An economist has warned the Government not to up its borrowing, despite record-low borrowing costs.
The Government's latest 10-year bonds have an average yield of 2.1 percent, with some paying out as low as 1.82 percent on maturity - barely above the official cash rate.
"I don't think the cost of borrowing is going to be an issue for years to come," independent economist Cameron Bagrie told The AM Show on Friday.
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But this doesn't mean the Government should borrow as much as it can, he warned, despite a desperate need for infrastructure and housing across the country.
"If you look at New Zealand at the moment, the construction sector is capacity-constrained," said Mr Bagrie.
"We are at full employment. So even if we went out there and borrowed an additional $10 to $20 billion to get out there and address the infrastructure deficits, it's not obvious we've got the workforce or the capacity across the economy to actually do this stuff in the first place."
The Government's struggling KiwiBuild and Provincial Growth Fund schemes are more evidence "throwing money" at the problems won't fix them.
"We're throwing about $1 billion at KiwiBuild a year, look at how long it's taking for that to ramp up; $1 billion a year going into the [Provincial Growth Fun], that's taking an awful lot of time to get the ducks lined up and the balls into play.
"It's challenging - it's convenient to say 'just get out there and lets borrow a lot more money', but there are planning issues on the other side."
Historically New Zealand hasn't been underinvesting, he said, but the problem is the projects chosen aren't always the best.
"We haven't been underinvesting in aggregate, but I think there is an issue in regards to whether we've been investing or putting money into the right places... We haven't been underinvesting, but I think there's an allocation issue."
The Government has promised to pay down debt racked up under the National-led Government in the wake of the global financial crisis. Its self-imposed Budget Responsibility Rules commit it to running surpluses, reducing debt and keeping Crown spending around 29 percent of GDP.