itās all rumours until you read it in the papers
Surprisingly, an article in this just this morning. Is it just playing politics or something bigger to come:
What āfiscal holesā does Finance Minister Nicola Willis face as she puts together mini-Budget?
All will be revealed at the much-signalled opening of the books in December - an event known as the
Half-Year Economic and Fiscal Update, or Hyefu, but which politicians often call opening the books probably because it sounds more dramatic.
This week, Willis will have sat down with Treasury officials and been given an unvarnished briefing on the state of the books, seeing details and figures that would have been unavailable to her in opposition.
The āopening the booksā shtick is more accurate you get to the topic of risks to the fiscal forecasts. These risks are declared, but donāt have specific dollar figures attached to them, at least not in publicly available documents.
Willis also mentioned these in her interview on Newstalk ZB,
saying she would soon ādeclare some massive spending blowouts [the former Government] have had in a couple of very poorly managed projects because I think New Zealanders need to know whatās been going on with the books under Labourā.
In some instances,
Treasury is able to get away with not publishing the cost of specific projects. This is often because the cost of that project is commercially sensitive, or because there is no accurate figure of how much something will cost.
In situations like this, Treasuryās update declares the fact that these blowouts exist, but doesnāt put a figure on them. Willis could choose to reveal more information about these projects, although she too would be limited by commercial sensitivity in some cases.
The risks mentioned in the Prefu, the most recent update, include cost pressures in health, potentially including the new Dunedin hospital.
Treasury was fairly scathing about these, saying in Prefu that they were ālargely driven by construction sector inflation and insufficient planning ahead of investment decisions for many legacy investmentsā.
Potential blowouts loom over at KÄinga Ora, where Treasury warned large-scale projects faced āongoing risk around cost overruns and changes to operating and capital costs given the scale and complexity of the projectsā.
There are two other big projects which are likely to be in Willisā sights. The first is something Treasury calls iRex, which is a rather strange abbreviation for the āInter-Island Resilient Connectionā. Outside of The Terrace, itās known as a project to replace the ageing Interislander ferries and upgrade the portside infrastructure in Wellington and Picton. The project has been beset by rumours of ballooning costs. At the Prefu, Treasury warned that iRex ācost estimates have increased significantly since the initial funding applicationā, but did not give an indication of how much.
The project has already run over budget, ballooning from $775m in November 2018 to $1.76 billion in March 2021 - making the two ferries already four times more expensive than the Titanic, which cost $381m in 2023 dollars. Letās hope we get more use out of them.
The final thing to keep an eye on is the NZ Upgrade programme, an Ardern-era infrastrucutre programme mainly targeted towards road building. One particular road, the Åtaki to north of Levin road has ballooned to $1.6b, roughly double the cost estimate from 2020. The last Government received advice on trimming the scale of the project, or tipping in additional funding.
National has pledged to build the road no matter the cost. Famous last words. Whatever cost blowout there is will need to come from somewhere.