pitfalls and ensure public trust.
The recent changes to New Zealand's PPP framework signal a promising future for infrastructure development across key sectors.
By addressing previous challenges and introducing strategic improvements, the Government is creating a more conducive environment for collaboration between the public and private sectors. These changes not only enhance the efficiency and transparency of project delivery but also encourage innovation and investment from private partners.
The recent New Zealand Infrastructure Investment Summit showcased the country's ambitious infrastructure pipeline to global investors. The summit, attended by more than 100 senior executives from international and domestic infrastructure firms, highlighted the critical role of foreign direct investment in bridging New Zealand's infrastructure gap.
Current projects that are drawing the attention of international investors to New Zealand include:
- The Roads of National Significance Programme, with the Stage 1 Northern Corridor Programme the current focus.
- The Department of Corrections’ Christchurch Men’s Prison redevelopment.
- A modified PPP approach to build and maintain three new courthouses signalled by the Ministry of Justice.
A balancing act between fiscal responsibility and ambition
While the operating allowance for new initiatives is limited, the Government must strike a balance between fiscal prudence and ambitious investments.
PPPs and NIFFco could be the linchpins in achieving this, allowing the Government to pursue transformative projects without overburdening public resources.
Moreover, transparent and efficient project management is essential to avoid cost overruns and delays. Learning from past successes and failures can help ensure every dollar spent delivers maximum impact.
Building a legacy
The 2025 Budget is more than just a financial plan; it's an opportunity to shape New Zealand's future.
By focusing on high-impact, sustainable infrastructure projects and harnessing the potential of PPPs, the Government can not only fulfil its campaign promises but also lay the foundation for a more resilient and prosperous 2026 and beyond.
As we await those Budget decisions, one thing is clear: the choices made today will echo for generations. It's time to invest wisely and build a legacy that all New Zealanders can be proud of.
John Marker
