NZ Govt to spend NZ$17bn on infrastructure over four years

WELLINGTON: New Zealand plans to spend NZ$17.1 billion ($14.1 billion)over the next four years on infrastructure projects, as it seeks to fire up a sluggish economy, the government said on Monday.

The government is walking a tightrope between trying to keep a tight rein on spending as it grapples with returning to budget surplus by 2014/15 while delivering on pledges to invest in a range of projects to drive economic growth.

The infrastructure plan for the next four years sees NZ$7.6 billion to be spent on "social assets" such as schools and hospitals, NZ$6.5 billion on roads and NZ$1.5 billion each on a nationwide rollout of broadband and improving the country's railway network.

"New Zealand faces some major challenges, including rebuilding Canterbury, but we remain committed to investment throughout the country and are continuing to look for new projects that lift productivity and growth," Infrastructure and Finance Minister Bill English said in a statement.

The government has set aside NZ$5.5 billion to rebuild the country's second largest city, Christchurch, which has been hit by a series of devastating earthquakes since September last year.

In addition to rebuilding Christchurch the government said its priorities are providing a comprehensive plan for investment in Auckland, New Zealand's biggest city, and better management of existing assets.

The value of assets under government ownership will grow by NZ$34 billion to NZ$258 billion by 2015, English said.

At its annual budget in May the government said it would cut spending and sell down stakes in four power companies, a miner and the national airline, to return it to budget surplus a year ahead of its previous forecast.

Two ratings agencies have New Zealand on a negative outlook, and have said the government must tightly control its finances and reduce the country's heavy reliance on foreign capital.

The central bank has also said tight controls on government spending would take the pressure off interest rates.

Copyright Reuters, 2011