What are we borrowing for? 2degrees Business wrap with Garth Bray - Wed 21 Oct

The discussion highlights the alarming rate at which public debt is accumulating, with the government reportedly spending a million dollars an hour. As bond yields rise, the focus shifts to the purpose of this borrowing. Despite the current demand for government debt, exemplified by Japan's record-setting 20-year bond auction, there is a pressing need to consider how these funds could be utilized, particularly for infrastructure projects.

In New Zealand, the Infrastructure Commission reports a significant increase in the project pipeline, now totaling 12,500 projects valued at 290 million, which reflects a rise of 15 billion in just three months. This surge is attributed to a mix of unfunded initiatives and escalating costs for projects already in the planning or construction phases. Notably, 97 billion of the pipeline remains unfunded, with smaller projects under 100 million making up a substantial portion of the total value, indicating a greater likelihood of securing funding compared to larger schemes.

The conversation underscores the necessity for bipartisan support and clearer project scopes to advance major infrastructure initiatives. As the debate season concludes, there is an urgent call to convert emerging agreements into actionable funding solutions before rising bond yields further inflate capital costs.

Te Waihanga, the Infrastructure Commission counts about 12,500 projects worth a combined $290 billion. See omnystudio.com/listener for privacy information.