Welcome to the weird world of Keyonomics. But first, today’s news…
National promises to spend $5 billion more on infrastructure than Labour over the next six years: an extra $500 million a year on key infrastructure such as roads as well as the $1.5 billion broadband plan. We’ll get a 20-year “National Infrastructure Plan” and a Minister of Infrastructure too. (More bureaucrats? Surely not.)
Roads seem to be privileged, especially those designated “Roads of National Significance”, with increased funding and a fast-track consent process. So much for reducing carbon emissions. Greens, take note.
There will be a “new range of financing techniques for national infrastructure projects. National will introduce infrastructure bonds as a new asset class, and make greater use of public-private partnerships.” The private sector gets the plum projects and rakes it in, as in Britain.
At most, National say, they will be running a gross debt-to-GDP ratio around two percentage points higher than Labour plans.
I am not against some borrowing for infrastructural spending. It’s fairer in terms of intergenerational equity. Why should we pay now for an asset that will benefit future generations? Since Sir Julius Vogel, this is how NZ has financed its infrastructural development for the most part.
But, yet again we get high-blown rhetoric — “It’s time to take the handbrake off. It’s time to turn the growth engine on” — without the critical detail needed to assess meaningfully what’s on offer.
How much new spending? For what exactly? Just roads? Which roads? What about rail? Electricity infrastructure? If electricity, how does that impact on the electricity market? Anything else? What would the terms of the PPPs be? What are the productivity benefits expected? How much of the extra borrowing will be to cover a structural deficit resulting from the tax cuts? …
After all, the Labour-led government is already delivering the largest road-building programme in NZ’s history, revitalising the rail network, and investing more in energy infrastructure than for a generation.
[Update: The Standard critiques the announcement.]