KEY POINTS:
Roads and other transport projects will take the biggest hit from an $800 million easing of National's proposed spend-up on infrastructure.
The party said yesterday it would leave intact a plan to borrow and spend $1.5 billion on faster internet broadband over six years, while cutting its overall
extra investment on infrastructure to $3.7 billion in response to bleak economic prospects.
That compares with a promise by National leader John Key in August to raise Government loans of $750 million for each of six years for infrastructure, amounting to $4.5 billion.
He announced a new category then of "roads of national significance" such as State Highway 1 which would be central to National's investment plans, and a streamlined consenting process for priority projects.
But keeping the broadband roll-out means the extra amount for roads and other infrastructure will shrink from $3 billion to $2.2 billion.
National's decision to ease back the throttle after the Government's forecast of 10 years of Budget deficits is alarming contractors and infrastructure financiers.
Contractors' Federation chief executive Richard Michael fears it will limit the economic stimulation at which National is aiming its tax cuts.
"Infrastructure is one of the building blocks of the economy and should be the last thing to be cut," he said.
The Council for Infrastructure Development is similarly disappointed, although it sees an increasing role for private investment in roads and railways to supplement direct Government funding.
"We would hate to see the focus on cost management and cost reduction once again inhibiting and limiting New Zealand's ability to grow and expand its economy," said chief executive Stephen Selwood. He said New Zealand faced a funding gap of $15 billion just for transport projects, of which he saw the highest priority as the $1.89 billion pair of motorway tunnels through Waterview on Auckland's western ring route bypass.
The cost of that alone could rise to $2.14 billion - almost as much as National's extra funding allocation from transport loans - if a Transport Agency study after submissions from business and motoring groups concludes the tunnels should be made wide enough for three traffic lanes in each direction, rather than just two.
The infrastructure council's wish-list includes $6.85 billion of new roads, $4.2 billion of rail development and the $4 billion set of motorway and train tunnels proposed for Auckland's next Waitemata crossing.
Mr Selwood said even if the harbour tunnels and new rail links beneath central Auckland and to the airport were deferred past 2018, an $8 billion transport funding gap would exist, needing about $700 million for each of 30 years for loan repayments.
But despite the global credit crunch, he said infrastructure remained attractive to private investors, particularly for superannuation funds seeking higher security than offered by other sectors.
Green Party spokesman Keith Locke questioned the security of investments in new roads at a time of uncertainty over cheap oil supplies.
He said public transport was a far safer proposition to cater for growing numbers of people needing to find cheaper ways of getting around.