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Hodgson: Speech to New Zealand Contractors

Fri, 6 Aug 2004

Hon Pete Hodgson Speech to New Zealand Contractors Federation

I'd like to talk about this government's approach to land transport.


Delivered in the Minister's absence by Rick van Barneveld, Chief Executive, Transit New Zealand.

Good afternoon, thank you for inviting me to speak to you today.

I'd like to talk about this government's approach to land transport. Our aim is to provide New Zealand with the affordable, integrated, safe, responsive and sustainable transport system it deserves. Our future prosperity and our environment depend on it.

This government takes a balanced approach to land transport. It is important to improve our roading network, to remove bottlenecks and reduce congestion. At the same time we're investing record money in public transport and efforts to reduce dependency on cars. We must break the cycle of building more roads just to see them jam up because we have done nothing to provide viable alternatives.

There has been a lot of change lately. The New Zealand Transport Strategy is just one and half years old. The ensuing legislation was passed only last Christmas. The foundations are laid. And the cash is now to hand.

Just a few weeks ago, the National Land Transport Plan ten year forecast was announced, $18.7 billion over ten years. That, simply, is a record level of expenditure by a country mile. So the strategy, the law and the cash are in place. So now lets explore this stuff called buildability. Buildability is code so I thought I should unpack the jargon and decode the code. I think it has four threads to it and I'm about to explore each of them.

1. Lack of belief in political promises has lead to a lack of planning in the past 2. Funding ramp up risks price ramp up 3. More training is required to lift capacity, and 4. Training takes time and we have short term skills shortfalls and bottlenecks.

I'd like to tackle each of these in turn. But first, let's get our approach right - these are opportunities, not threats. We should be pleased that our problem is getting the money spent, rather that trying to cope with the chronic underinvestment that strangled our transport infrastructure through the 90s.

Lack of belief in political promises has lead to a lack of planning in the past This is the biggest factor identified in the recent Ministry of Economic Development Buildability Constraints Report that was circulated to stakeholders earlier this week.

It is a risky business to make investment decisions against nothing more than political rhetoric. Investment often takes time to have an effect and longer still to pay off. Its difficult to commit to put your own money up when you are living from year to year on political promises and the hope that successive governments will be able to come up with the cash. This government realises this problem and has acted to address it. That is why we now have ten year plans. Not only do we have the plan for what we want done, the money is planned too with real transparency about where it's coming from. Transit's insert in Tuesday's Herald can only have helped build that confidence.

You now have the certainty you need to plan and invest against.

Funding ramp up risks price ramp up The rules of supply and demand tell us that as demand rises sharply, so might price. Demand is rising sharply and the government is doing the demanding. So we are watching price. We are not about to pay $1.20 when $1 would otherwise have done. That is why we are so interested in the ramp up of supply. That is why we invented the code word called buildability. We are not about to pay gold plated prices. We want to give you funding certainty. We want to see your capacity rise. We want to see the supply side flourish.

Your perspective is different. You say the supply side is in good shape and getting usefully better. You say that right now we should trust you, let the money flow and get the jobs underway. Right now you are mostly right. So the money is flowing and the jobs are getting done.

But look at our ten year funding plan. It is ambitious. Actually, it's unprecedented. So the supply side must grow. If it doesn't, then the price will rise and our predictable response is that sooner or later we might baulk. Which doesn't suit you and doesn't suit us. So it's called a joint risk. So it must be jointly addressed which is what the remainder of this wee speech is about.

More training is required to lift capacity Properly trained employees are essential to delivering both consistent work quality, and a safe work environment. Your attitude towards industry training and what you have done to promote it is exemplary. This is demonstrated through your involvement with Infra Train and its achievements under Chief Executive, John Wills.

Infra Train is already responsible for developing the unit standards that form the building blocks of the industry's qualifications as part of the National Qualifications Framework. And it is your experience and knowledge of what trainees need to know in the real world that drive training and qualifications across: Civil and Roading Construction, Pavement Surfacing, Roadmarking, Rural Contracting, Agrichemical Application, Demolition, Drainlaying, Road Opening, Temporary Traffic Control, Water Reticulation and Bulk Earthmoving.

The success of Infra Train is down to the quality of on the job training given. And that is down to the quality of workplace facilitators. I expect that many of you are facilitators and I'd like to thank you for the good work that you do and say stand by to do a lot more.

We have then the basic infrastructure to provide relevant training but we must expand it. Neither this government, nor your Federation, is under the false impression that the volume of new talent coming through is sufficient to meet the opportunities that our fully funded, ten year programmes present. We do though have time in which to make the necessary step change to meet the challenge.

The Department of Labour, Work and Income and the Department of Immigration are also all working together with you to reduce labour shortages and get more people into training right now. I know you will make a valuable contribution to this work at this month's Department of Labour forum on this work.

It is up to government, The Department of Labour, Work and Income, the Department of Immigration, Infra Train and the funding body, the Education and Training Support Agency (ETSA), to work together with you to make the most of the opportunities set out on the ten year transport plans. I am sure we are up to the challenge.

Training takes time and we have short term skills shortfalls and bottlenecks We have challenges with regard to capacity in very specific areas now. We have to work around them. Take tender teams, this is specialised work. I know that Transfund, Transit and the major contractors are doing a good job in phasing major projects to ensure that capacity is properly utilised so that we see a steady stream of work from one project to the next.

You may wish to contest that there is a shortage, or some detail of Transit's timing. Do so. But remember that we are the buyer and you are the seller and that we have to see eye to eye.

In conclusion, we've come a long way from the decade of underinvestment and poor planning that was the 1990s. First we needed to change our approach to transport. The old mantra of roads roads roads is simply not good enough. It is backward thinking that will simply replace today's traffic jams with bigger ones tomorrow. It's a simplistic approach with appeal for those who seem incapable of thinking of its wider social, economic and environmental consequences.

We now have a government that is aware that a properly resourced, integrated and planned transport infrastructure is essential for sustained economic growth. We now have the policy and the money set aside to make this a reality. Sure, we need to continue to invest in roads to improve safety and help business bring goods to market, and there is still much work to complete that was not done, or even planned for, in the 1990s. But at the same time, we're investing in public transport to reduce the burden on our roads, and in turn business, and spending more money than ever before to offer viable alternatives to the car where possible and to encourage people to use these.

As a result, we are now in an era of certainty in our transport planning and resourcing. It is up to contractors, training providers, Transfund and Transit working together with all levels of government to make the most of the unprecedented opportunities this offers.

Together, we can give New Zealand the affordable, integrated, safe, responsive and sustainable transport system it deserves.


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