A leading economist says this week's Budget will be focused on infrastructure and rebuilding from the devastation caused by Cyclone Gabrielle and the wild weather, but believes it could've been avoided.
The Government announced on Sunday a massive $1 billion new package of support for flood and cyclone-ravaged communities, including an additional $275 million to repair roads, a $100 million flood protection fund, and a commitment to return all schools to their pre-weather state.
The Budget 2023 announcement is about responding to the "immediate recovery needs" and investing in "greater resilience for tomorrow", Prime Minister Chris Hipkins said.
"This is about doing the basics - repairing and rebuilding what has been damaged and making smart investments," he said.
"This recovery package will get roads, rail and schools back to where they were before the extreme weather hit this year so communities can get back to normal as soon as possible."
Infometrics principal economist Brad Olsen told AM Early on Monday he believes New Zealand has "taken our eye off the ball" over the last 30 years with infrastructure.
"We've had significant population growth, which means there are more people in the country that require all of these infrastructure resources to get around, we've had issues around housing and of course, you can't build a house or you struggle to build a house if there are no pipes, no internet, no roading to those new developments," Olsen told AM Early host Nicky Styris.
"So we've seen over time a real difficulty not only in expanding what we're able to offer as a country, but increasingly, we've been sweating our current assets to the absolute end of their lives and that means that increasingly we are seeing more failures."
Examples of the failures include failing water pipes in Wellington, a pothole "crisis" and the lack of spending on maintaining our highways, Olsen said.
"We know that there is still more development that needs to occur around New Zealand.
"We know there are more houses to be built and more communities to be connected up. All of that suggests that actually, we've got a lot of work on our hands."
Treasury warned New Zealand has a $210 billion bill to fix our infrastructure deficit and stop the deficit from getting worse in future.
Olsen added Infometrics estimates $172 billion of work is needed over the next 10 years to fix our infrastructure deficit.
"What we're continuing to see is communities are demanding more and more and we haven't necessarily put investment in the right places yet. This budget is an opportunity to change that," Olsen said.
"I think we're getting dropped a pretty strong hint by the Minister of Finance... that New Zealand is struggling when it comes to infrastructure. We haven't invested enough and he's very keen to use New Zealand's balance sheet to continue to enhance our infrastructure offering."
Olsen believes this will see New Zealand take on more debt but doesn't think that is a bad thing.
"Realistically, given the state of New Zealand's infrastructure, that is a very good idea. It's good borrowing rather than bad borrowing," Olsen said.
He told AM Early the other area the Government will focus on in the Budget will be the cost of living crisis hitting Kiwis hard in the back pocket.
"They'll want to ensure that those Kiwis who are hardest hit through the current high level of inflation are supported but equally, they've got to be incredibly careful at the moment that they don't do too much and actually overdo it and stimulate even more inflation," Olsen said.
"This budget will be a careful balance, but again, encouraging to see the signs of the Government having focussed very much on what its priorities are and making sure it's putting its money where its mouth is."
Watch the full interview with Brad Olsen in the video above.
