3 February 2009

Infrastructure announcements restrained but prudent

The infrastructure funding announcements by the government today on transport, education and housing are modest in terms of current levels of expenditure and may not be “new” money.  However IPENZ supports a restrained approach.

“It’s more about retaining jobs in a construction sector that has been hard hit by cutbacks in private investment, rather than about infrastructure,” says Dr Andrew Cleland, Chief Executive of the Institution of Professional engineers New Zealand (IPENZ). “But it is vitally important that the many apprentices taken on over recent years can be retained – we will need them in the medium term.”

In the roading sector the additional $142m over 2 years represents only a 9% increase in annual capital expenditure, and the $100m over 2 years for maintenance and renewal projects represents only a 7% increase.

“What is important for the large roading projects is that they fit into a consistent long term pattern of spending – this allows contractors to most effectively deploy their staff and machinery,” says Dr Clelend.

“It is also not clear whether this bringing forward of future expenditure will be replaced next year – so it is difficult to tell whether this is new money. Similarly the bringing forward of $216 m for schools and $124 m for state housing may not be new money unless it replaced next year,” he says. “ “However in light of the prevailing economic environment – with Treasury forecasting a sustained period of operating deficits and increasing gross debt – IPENZ supports this restrained and prudent approach. ”  

“Our interpretation of these announcements is that it is more about minimising unemployment in the in the construction sector in the short term– particularly for trades, semi-skilled and unskilled people, rather than providing a stimulus to the broader economy by significantly improving infrastructure.”

“There is also no reference to broadband at this stage but we understand that with the telecommunications market improving down load speeds using VDSL high speed technology, any Government announcement on broadband  investment need to be more carefully considered.”  

For more information contact:
For more information contact:
Andrew Cleland
Chief Executive, IPENZ, Engineers New Zealand.
Mobile: 021 311 879
DDI: 04 474 8935

Julie Buchanan
Communications Manager, IPENZ, Engineers New Zealand.
Mobile: 021 479 885, 04 473 2028

Prepared by Julie Buchanan, Communications Manager, IPENZ, Engineers