Source: Radio New Zealand
It showed agencies such as in health, justice and education had faced a December deadline to make the case for their bids for this year’s Budget, but that had to be pushed back. RNZ
The government has been facing too much demand to fund infrastructure projects from agencies left with too little time to plan them, forcing it to push back a Budget 2026 deadline.
A newly-released Treasury report said significant trade-offs were still required.
It showed agencies such as in health, justice and education had faced a December deadline to make the case for their bids for this year’s Budget, but the deadline had to be pushed back.
“With agency capacity constraints being signalled in the QIR (quarterly investment report) for Budget 2026 we have extended this timeline to April 2026.”
The report on central government investments for the three months to September 2025 – the latest QIR available – said demand “significantly” exceeded available Budget allowances, though it blanked out the figure
That was also the case for the next four Budgets.
But because agencies had also spent only half what they expected in the quarter – $2.3 billion versus $4.7b forecast – the report held out hope that better planning could result in more investments that were “right-sized and deliverable”, reducing Budget bids.
A debate in Parliament on infrastructure was set for Wednesday.
This follows release of the country’s first National Infrastructure Plan last month that sparked a debate about building roads versus hospitals.
The QIR said there were “large differences between forecast and actual spend and reported delays once entering delivery”.
It also said agencies were continuing to signal funding requirements for Budget 2026 that “significantly exceed available allowances, with $38.2 billion capital signalled over the next five Budgets.
“Significant trade-offs are still required”.
It did not go into details of any possible trade-offs.
Treasury is developing advice on the medium-term capital pipeline due this month.
The QIR said agencies had been expected to have a full-fledged business case or a fast-track single-stage business case done “before submitting a Budget bid in December to ensure robust value for money advice from the Treasury”.
It was pushed back to April to ensure the builds would proceed quickly after the Budget. Last year there was still a backlog of 15 becalmed projects funded in Budget 2024; however, that number had been cut to just three in this QIR.
“The September 2025 QIR tells us that agency projections for timely conversion are looking better than previous quarters.”
This “Budget conversion” – converting from funding, to building – is a marker of momentum.
“We also need to keep momentum and scrutinise whether agencies have done enough planning to ensure that what gets funded in Budget 2026 is investment-ready and starts delivery within the 2026-27 financial year.”
To do that, Treasury was working with bosses of capital-intensive agencies – such as Defence, Health NZ, NZTA – “to improve system approaches, including approaches for more timely conversion post-Budget.”
Part of the problem was underspending.
“Crown capital expenditure underspend of $2.4 billion tells us that agencies may be forecasting too optimistically, such that it does not match their capacity to deliver on everything that has been funded.”
Sometimes the reason was a policy shift, such as that cut Kainga Ora spending, or timing as at NZTA.
But underspending was a big enough worry that bosses of the big-spending agencies had met “to address significant discrepancies between forecasted and actual capital investment spend”, followed up by the Secretary to the Treasury writing to them to improve forecasting, and to their ministers.
Ten projects entered the ‘pipeline’ for planning in the quarter, including private provision of hospital carparking.
The QIR showed some projects as of last September were hitting ructions and delays:
Three had not yet signed contracts though they were funded a long time ago:
- Waikeria prison expansion phase 2, expected to sign a contract in quarter to March 2026
- Specialised Rehabilitation Centre at Manukau Health Park, funded in Budget 2022, expected to sign in June 2026.
- A third project was blanked out.
Fifty-three investments were reporting delays last September, five of them with over a $50m budget that were more than a year delayed.
Delays included:
- Kainga Ora’s Northcote project
- Manukau health park, delayed two years
- Christchurch Hospital Tower 3 delayed by nearly two years, due October 2026
- Nelson Hospital inpatient block delayed 18 months
- Wairarapa rail Upgrades, delayed by 15 months, due for completion March 2027.
Three projects racked up red warning alerts in their first ‘Gateway’ reviews that are meant to keep them on track, signalling “major risks and issues” and triggering Treasury and ministerial intervention:
- Police’s Arms Transformation Programme for implementing legislative changes and improvements to the administration of the Arms Regulatory system
- MSD’s Disability Support Services – High and Complex Framework
- Nelson Hospital Redevelopment.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
