KiwiBuild spearheads $42 billion capital spending programme
By Paul McBeth
Dec. 14 (BusinessDesk) - The new government will pump in $2 billion over the next three years to kick off the KiwiBuild
programme targeting 100,000 affordable houses being built over the next decade.
The policy is one of the new administration’s headline programmes in a planned $41.7 billion capital spend over the next
five years, the Treasury’s half-year economic and fiscal update forecasts show, with an available capital allowance of
$12.6 billion and including $7.7 billion of contributions to the New Zealand Superannuation Fund.
Under the KiwiBuild programme the government will buy private developments off the plans and build new houses over the
next three years, after which the $2 billion of capital will be recycled as dwellings are sold and reinvested.
The net result is expected to boost nominal residential investment by about 10 percent in the June 2022 year, which
would be $5.4 billion across the forecast period. Residential investment is seen contracting 1.5 percent in 2018 as
capacity and finance constraints grow in the construction sector, before expanding in subsequent years to a peak 8
percent in 2021.
“There is a high degree of uncertainty about the impact of policies designed to alleviate capacity constraints, given
the limited detail on what form they will take or when they will come into effect,” the document said. “These policies
could be more effective than assumed and mean that aggregate residential investment expands faster to meet the demand
created by KiwiBuild.
“Conversely, constraints may have a more prolonged impact and it could take longer until policies take effect,” it said.
Finance Minister Grant Robertson said future capital spending will be “significantly larger” than the previous
administration to make up for what he said was an “infrastructure deficit”.
Education is set to get $4 billion of capital spending on physical assets over the next five years while the New Zealand
Transport Agency will get $6.7 billion for the national road network.
“Capital investments will be a key focus of our budgets, in particular, ensuring that infrastructure and services are in
place to support improved well-being and that as a country we are actively planning for our future,” Robertson said in
his budget policy statement. “Investing in infrastructure relating to housing (through KiwiBuild), integrated urban
development and sustainable transport will also be key priorities for the government.”
The increased capital spending also delivers on Labour’s coalition agreement with New Zealand First and the confidence
and supply deal with the Greens. Those agreements amounted to $3.7 billion, which Robertson said “will deliver
sustainable and inclusive growth and the strong public services want and need”.
The $1 billion provincial growth fund, overseen by Regional Economic Development Minister Shane Jones, is expected to be
spread across three tiers of investment, small scale projections, medium- to large-scale projections such as the one
billion trees programme, and large infrastructure.
(BusinessDesk)
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