Infrastructure announcements restrained, prudent

11 February 2009

Infrastructure announcements restrained but prudent

Whilst IPENZ supports this restrained approach, it is more about minimising unemployment in the construction sector in the short term– particularly for trades, semi-skilled and unskilled people, rather than providing a major stimulus to the broader economy by significantly improving infrastructure.

“We support a restrained and considered approach in which spending has both good benefit cost ratio and helps address the short term,” says Dr Andrew Cleland, Chief Executive of the Institution of Professional Engineers New Zealand (IPENZ).

“It’s more about retaining jobs in a construction sector that has been hard hit by cutbacks in private investment, rather than about infrastructure. But 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 Dr Cleland.

“What is important for the large roading projects is that they fit into a consistent long term pattern of spending – this allows contractors to most effectively deploy their staff and machinery,” he says.

In the roading sector the additional $142 million over 2 years represents only a 9% increase in annual capital expenditure, and the $100 million over 2 years for maintenance and renewal projects represents only a 7% increase.

“It is also not clear whether this bringing forward of future expenditure will be replaced next year – so it is difficult to tell whether this is new money. Similarly the bringing forward of $216 million for schools and $124 million for state housing may not be new money unless it replaced next year,” he says. “ However in light of the prevailing economic environment – with Treasury forecasting a sustained period of operating deficits and increasing gross debt – IPENZ supports this restrained and prudent approach. ”

ENDS

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