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The government's newly announced infrastructure spending is good news for those in the roading and construction services industries.
On Wednesday, Prime Minister John Key, announced $483.7 million of spending initiatives in the areas of state housing, roading and education.
The spending is part of a $5-billion investment in the country's infrastructure aimed at stimulating the economy as the recession sets in.
The transport sector will get $142.5 million for five major state highway projects, $120 million will be allocated to state housing, and $2.16 million in funds will be spent on education and new schools.
Transport Minister Steven Joyce said the five main transport projects will provide an immediate boost to regional economies, and the majority of subcontractors and suppliers will be regionally based.
Roading New Zealand chief executive Chris Olsen estimates the spending on transport alone will rescue around 400 jobs.
"While some people have unfortunately lost their jobs already, this package means many jobs currently under threat will be secure for the foreseeable future," says Olsen.
The announcement has also been welcomed by industry organisations who say the spending will boost New Zealand's assets.
"Investments like those announced will show a great rate of return," says Alasdair Thompson, chief executive of the Employers' and Manufacturers' Association.
"What's more it's a good time to be bringing work like this forward when prices are keen and people around the country need the work," he says.
The Council of Trade Unions is supportive, saying the time is ripe for investing in infrastructure as it takes advantage of New Zealand's relatively low public debt.
But both the EMA and Martin Allison from ABN Amro Craigs point out that the spending was originally budgeted for the new two to three years.
"What we're seeing is bringing that forward. I don't think there's going to be any massive criticism about that, in fact I think the government will be applauded for doing that," says Allison.
There is some uncertainty, however. The Institute of Professional Engineers (IPENZ) says it not clear whether the funds brought forward will be replaced next year.
"It is difficult to tell whether this is new money," says IPENZ chief executive Andrew Cleland.
The organisation says the announcement reflects only a 9% increase in annual capital expenditure for the roading sector, and only a 7% increase for the maintenance and renewal projects.
While IPENZ has welcomed the announcement, it has described the spending as prudent.
The organisation says the measures are more about minimising unemployment in the short-term - particularly in the construction sector that has been hard hit by cutbacks in private investment - rather than providing a major stimulus to the broader economy.
It says there is a need to look beyond the immediate economic downturn and plan for the future.
"It is vitally important that the many apprentices taken on over recent years can be retained - we will need them in the medium term," says Cleland.
For detailed information on what the funds are being spent on, CLICK HERE .
Add a Comment:
Post new commentChaffe said on 2009-02-11 @ 15:35 NZDT: Report abusive post
Praise the lord that John Key is in the PM's seat! If a Labour-led coalition was still in power it would be build in far more than 2 years. Fantastic to have common sense back inside the decision making halls of power.
bella.m31 said on 2009-02-11 @ 14:58 NZDT: Report abusive post
Yay, Im so glad they are finally doing this bridge. We had to wait for 2 hours to get across it one New Years.
kstew said on 2009-02-11 @ 14:21 NZDT: Report abusive post
Yeah, good. But if we bring forward spending, what will happen a few years down the track?
sarahp said on 2009-02-11 @ 12:43 NZDT: Report abusive post
It's amazing that these are things that should have been done anyway regardless of "recession", but it takes the threat of a broken economy to get basic infrastructure needs fulfilled