All aboard the $138b train!
A whopping $138 billion of infrastructure spending is planned across New Zealand over the next 10 years, according to the latest Infometrics Infrastructure Pipeline Profile. Updated in early November, the Profile shows planned infrastructure spending is expected to be roughly $9b higher than our previous estimate from September 2018 (see Chart 1).
This time, roading isn’t driving growth in infrastructure spending. Instead the increase is driven by a large rise in rail infrastructure spending coming down the line! The Labour-led government’s affinity for rail transport over roading is very evident, with a $1b rail announcement in the 2019 budget just the start.
Roading spending on a lower track
Our roading infrastructure spending figures are based on our understanding of local council capital expenditure forecasts and NZTA’s National Land Transport Fund allocation. The Infrastructure Pipeline shows that, compared to previous estimates, NZTA’s infrastructure spending is losing steam – especially over the next three years. The most significant derailing comes from less capital spending on local road maintenance and operation, as well as less money on public transport services.
The logic behind the decrease in planned roading infrastructure isn’t clear. Previous estimates looked overly optimistic and ambitious, so it’s likely that our lower estimate of expected spending is returning the track to a more normal level of infrastructure spending. It is important to note that, although lower than last year, NZTA’s expected annual capital spending on public transport services remains more than twice what was spent annually back to 2010.
Another driver for the decrease in planned roading infrastructure is likely to be a change in government’s preferences, with a shift towards multi-modal transport options.
Full steam ahead
KiwiRail’s capital expenditure forecast signals an expected $2.3b of rail infrastructure spending between 2020 and 2023. When combined with Infometrics forecasts of rail spending for the 2024-28 period, we expect to choo through $7.4b over the 2019-28 period (see Chart 2). With that much money going into rail over the next 10 years, now is as good a time as any to be called Thomas!
Our full Infrastructure Pipeline Profile looks in-depth at a range of infrastructure spending types and projects. We provide detailed information on expected capital spending on roading, other land transport, ports and airports, electricity transmission, electricity distribution, electricity generation, irrigation, telecommunications, and local authority spending.
This information is provided at a both a national and regional level, but unfortunately it doesn’t come with as many puns.
If you want to find out more, please contact Paul Barkle at paul.barkle@infometrics.co.nz
(We can’t guarantee you won’t get more bad puns out of Paul though, that train has already left the station).
