Budget cash for highway upgrade

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

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

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 Kaikoura rail corridor reinstatement was now expected to be $1.1b to $1.3b, down from $1.4b to $2b previously.

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

But he hinted the Budget would include action on what was foreshadowed as a ‘‘family and tax package’’, which could include increases in payments such as Working For Families.

He again ruled out a cut to tax rates but said: ‘‘There are a range of ways you can support families, including transfers, tax thresholds and so on ... We’ll be talking about that on Budget day.’’

But Labour spokesman Grant Robertson said the case had not been made to cut taxes ‘‘when there were children doing their homework by torchlight in the back of a van’’.

Joyce said stronger growth was flowing into Government’s books

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.

Joyce said the biggest threat to the New Zealand economy was the ‘‘insular economic policies’’ pushed overseas and by his opponents at home.