Budget 2013 continued the Government’s focus on building economic momentum based on more exports, more productive investment and assisting businesses to invest in growth and more jobs.

In particular, it confirmed a track back to fiscal surplus and further progress in better managing the $240 billion of assets the Government manages on behalf of all taxpayers.  Despite the tight financial situation the Government inherited in 2008, we have embarked on a multi-billion dollar infrastructure investment programme in roads, rail, ultra-fast broadband, irrigation and electricity transmission.

All of these areas make an important contribution to a growing economy and help to support thousands of jobs along the way. Over the past four years, the Government has also worked hard on improving the way it manages its assets on behalf of all New Zealand taxpayers. That has meant freeing up capital from some parts of the Crown’s balance sheet to invest in other assets.

A feature of the Budget was the allocation of another $1.5 billion from the Future Investment Fund, which uses proceeds from the Government’s share offer programme – including the recent Mighty River Power float - to invest in priority public assets and infrastructure.  This is on top of the $569 million allocated in last year’s Budget, bringing the total allocated from the Fund so far to $2.1 billion.

The rationale is straightforward. The Government is swapping one type of asset for another – minority shareholdings in energy companies for cash. This cash is being invested in other public assets, without the Government having to borrow more from overseas lenders.

Over the course of the share offer programme, we expect taxpayers will receive between $5 billion and $7 billion. This is around three per cent of all the assets taxpayers own. But the proceeds will make an important contribution to keeping overall debt under control and to the better management of public assets.

The successful float of a minority shareholding in Mighty River Power raised $1.7 billion for taxpayers, and provided the first tranche of money into the Future Investment Fund. Without these proceeds, we would either have to borrow more money overseas, or go without some of the new infrastructure, new hospitals and new schools our communities require.

So the Budget confirmed a number of significant investments from the Future Investment Fund into infrastructure and new public assets. They included:

• $426 million for the redevelopment of Christchurch and Burwood hospitals. This will be the single biggest building project in the history of New Zealand’s public health system.
• $50 million to speed up the School Network Upgrade Project, which enhances the technological capability of schools.
• $94 million for the fourth year of KiwiRail’s turnaround plan.
• $80 million for irrigation projects.

Budget 2013 also set aside over $700 million in contingency for other key projects, including:

• Building new schools.
• Christchurch’s new justice and emergency services precinct.
• Supporting Canterbury tertiary institutions in their recovery from the effects of the earthquakes.

The Government has agreed that over the life of the Future Investment Fund, $1 billion will be allocated to hospitals and other health projects. This includes the $426 million allocated to the Christchurch and Burwood hospitals redevelopment.

And we have previously confirmed that another $1 billion of the Fund will be ring-fenced for modernising and transforming schools as part of the 21st century Schools Programme. In total, $219 million of this has so far been allocated.

Rebuilding Christchurch is estimated to cost $40 billion, making it the largest building project in New Zealand’s history.  The Government’s share of this is now $15 billion – including the latest Budget allocation of $900 million from the Future Investment Fund.  Allocations from the Future Investment Fund build on $4.3 billion of new infrastructure spending over previous budgets for projects such as schools and ultra-fast broadband.

In addition to Budget initiatives, the Government is investing $12 billion over 10 years to improve the state highway network and $4.6 billion through Transpower over 10 years to upgrade the national electricity grid.  This well-targeted investment in infrastructure is helping lift productivity. Over time, it will mean better wages and higher living standards for New Zealanders.