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NZ's Ardern starts election year with big infrastructure spending pledge

By Praveen Menon
FILE PHOTO: New Zealand's Prime Minister Jacinda Ardern speaks during an interview with Reuters in Wellington

By Praveen Menon

WELLINGTON (Reuters) - New Zealand Prime Minister Jacinda Ardern kicked off her reelection campaign on Wednesday with a NZ$12 billion (6 billion pounds) infrastructure pledge, an investment aimed at dousing criticism of her handling of a housing crisis.

Ardern, whose Labour Party's popularity has dropped in recent months although she remains the favourite leader candidate, announced on Tuesday that the Pacific nation would go to the polls on Sept. 19.

That has set up a lengthy election campaign against the backdrop of slowing economic growth, low business confidence, a failed state housing project and scandals within her coalition government.

"This is a once in a lifetime opportunity to invest in New Zealand -- modernising our infrastructure, preparing for climate change and help growing the economy," Ardern said in a statement announcing the infrastructure investment.

The plans include NZ$2.2 billion for new roads in the country's biggest city, Auckland, and NZ$1.1 billion for rail projects. Buses, walkways, bicycle lanes in major cities and healthcare facilities would also receive funding.

The spending, which the government first flagged in last month's economic and fiscal update, could help fire up an economy facing international and domestic headwinds.

Fiscal spending would lessen the need for the Reserve Bank of New Zealand (RBNZ) to ease policy at its meeting next month.

"These low rates – around 1.5% for ten years – can be locked in over the long term, making this programme sensible and affordable," Finance Minister Grant Robertson said, adding that net debt would remain low.

RBNZ Assistant Governor Christian Hawkesby said on Wednesday there were upside and downside risks as the bank considered whether to move on monetary policy.

Political pundits have predicted a close election contest as referenda, scheduled to run alongside the leadership poll, on legalising cannabis and euthanasia are expected to be distracting and divisive.

Ardern is hugely popular among liberals overseas thanks to her compassionate but decisive response to the Christchurch mass shooting, her focus on climate change action and multilateralism, and her ability to combine motherhood and leadership.

But some of her critics back home say her global image does not match up domestically, as issues of child poverty, affordable housing and inequality continue to bite.

Two October opinion polls showed support for her ruling coalition, formed with the right wing New Zealand First Party, at its lowest since 2017. Ardern's own popularity also waned, but she remains far ahead of her rivals.

Ardern has asked voters for a further term to "get the job done".


(Editing by Sandra Maler and Jane Wardell)