By Nick Leggett, Chief Executive, Infrastructure New Zealand

Any critique of the New Zealand Government’s 2025 Budget must begin by recognising the difficult fiscal conditions in which it was delivered. Finance Minister Nicola Willis and her Cabinet colleagues have faced tough decisions in their pursuit of reduced government spending and a return to surplus; however, from an infrastructure perspective, the Budget is a wee bit underwhelming – it does not yet provide the scale of public investment needed to lift Aotearoa New Zealand’s infrastructure delivery, support economic growth, or meet the needs of our communities.

The Budget contained no headline nation-building infrastructure initiative – no big bang. Instead, it provided cautious investments in health, education, defence and our rail network, and a stronger tilt towards incentivising private sector activity. In an environment where both public and private capital will be essential to bridging New Zealand’s well‑documented infrastructure deficit, this Budget leaves much of the heavy lifting to future fiscal cycles.

I acknowledge the government’s overall fiscal strategy and its desire to see a return to surplus. The increase in core Crown debt since 2019 and the costs of servicing this debt are a real threat to New Zealand’s economic future; however, the cost of underinvestment in infrastructure is equally real. It shows up in clogged roads, crumbling underground utilities, and underfunded schools and hospitals struggling to provide for the growth of their communities. This Budget is not the antidote to these problems, nor does it suggest a reprioritisation of the Crown’s assets through a programme of asset recycling.

There were some welcome spending commitments. The $1 billion for hospital facility upgrades, including Nelson Hospital and Wellington’s Emergency Department, is a necessary step towards restoring our underfunded health infrastructure. So, too, is the $219 million set aside to rebuild local roads in cyclone‑affected areas. Investments in commuter and freight rail are also positive signals, as is the modest allocation to support regional deals, an initiative that, if done well, could recalibrate how we plan and fund local infrastructure.

These initiatives do not represent an infrastructure game changer and, in many cases – such as that of Nelson Hospital – are necessary just to maintain a viable service. Too many communities remain unclear on when promised infrastructure will materialise. In the meantime, the maintenance backlog grows, demand pressures build and the confidence of our industry further erodes.

Nowhere is our continued underinvestment in infrastructure more visible than in the latest developments surrounding the Ōtaki to North of Levin highway. While not addressed directly in the Budget, recent news that government officials are considering major scope reductions to the project is a cause for concern.

The 24-kilometre, four-lane expressway, which has been highly anticipated, was to be a vital link to boost safety, reliability, and economic development in the lower North Island, while significantly reducing travel times and congestion through Levin. Yet, in public consultation, officials are now suggesting a reduction to two lanes for part of the route, a ground-level roundabout instead of a grade-separated interchange and the removal of a proposed overbridge.

Let’s be clear, cutting critical elements such as these to save money during construction is a retrograde step and will lead to greater costs down the line, when retrofitting is required. The search for short-term savings is precisely the mindset that has contributed to New Zealand’s infrastructure deficit. If we want our assets to stand the test of time, lift productivity, and enable sustained economic, environmental and community benefits, we need to be prepared to invest in them.

Budget 2025 did provide some promising signals on the private investment front.

The new Investment Boost initiative will be very welcome by the industry and investors. It allows businesses to deduct 20 per cent of the cost of new assets from taxable income, which should help unlock investment in plant and machinery, and further incentivise investment in private infrastructure assets. Coupled with changes to interest limitation rules that make it easier for foreign-owned firms to fund investment via debt, and the establishment of Invest NZ as a shopfront for international capital, Budget 2025 shows positive momentum in attracting and enabling private infrastructure investment.

That said, private capital alone won’t get us where we need to go. Infrastructure is a public good as much as a commercial proposition, meaning we must break the cycle of piecemeal planning, fiscal over-caution and under-delivery. We need a strategic pipeline of projects, backed by multi‑cycle commitments and underpinned by bipartisan support. We need to make smart use of user charging, public-private partnerships and innovative procurement. And we must stop deferring today’s investment decisions only to be forced into a costlier catch-up tomorrow.

Budget 2025 may provide the foundations for economic stability, but it must not be the ceiling of our infrastructure ambition.