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Winston peters’ Who Pays For Our Roads? Speech

Winston peters’ Who Pays For Our Roads? Speech

President Dwight D. Eisenhower once said that without the forces of our communication and transportation systems, we would be “a mere alliance of many separate parts”.

This indeed holds true for New Zealand.

As a small isolated nation located largely on two long and narrow islands with several kilometres of rough waters between them we confront a distinctive and challenging geographical reality.

This means our ports, our roads and our railway networks are essential for inter-connecting and linking our people and our commerce.

And for these to work effectively, a developed and successful infrastructure is crucial.

As an industry transport is the largest employer in the country.

It is an industry which is essential to us all. Without the ability to freight goods and transport passengers this country would come to a stand-still.

Yet it is an industry which has been largely overlooked by recent governments.

Who pays for our roads?

We do – the average New Zealander – several times over.

And Tauranga residents are set to pay even more than other New Zealanders.

While the recently released consultant’s study commissioned by the AA identifies Tauranga’s urgently needed roading projects as worthy of top priority for government funding, the Harbour Link project does not even feature in Transit’s 10-year national roading programme.

It is a project of very high priority which serves New Zealand’s largest export port, but it doesn’t even register in the 10 year plan, and therefore receives no funding.

As a result, Tauranga is likely to become the only place in New Zealand where tolls are planned for an existing road.

The Harbour Bridge Link can and must be classified as a state highway – and it must receive priority funding, not tolls, and now.

Why does the Government believe it is fair to expect Tauranga residents to finance a bridge to New Zealand’s largest export port through tolls?

Why should we be hit with yet another tax when no other city or region in the country faces having to pay for an existing toll free road while going about their normal work and city travel?

Further, tolls do not fall fairly across society.

For the average business trip the cost will in large measure be passed on, adding to the cost of the product or service or alternatively claimed as an operating expense (in which case the taxpayer will pay).

On the other hand, for the employee it becomes an expense against their net income.

It has been suggested that the toll for a car crossing the bridge could be in the vicinity of around $1.75. Anyone crossing this 6 days a week will have to pay this amount 12 times. This adds up to an excess of $1,000 a year, which by any standards is a big chunk out of somebody’s income.

The Government is perpetrating a myth that there is not sufficient funding for roads and transport infrastructure. This means the Kiwi motorist is being hit twice with roading costs and tolls while the so-called dedicated petrol tax is siphoned off by the Government to pay for Labour’s pet projects.

Only half of the money collected in petrol tax is directed toward roads and transport infrastructure.

The rest remains in the Crown account to be spent how the government sees fit.

This includes prisoner payouts, Maori television, hip hop tours and other frivolous spending.

To add insult to injury, the Government added four cents a litre to the price of petrol last year for the explicit purpose of addressing roading.

This occurs with no recognition that the funds already exist, but are simply being diverted elsewhere.

Despite high crude oil prices, much of the current cost of petrol reflects the taxes collected by the Government.

The introduction of the new Customs and Excise (Motor Spirits) Amendment Bill in April next year signals the fourth unnecessary increase in petrol levies since Labour came to power in 1999.

It will raise the price of petrol by a further 5 cents a litre, excluding goods and services tax, with an equivalent increase in road user charges for light diesel vehicles. The cheating has to stop. A good roading network is absolutely essential if we are to remain on a competitive footing with other developed nations.

It is quite obvious that investment levels in road networks have not kept pace with the significant road utilisation in New Zealand’s economic engine room.

About seventy years ago – in the late 1930s – there was a flurry of investment activity - a period of physical building of the nation's infrastructure - roads, railways, ports, telegraph, and new facilities such as hospitals and airports and electric power.

The country’s productive capacity was given a boost. Infrastructure and industrialisation were key ingredients in raising living standards.

After decades of neglect and of misguided policies where we sold our assets AND lost our ability to plan, we again find ourselves in a 1930s situation where we have to rebuild our nation.

And we aren’t going to do it on tolls - and we don’t need to.

SLIDE 1: LET’S TAKE THE TIME TO CONSIDER A FEW FACTS:

SLIDE 2: Government expenditure on roading (as a proportion of our GDP) in New Zealand has been decreasing throughout Labour’s term – and it was already significantly lower than Australia’s and massively lower than the USA. This in a long, thin, road dependent country that hocked off its railways and watched private enterprise run them into the ground.

SLIDE 3: For those of us in Tauranga the benefits of improved roading infrastructure are obvious. Infometrics, highly reputable economic forecasters, have provided figures for the Tauranga strategic roading network. Their estimate of costs for the network is an initial $510 million, as against benefits of over $691.4 million. You don’t need to be a Rhodes scholar to spot the return on investment - with a benefit / cost ratio (BCR) of 7.6 according to the Allen Report. The clear message is that INVESTMENT in roading infrastructure is vital to our future economic wellbeing. The question, as always, is where do we get the money?

