Government plans on borrowing likely billions to fund a 'significant' infrastructure spending spree

Speaking at Labour's annual conference this afternoon, Finance Minister Grant Robertson said the Government has a "once in a generation" fiscal opportunity. Photo / Mark Mitchell

The Government has signalled its intentions to take advantage of the all-time low cost of borrowing to bring forward a "significant" amount of spending on infrastructure projects.

But there is little detail about the size and scale of the spending package – the Government promised to unveil more information at the Half Yearly Economic and Fiscal Update (HYEFU) next month.

Speaking at Labour's annual conference this afternoon, Finance Minister Grant Robertson said the Government has a "once in a generation" fiscal opportunity.

"It makes sense to take advantage of this low [government] debt and record low interest rates to make investments now to benefit generations to come."

Right now, he said, the Government can borrow at an interest rate of just 1.3 per cent for 10 years – an all-time low.

"We have the lowest borrowing costs in New Zealand's history, so it's time to invest."

The announcement will come as welcome news to Reserve Bank Governor Adrian Orr, who has been calling on the Government to spend more money to help stimulate the economy.

Robertson said he had directed Treasury to help bring together a package of short- and medium-term infrastructure projects the Government can invest in.

"We are still finalising the full list of specific projects, but they will be spread across the country and will support a number of different sectors."

Just what sectors Robertson is referring to remains unclear at this stage, as does the amount of money the Government will spend.

Reserve Bank Governor Adrian Orr says he will be watching the Government very closely to see if it actually spends what it said it was planning to over the coming years. Photo / Mark Mitchell

But Robertson emphasised the size of the investment package would be "significant".

"The investment will have a significant economic impact and create more job opportunities for Kiwis – especially young people."

New Zealand's economy, although still relatively strong compared with other countries, has been weakening.

Robertson noted this in his speech, citing issues such as Brexit and the US/China trade war as the main contributing factors to a global economic slowdown.

"As an open, export-based economy we are not immune to this slowdown. We cannot expect rates of growth to continue unabated in this part of the global economic cycle."

One way the Government can boost the economy is by spending more money – Orr has been advocating for this approach for much of this year.

Speaking to Q&A in August, he put it plainly: "We really need to see the Government spending."

Earlier this year, Robertson said that the Government would be abandoning its 20 per cent of GDP debt limit for a 15-25 per cent band.

That decision means the Government would have billions more dollars it would be allowed to borrow, before hitting the upper limit.