Budget 2022: Money, money, money

IT WAS DURING record low unemployment figures, a gross domestic product above prepandemic levels, and rising wages that the Government delivered its fourth budget. That was the domestic parameters in which Finance Minister Hon Grant Robertson delivered Budget 2022. Interestingly, this budget was released six days before the International Monetary Fund (IMF) gave New Zealand’s economy a decent thumbs up. IMF staff holds bilateral discussions with members, usually every year, and collects economic and financial information, and discusses with officials the country’s economic developments and policies. Its latest report1 on New Zealand states that we “managed the transition to living with COVID well. Strong health and economic policies supported quick recovery from lockdowns in 2021”. However, its views on the country’s infrastructure leaves a lot to be desired: “Infrastructure spending should aim at reducing the infrastructure gap and supporting the transition to a net zero carbon growth path”. “Complementary policies to address gross emissions, including investment in green technologies and infrastructure, supporting innovation, and regulatory actions to accelerate the uptake of low- and zero-emissions technologies may thus be needed, along with the use of [Emissions Trading Scheme] proceeds to compensate those adversely affected by carbon price increases, particularly vulnerable groups.” And this was the international framework within which the Government announced its spending going forward. One such initiative is the $18 million for the development of a comprehensive energy strategy, a hydrogen roadmap. This work sets the foundations for future decarbonisation and high value economic opportunities, a very fine opportunity for companies already working in this field. Further, the Government says that by creating a clear regulatory environment, this will support new investment, regional development and highly skilled jobs, while providing more renewable energy options to support our transition to a low emissions economy. “Hydrogen as a fuel could enable the decarbonisation of hard to electrify sectors such as heavy freight and steel – the roadmap will provide the nascent green hydrogen sector with further clarity on how the government will support a pathway to an economically sustainable market for hydrogen,” the budget states.

Transport mode shift and reducing emissions from transportation are also big-ticket items, with a price tag of $375 million. As a step towards reducing vehicles on urban roads, this will help spur investment in “making walking, cycling and public transport more attractive options” to help make our cities more liveable.

Additionally, it is envisaged that this will help local councils transition toward lowemissions urban environments. A $41 million investment has been tagged to support Public Transport Authorities to deploy low- and zero-emissions buses, an initiative already underway around the country. Interestingly, there is $20 million of funding allocated to support innovations in the decarbonisation of freight through co-funding for projects demonstrating low emission freight technologies, fuels, services, infrastructure, innovations and business models.

By and far the largest investment belongs to our country’s infrastructure over the next five years with a $61.9 billion investment. The Government knows that “this alone is not enough”, as the infrastructure gap is estimated to be between $17-$104 billion.

“We need to be smarter about the way we plan, deliver and use our infrastructure. This will mean getting more from the infrastructure we do build, reducing costs and prioritising for the greatest impact,” Robertson said.

“Te Waihanga’s [New Zealand Infrastructure Commission] strategy will be a key enabler of many of our Government’s priorities; tackling the housing crisis, responding to climate change, and building a more secure economy.” That infrastructure investment will be spent across housing, transport, health, education, and other areas. The specific Budget 2022 projects include: • $349 million of capital funding to replace and modernise our rail assets;

• $1.3 billion of capital funding for upgrading our health infrastructure to support current and future demand, including priority capital projects such as Whanga -rei Hospital and starting the redevelopment of Nelson Hospital; • $385 million of capital and $50 million operating funding for building and refurbishing new classrooms; and • Further funding to progress the delivery of the Auckland Light Rail project There is also $36 million set aside to support Ma -ori economic development with the Te Ringa Ha -pai Whenua Infrastructure Fund ($10 million total operating) and the Progressive Procurement project ($26 million total operating). These will enable owners to undertake economic, cultural, social and environmental projects on their whenua and will help to build capability for Ma -ori businesses to effectively participate in public sector procurement processes and increase supplier diversity. For New Zealand’s small to medium sized enterprises (SMEs), a new fund will be available to improve access to finance is included to drive economic security, innovation, and lowemissions growth. The Business Growth Fund has set aside $100 million over the coming year for Crown investment as a minority shareholder in a Business Growth Fund, alongside private banks.

“It is intended the Fund will help fill a gap in the capital market for SMEs that require growth capital not available through current market providers. The Fund is an investment model already established in the UK, Ireland, Canada, and Australia,” Economic and Regional Development, Tourism, and Small Business Minister Hon Stuart Nash said.

“SMEs are a core part of our economy, contributing about 30 percent to New Zealand’s GDP. Many are poised to grow if given the opportunity and can play a key role in our economic security and transition to a low emissions economy.” The tourism industry wasn’t forgotten; a $54.2 million is available through the Innovation Programme for Tourism Recovery. While the new programme is subject to further detailed design work, it will prioritise innovation and low-emissions projects, and support tourism recovery. “We will work alongside tourism businesses to develop new innovative ideas that improve sustainability and productivity of eligible businesses. The Government has agreed to reallocate funds from previous tourism support programmes that were not drawn down by eligible businesses,” Nash said.