SLIDE 4: When we look at the price of a litre of petrol its strategic importance is immediately obvious: based on a current retail cost of 121.51 cents you can see that, while only a shade over 50% is made up of fuel costs, the taxman and other agencies are taking around 55 cents in every litre. That is an income stream vastly superior to the tollgates – and much fairer.

SLIDE 5: So what happens to that 55 cents? Around a third of the tax take goes into roading and related activities – a government that is holding record surpluses siphons off over 37 cents. A good starting point in funding our infrastructure would be the application of an increasing proportion of the tax take. We don’t pretend that that, on its own, will solve the problem but we have already noted the income stream AND the economic benefits arising from the investment – an enormously sound basis for borrowing to get the job done now!

SLIDE 6: Increased production, and exports, and income and wealth, reductions in travel time (and consequential avoidance of lost output) and lives saved are just some of the obvious benefits of investment in our roading network. The financing choice is also starkly clear: we can build toll roads to nowhere, or we can use our resources and borrowing power to make a positive investment in the building of our city, and region and in the rebuilding of our nation.

To be specific –

Tauranga’s harbour link must be defined as a state highway. State highway projects must be accelerated by an immediate injection of funds (from taxes already collected from the motorist and from borrowing). Deals like those proposed for Auckland and Wellington must also be made for Tauranga. The country’s premiere port and fastest growing provincial city needs the certainty of a robust roading infrastructure. New Zealand First will do everything possible to see that the harbour link is built, including championing a comprehensive roading package for our region – but the price of tolls on our citizens is a last resort, not a first choice! Already overseas interests are offering to build our roads. Why would we want to cede ownership of our transport system to foreign entrepreneurs? Promises of a quick solution that is reliant on a tolling regime are further steps on the road to nowhere.

Transit is certainly doing its best to assist the Government with its manipulation.

Just the process of trying to get Government funding for new roads and roading upgrades is frustratingly time-consuming, arduous and unnecessary. Instead of just getting on with the job, Transit insists on a series of studies and reviews that take years and years to complete.

We are told these studies and reviews are necessary to ensure that all options have been considered before a “best” solution is settled on.

In the meantime, motorists must put up with treacherous and dangerous roads, poor access and heavy traffic congestion – even though they are being made to pay several times over for Transit’s obligation to run a safe road.

The Land Transport Management Act, passed last year, is also contributing to the Government’s inability to come up with solutions to this country’s roading problems.

The Act changed the rules for road funding from the old benefit/cost ratio under which the bridge would easily qualify for funding, and replaced them with new rules allowing alternative funding of new roads.

We were told that this would allow projects to proceed earlier than the priority for traditional funds would allow. Nowhere was it signalled that tolls would instead be used to boost the National Land Transport Fund in the manner now planned.

And while the initial Bill did not permit tolling of existing roads, United Future MP Larry Baldock foolishly ensured a clause was specifically changed to allow the existing bridge to be tolled.

Now if this isn’t an obvious attempt to encourage public acceptance of tolls, I don’t know what is.

This kind of action makes it glaringly obvious just how keen the Government is to add toll profits to the consolidated fund, only to be frittered away as they see fit.

There have been repeated claims that there is no other alternative to fix our congested roads, and that without a tolling regime Tauranga will be forced to wait up to 15 years before the second Harbour Link bridge is built.

But there are alternative solutions – and they are by no means difficult.

Our first priority must be to stop the nonsense of petrol tax being diverted into consolidated revenue and spend it on roads.

If the money that was taxed through petrol went to transport infrastructure as it was intended, then instead of spending around $1.6 billion on infrastructure this would be closer to $2.2 billion.

It would also mean that tolls are not branded as the most viable option for funding the upgrading and building of more roads.

This is not an impossible task, and we started this process when we were last in government.

While we remain committed to reclaiming this funding for roads, we must also acknowledge that in the short term this still leaves us woefully short of what we need to spend.

Infrastructure investment directly corresponds with economic growth.

Borrowing must be looked at in terms of the return which it brings, and also at the cost of not doing so.

Sound investment in our roads and transport infrastructure could bring huge economic benefits to New Zealanders.

It is nonsense to suggest that the Harbour Bridge Link shouldn’t be deemed a state highway. Clearly it meets all the criteria.

This bridge cannot wait for funding, neither should it be tolled.

It should be immediately designated as a state highway and the state programme should be expanded by making full use of the taxes collected and by borrowing against future income streams and economic gains.

The solution is simple, and it is staring us in the face.

The money to fund a decent roading infrastructure exists – believe me. We just need to start using it for what it is intended to be used for.

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