The gap between talk and cheques clearing
In the quarter to September 2025, government agencies spent $2.3 billion against a $4.7 billion forecast, leaving $2.4 billion unspent. Across the biggest spending agencies, the full-year gap hit $1.5 billion against a $14 billion forecast. Kainga Ora was the worst offender at $500 million underspent, with the Transport Agency, Defence, and Health New Zealand each trailing by roughly $200 million.
This is not fiscal prudence. Parliament appropriated the money. Ministers announced the projects. The agencies simply failed to convert intention into activity. And while the cash sat idle, the people who would have delivered those projects packed up and left.
12,000 workers gone in a year
Engineering NZ’s infrastructure review puts hard numbers on the damage. Construction employment fell by 2,315 jobs in the June 2025 quarter alone, a 1.3% drop. Over the full year to June 2025, the sector shed roughly 12,169 filled roles, a 6% decline. Construction output in that quarter was $7.8 billion, down 8.5% year-on-year. Residential building work by value fell nearly 9.1%.
At the firm level, 751 construction companies were liquidated in 2025. More than $5 billion less was spent on building work between 2023 and 2025 compared with the prior period.
Craig Davidson, managing director of AECOM New Zealand, puts the industry workforce loss at 10-15% over the past 18 months. His warning is blunt: “It’s difficult to get staff to return to New Zealand when demand picked up. So what we need is to avoid that boom, bust cycle.” The AECOM 2025 survey found only 20% of industry respondents had confidence in government financing mechanisms.
Once they’re gone, they’re gone
Engineering New Zealand chief executive Dr Richard Templer has been the sector’s most prominent voice. He told RNZ the situation was having a “devastating” impact on the profession, with the pipeline of work having “all but dried up.” His diagnosis is specific: “stop works” began in March when money earmarked for projects wasn’t released, hitting housing and transport hardest.
“We simply can’t afford to lose more engineers,” Templer said. “Once they’re gone, they’re gone – it can take years for engineers to come back.”
Anna Bridgman, Water NZ operations manager at Stantec, reinforced the point from the delivery side: “Certainty of work would allow companies to invest in people … even if the quantum is smaller.” The industry isn’t asking for more money. It’s asking for the money already committed to actually flow.
$275 billion in plans, $3.7 billion a year to pay for it
The disconnect between ambition and funding is staggering. New Zealand Infrastructure Commission chief executive Geoff Cooper oversees a National Infrastructure Plan covering $275 billion across 11,925 initiatives. Of the 44 projects over $1 billion, Cooper notes that “most of those really are not funded, or don’t have a path to funding.” The annual Budget capital allowance is just $3.7 billion.
New Zealand already invests around 5.8% of GDP annually on infrastructure, among the top OECD spenders, yet ranks near the bottom for value delivered. Only 30% of the pipeline is for maintenance and renewals when it should be around 60%. Spending more and getting less is the defining feature of New Zealand infrastructure policy.
Dashboards won’t rebuild a workforce
Infrastructure Minister Chris Bishop has introduced new monitoring tools. “We’re closely monitoring whether underspend improves in 2026,” he said, pointing to dashboard metrics giving Cabinet early visibility of spending fluctuations. The backlog of stalled Budget 2024 projects was cut from 15 to three by September.
That’s progress. But it treats the problem as one of forecasting and accountability, when the evidence says it is a capability destruction problem. Those are not the same thing.
Treasury’s own numbers show $38.2 billion in capital signalled over the next five Budgets. When that pipeline eventually opens, the government will be tendering into a market with 10-15% fewer workers, a depleted mid-career engineer cohort, and a domestic STEM pipeline already weakened by a 20%-plus decline in senior maths and physics NCEA completions over the past decade. The country needs up to 2,300 additional engineers per year just to meet growth demand.
The result is predictable: higher tender prices, longer lead times, and greater execution risk on every major contract. The money “saved” by underspending today will be extracted from future project budgets at a premium. That is not fiscal conservatism. It is a deferred liability wearing a spreadsheet as a disguise.
Sources
- RNZ: Government pushes back deadline for agencies’ project funding bids (2025)
- RNZ: Government to monitor agencies’ underspending on infrastructure (2025)
- Engineering NZ: Government must ‘urgently firm up the infrastructure pipeline’ (2025-01-14)
- RNZ: ‘Devastating’: Hundreds of engineers leaving NZ due to infrastructure delays, CEO claims (2025)
- RNZ: Uncertain funding, politics hindering infrastructure and building development – report (2025)
- NZ Herald: National infrastructure plan – Too much new, not enough maintenance (2025)
- Engineering NZ Infrastructure Review: The time to change is now (2025)
- Scoop: Building slump under National costs jobs (2026-03-05)