Finance Minister Nicola Willis laid down her second budget, which includes boosts for road repair and investment incentives.
“Budget 2025 responds to New Zealand’s long-term challenges with initiatives to boost growth, investment and savings; targeted investments in the essential services and infrastructure New Zealanders rely on; and reforms to fix financial holes in the government’s books,” Willis said.
Total capital expenditure in the Budget reaches $6.8 billion.
The announcement will see billions set aside to fix cyclone-damaged roads, improve rail networks, and major capital projects.
Infrastructure and Transport Minister Chris Bishop said infrastructure investments will grow the economy, create opportunities and raise living standards for New Zealanders.
“The infrastructure investments in Budget 2025 build on our existing pipeline of infrastructure projects, including by providing funding for some of the projects highlighted at this year’s Infrastructure Investment Summit,” he said.
The budget includes $219 million in additional operating funding to complete recovery works on local roads that were damaged in the 2023 North Island weather events, and $464 million capital and $141 million operating for rail maintenance.
Last year’s Budget invested nearly $1 billion into recovery and resilience projects in regions hit by Cyclone Gabrielle and the Auckland Anniversary weekend floods. Since 2023, the Crown has provided $2.9 billion for North Island weather events-related response and recovery works across the state highway and local roading network. This Budget provides $219 million additional funding.
NZ Transport Agency Waka Kotahi will distribute the funds to local councils to complete recovery works across affected local roads.
“This work is vital to restoring access to goods, services and employment opportunities to impacted communities in the North Island,” Bishop said.
Five councils will likely receive a share of the $219 million, across a three-year period from 2026/27: Central Hawke’s Bay District Council, Gisborne District Council, Hastings District Council, Napier City Council, and Wairoa District Council.
Budget 2025 funding covers the NZ Transport Agency’s contribution to complete local road recovery works, subject to councils meeting their share.
Funding will be allocated over three years: $106 million in 2026/27; $82 million in 2027/28; and $31 million in 2028/29.
“This initiative provides certainty for councils that the Crown has made funding available to complete recovery works that allow them to budget appropriately for 2026/27 onwards,” Bishop said.
“A resilient transport network in the East Coast and Hawke’s Bay regions will help deliver the infrastructure communities need to grow their businesses, get their kids to school, and ensure goods get from A to B efficiently.”
Transport sector responds
Transporting New Zealand has welcomed boosts for road repair and investment incentives in the budget – but says the Government has missed the opportunity to accelerate the Roads of National and Regional Significance, along with other growth-orientated infrastructure investments.
Chief executive Dom Kalasih said the roading boost will be reassuring to their freight operator members in the affected areas.
“We’re pleased to see $219 million to fund local road repair following Cyclone Gabrielle and the Auckland Anniversary weekend floods. This will provide important certainty for the East Coast and Hawke’s Bay.”
Transporting New Zealand has also welcomed Investment Boost, a new tax incentive which enables businesses to immediately deduct 20% of the cost of a new asset, on top of depreciation. However, Kalasih said the devil would be in the details.
Transporting New Zealand is more cautious about the boost in rail spending, saying the Government will have to carefully monitor spending to ensure value for money.
“Rail freight plays an important supplementary role in transporting non-time sensitive cargo – 5.6% of the freight task by tonnage compared to 92.8% for road freight. New Zealand needs a resilient multi-modal transport system.”
“However, as noted in the Government Policy Statement on land transport 2024 – rail freight volumes steadily declined in the past six years, despite receiving almost $2.5 billion in Crown funding. The Government must hold KiwiRail to account on delivering a return on this additional investment if they want to turn things around.”
Transporting New Zealand says it would have liked to see additional capital funding to support the infrastructure pipeline, avoiding further cuts and delays.
“Just this week we’ve seen NZTA announce downgrades to the design of the Ōtaki to north of Levin new (tolled) highway that will impact safety and efficiency, reflecting cost pressures,” says Kalasih.
“If the Government wants to deliver a more productive, safe and efficient network of State Highways and local roads, it needs to be prioritising additional funding and revenue for growth-orientated projects like the Roads of National and Regional Significance.”
Meanwhile, the National Road Carriers Association (NRC) says Government’s introduction of the ‘Investment Boost’ tax incentive in Budget 2025 is welcome, recognising it as a significant step towards enhancing productivity and stimulating growth within New Zealand’s freight and transport sectors.
“For the freight and transport industry, this incentive provides a timely opportunity to invest in modernising fleets, upgrading logistics infrastructure, and adopting advanced technologies,” says NRC GM Policy & Advocacy James Smith.
“Such investments are crucial for improving operational efficiency, reducing environmental impact, and meeting the evolving demands of supply chains.
“NRC acknowledges the Government’s commitment to fostering a business environment conducive to investment and growth. We encourage our members and industry stakeholders to leverage this incentive to enhance their operational capabilities and contribute to New Zealand’s economic resilience.”
