$11b boost for core services

The Government is promising to pump $11 billion into new infrastructure spending in the next four years, including $812 million to reinstate State Highway 1 north and south of Kaikoura.

The increase represents a $2b lift on the December forecast, including $1b in the May 25, 2017 Budget.

In a pre-Budget speech to the Wellington Chamber of Commerce, Finance Minister Steven Joyce also set a new debt target for the Government, beyond the current 20 per cent of gross domestic product (GDP) by 2020, lowering it to 10-15 per cent by 2025.

Net debt is tipped to be 24.3 per cent of GDP by the end of this financial year in June.

Joyce said the extra investment would support growth and would ‘‘extend that run rate significantly’’ in spending on schools, hospitals, roads, housing and railways.

The cost of the SH1 and the Kaikoura rail corridor reinstatement, following the earthquake in November, was now expected to be $1.1b to $1.3b, down from $1.4b to $2b estimated previously.

Joyce also reaffirmed a commitment to cutting taxes when there was room to do so, ‘‘in particular the impact of marginal tax rates on lower and middle income earners’’.

Stronger growth was flowing through to the Government’s books, Joyce said.

The Treasury has previously reported the surplus running at $1.4b, $900m ahead of December’s forecast, in the eight months to the end of February.

The $2b Terra Nova wage settlement for aged care workers would be treated as outside the operating allowance so would not cut into the cash set aside for new initiatives.

Joyce said one of the biggest risks to the country’s economy was the ‘‘more insular economic policies being pushed overseas, and by our opponents domestically’’.