Budget 2026: Billions for capital projects, with major investment in rail, roads and hospitals
Thursday, 28 May 2026
The Government says it will spend $7 billion on capital expenditure - with rail, hospitals and a road the main focus.
Christopher Luxon first hinted at an increase in capital spend at the first pre-Budget speech earlier in the month.
Extending Waikato Expressway and natural disaster proofing roads
Budget 2026 will spend $1.733 billion in funding on an extension to the Waikato Expressway from Cambridge to Piarere Rd.
It would be a 16-kilometre four-lane route which would start at the end of the current motorway.
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Transport Minister Chris Bishop said it was an important route for the State Highway network.
“State Highway 1 between Cambridge and Piarere is a critical freight and economic link connecting Auckland, Waikato and the Bay of Plenty with the central and lower North Island.”
Bishop said the project had a benefit cost ratio of 2.7 to 3.1.
Consents were approved for the road in September last year, with early works ticked off by the NZTA board in December 2025 which were underway at the time of reporting.
$400 million had been set aside in the Budget for state highway resilience against natural disasters.
The roads set to get those resilience funds included State Highway Two Waioweka Gorge between Bay of Plenty and Hawke's Bay, State Highway Three's Awakino Gorge in Taranaki, State Highway 25 in Coromandel and safeguarding State Highway 94 between Milford and Te Anau.
Rail investment on track
Prior to Thursday cabinet ministers Winston Peters and Nicola Willis confirmed rail investment would get a cash injection, which has been fulfilled in Budget 2026.
The Government has funded just over $1 billion for rail over the next three years alongside $106.9 million to continue metro rail renewals.
Rail Minister Winston Peters said KiwiRail could use the funding combined with $60 million from its freight track user charges to prepare for its rail investment programme for 2027-2030 which will be approved by the Government.
'Rail infrastructure investment already sees 66 cents in every dollar going to maintenance and renewals, well above the 60 cent benchmark the Infrastructure Commission recommends and we expect this will increase over time.'
Government goes for a hospital spend up
Budget 2026 will see increased investment for hospitals with $680 million for capital spending in the health system.
This would go to a 158-bed ward tower at Whangarei Hospital, acquisition of land for a new hospital south of Auckland and infrastructure upgrades at Auckland's Mason clinic.
It would also fund enabling works for development at Tauranga, Palmerston North and Hawke's Bay hospitals.
On top of that money, Health New Zealand will invest a further $930 million over the coming year in new clinical equipment, technology upgrades and hospital facility improvements across the country.
Health Minister Simeon Brown said together these investments would future proof critical health services and deliver health targets.
More money for hospitals was a key recommendation from Infrastructure Commission's National Plan from earlier this year.
Other investments included new police stations, defence facility upgrades and navy ship maintenance, classrooms and court houses.