Prime Minister Chris Hipkins says he imagines Tauranga is likely to benefit from the $6 billion critical infrastructure funding outlined in Budget 2023.

Hipkins spoke to a room full of Tauranga business owners at Trinity Wharf this afternoon, and addressed their concerns regarding the infrastructure deficit and the economy.

Speaking on the city's roading network, Hipkins says Tauranga has an infrastructure which is "overcrowded" and roads "don't have the capacity they need".

"We have to build more resilience, which means areas like this will get more investment."

The Prime Minister says he cannot announce where and when certain roads will be built, but says the Government is "very aware" of the infrastructure pressures facing Tauranga and the Bay of Plenty.

"It's no secret it is a challenging environment for infrastructure investment. We as a country have to rethink how we fund it."

Hipkins says typically, the fastest way to increase investment in roading is to increase petrol taxes "much faster" than the country currently is.

"With international prices being at the level they are, I'm not sure [raising petrol tax] is the best way of doing it. Also as we see more electric vehicles entering the market, and other alternative modes of transport, we're likely going to see the [petrol tax] revenue declining.

Prime Minister Chris Hipkins says the Crown has to find different ways of funding transport infrastructure. Photo: Taylor Rice/SunLive.

"So the Crown is going to have to find ways of funding transport infrastructure which are different to the ones we are doing."

Hipkins says the Government's New Zealand Upgrade Programme is an indication they recognise funding needs to come from other areas, as funding for the programme came "over and above" the land transport fund".

"We haven't indicated exactly how the $6 billion of critical infrastructure funding we set outside in this year's budget is going to be spent yet, but I imagine Tauranga will be one of those places which will benefit from it."

Country "struggling" to keep up with population growth

Hipkins says New Zealand grew from a population of four million to five million in "just over" half the time it grew from three million to four million.

"Tauranga has been one of the main recipients of that huge explosion in population growth. We as a country are struggling to keep up with that."

The Prime Minister says the Government is helping to "unlock" more space for housing, and is committed to make sure the infrastructure for building new homes is available.

Government books in 'good standing”

Estimates for the recovery of Cyclone Gabrielle are between $9 billion and $14.5 billion, and Hipkins says 'about half” of this is public infrastructure, which the Government will 'have to shoulder” a lot of.

Despite this, the Prime Minister says the overall standing of the Government books is 'quite good”, and the Government is making sure money is set aside for cyclone recovery.

'It's been a pretty tough three or four years. The Covid-19 period put a big squeeze on a lot of people, and the exit from our Covid-19 response was a bit bumpy, and the economic effect of that was pretty bumpy.

'The global aftershock also squeezed New Zealand a lot as well. But actually we've got reason to feel optimistic now, because we are coming through that period.”

Hipkins says inflation is starting to come back to normal levels, and supply chain issues on a global level are starting to resolve after a period of significant disruption.

Additionally, Hipkins says New Zealand has seen 'good prices” and market opportunities for exports, and mentions free trade agreements with the United Kingdom, European Union, and the China Free Trade Agreement upgrade as examples.

'In terms of the economic fundamentals, I think we're actually in a good position to bounce back strongly from a difficult economic period. We've still got a bit more of headwind to get through in the next 18 months or so, but actually we're well positioned I think, to recover and that's reason to be optimistic.”