Budget 2006: No construction boom from road funding

The $1.3 billion in new funding for roads will be a positive but doesn't signal a boom time for the construction sector.

Analysts were yesterday quick to point out that only $425 million of the money would actually create new work for the sector.

The remaining $862 million will cover a funding shortfall for existing projects which has been caused by increased expenses.

The market was underwhelmed by the news with Fletcher Building shares closing 7c down at $9.39.

While any new infrastructure spending was good for the company that had to put in perspective, said one analyst, who asked not to be named.

The Winstone Aggregates business, which could benefit through the supply of materials, represented less than 7 per cent of Fletcher's business.

The infrastructure component of Fletcher Building's construction business represented only about 8 per cent of total revenue- and roading was just a fraction of that.

But, despite that, one of the key factors underpinning investor confidence in Fletcher Building at present was the fact that infrastructure work was kicking in as the residential and commercial building sector cooled.

That was something that hadn't happened in the last couple of economic cycles, the analyst said.

Hawkins Construction chief executive Chris Hunter welcomed the new funding, even though his company is not directly involved in road building. "I know how many families this industry feeds and so any new money coming into the sector is a good thing.

"This will be some comfort for workers in the industry.

"It ensures we're not in a boom-and-bust scenario," he said.

At listed freight company Mainfreight, chief executive Don Braid was considerably less impressed.

"We'll take any spend to get this roading infrastructure upgraded but it is massively overdue," he said.

"In my view, this is a drop in the ocean compared with what should have been spent over many years.

"It's still difficult to do business across the country with the roading infrastructure we've got and that's not going to change tomorrow."