Pre-Budget Forecasts – What the construction industry can expect from Budget 2017

Election year budgets have a tendency to be the most expenditure focused of the triennium, often labelled as ‘lolly scrambles’ or ‘vote buying’, and ever since Treasury released the Budget Policy Statement in December it’s been clear Budget 2017 will be no different. As the Prime Minister put it in his pre-budget speech ‘A growing economy and strong government accounts give us choices we didn’t have just a few years ago’.

The Budget will be released this Thursday 25 May and the clear winner from the pre-budget announcements appears set to be infrastructure. The first tranche of an additional $11 billion investment programme proposed for the next 4 years will be detailed when the Budget is released, however the vast bulk of this money has already been announced as:

  • $2.3 billion to Housing New Zealand for the Crown Building Project to build 13,500 new social houses and 20,600 new affordable and market homes over the next 10 years
  • $812 million to the New Zealand Transport Agency for reinstating State Highway 1 between Picton and Christchurch based on the costing coming out of the Kaikoura Earthquake (discussed in our earlier blog post).
  • $102 million to the Tourism Infrastructure Fund which will be made available to local councils and other community organisations, for tourism focused projects such as new carparks, toilets and freedom camping facilities.
  • $76 million to the Department of Conservation, $31.3 million of which is intended for upgraded tourism facilities and expansion of the Great Walks.
  • $304 million to the emergency and modular housing programme for 2150 houses for urgent temporary accommodation.

There may still be enough room for one or two more announcements within the infrastructure and major capital works space this Thursday. However, as reported in the National Business Review last week in an interview with John Tookey, construction management professor at AUT, unless something is done to address capacity shortages in the construction industry even the above may prove too difficult to deliver.

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