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Don Brash Speech: National's Plan for Better Roads

Don Brash
National Party Leader

1 April 2005

National's Plan for Better Roads
Address to the Automobile Association of New Zealand
Annual Conference, Napier

Mr Chairman, Ladies and Gentlemen.

I want to begin this afternoon by saying something that more politicians should be saying to the Automobile Association: thank you.

Thank you because you make a major contribution to the economic and social well-being of New Zealand – not just through the many services you provide, but also through your many contributions to the way we all think about transport issues.

In particular, I want to say thanks for your commitment to the production of the Allen Consulting Group’s report on the Benefits of Investing in New Zealand's Road Infrastructure.

The Government – in the person of Pete Hodgson, the Minister for Greenhouse Gases – gave it a “qualified welcome”. [1]

There are no qualifications to my welcome of the report, or to my thanks to you.

You have made a strong case for increased investment in the New Zealand roading network.

And the National Party is not only listening to that case, we are responding positively to it.

“Safer drivers in safer cars on safer roads”. That’s what you want. That’s what we want.

One of the points which the Allen Report made very clearly is that one of the reasons our roads are unsafe is that we have failed to build properly connected roading networks.

As a heavy road user myself, I want safer roads, and a much better connected roading network. And that’s certainly what all parents whose kids venture onto the roads – whether on the way to school, or as teenagers out on the town – want. And I have no doubt it is what the business community wants also.

Like you, I’m only too aware of the white crosses on our roads and the black spots in our roading network.

Our roads are increasingly congested and increasingly unsafe.

It’s the same story – whether you’re in the Bay of Plenty or Canterbury, the Waikato or Nelson, Auckland or Wellington.

None of us knows if it’s going to take four hours or six to get to Wellington from Taupo.

None of us knows that we won’t be wiped out in a head-on collision by someone coming the other way on State Highway 2 in Maramarua’s crash alley.

None of us knows if it’s going to take us 30 minutes, or an hour, or two, or more to negotiate Auckland’s southern motorway – or drive between Plimmerton and Wellington.

None of us knows if we’ve allowed enough time to catch that plane.

In the Bay of Plenty, the combination of kiwifruit, logs, dairy products, and coal has put the roads between Katikati, Tauranga, Mount Maunganui, and Te Puke under huge pressure.

The main highway between Hamilton and Auckland is getting better, but still falls a long way short of what is required.

The roads north of Orewa are now under huge pressure and little relief is in site. At Puhoi, ALPURT will spill huge volumes of traffic out onto a grossly inadequate roading system.

In some parts of rural New Zealand, the roading network is simply not adequate to carry the traffic which will be involved in getting our logs and other primary produce to market.

Reputable estimates put the cost of road congestion in Auckland alone at around $1 billion a year.

Multiply that across all the congestion black spots on the roading network.

And then add in the cost of fatalities, injuries, vehicle damage, and the environmental impact of emissions from idling vehicles.

You can see the mammoth cost to the country of a substandard road system.

Over the last 20 years, our level of investment in new roading infrastructure has lagged seriously behind the growth in traffic volumes, volumes which have more than doubled in the last 20 years.

This lag is a significant factor behind the growing income gap between New Zealand on the one hand and Australia and other developed countries on the other. That gap is reflected in an accelerating net exodus of New Zealanders across the Tasman – an exodus which has seen some 90,000 New Zealanders move to Australia in the last five years alone. If we want our brightest, most enterprising, most innovative young people to feel that they can give themselves and their families the best possible future in New Zealand, we have to do everything possible to narrow that gap.

Our under-funded roading system is holding back income growth in New Zealand, and is generating huge financial and human costs.

We can’t sit back and tolerate what’s happening here today.

Consider the human costs.

Road fatalities per 100 million kilometers driven are 20% higher in New Zealand than in Australia, and 50% higher than in the United Kingdom.

Chart: Fatal accident rates in various OECD countries

State Highway 2 through Maramarua, and the Centennial Highway into Wellington, have both recently witnessed appalling levels of human tragedy. That level of carnage is partly a consequence of poor driving of course – and not all of it by those who end up dead – but is also directly related to the poor quality of our roads.

Labour’s answer to our road toll has been heavier policing – more speeding tickets issued. More speed cameras. More revenue.

But we know it takes far more than that to achieve a solution.

A major effort to build better roads is long overdue.

We top the world in terms of cars per capita – more cars per head of population than any other country. [2]

But New Zealand’s spending on roads per motor vehicle is significantly lower than in all but two of 21 countries surveyed by the OECD.

Relative to GDP, public spending on roads here is well below that of other jurisdictions of roughly comparable size – like New South Wales, Victoria, Queensland. And well below the United States and most European countries.

Chart: Government expenditure on roads relative to GDP in New Zealand, Australia and the U.S.

Moreover, in the United States, Europe, and Australia there are significant levels of private investment in roads on top of the public investment.

We don’t have that.

Even by our own past standards, our investment in roads has slipped.

During the sixties, seventies and early eighties, New Zealand spent around 1.3% of GDP on roading – about the average for OECD nations.

Chart: Total roading expenditure relative to GDP in New Zealand

In the belt-tightening of the mid-eighties, expenditure on roads slumped to around 1.0%, and stayed there for the best part of a decade, until entrenched fiscal problems were overcome.

In the late nineties, the last National Government lifted road spending to a little over 1.0% of GDP, by starting a process to move more petrol tax out of the consolidated fund into the road fund.

At that time – 1998 – we said that, as circumstances allowed, more transfers would be made.

Labour came in, and stopped the process. Under Labour, the level of investment in roads, relative to GDP, slumped again.

The consequence of all this is that the value of our road network as a percentage of New Zealand’s GDP has fallen dramatically. Between 1993 and 2003, it fell from 45% to 27% of GDP.

Chart: Value of New Zealand’s road network relative to GDP

As a result of our under-investment in roads, the degree of “connectedness” of New Zealand’s major urban road networks is lower than in major urban centres in comparable countries. In other words, there are big gaps in our urban roading networks.

It is not at all surprising that, in recent years, congestion in our major cities has become markedly worse, and is now worse than in both Sydney and Melbourne.

Chart: Increased congestion in Auckland and Wellington

Today, literally, Labour sits on a record Budget surplus, collects nearly $600 million a year more from petrol tax than it spends on roads, and hits you with another 5 cents per litre of petrol excise tax.

Originally, the Government claimed that today’s 5 cents per litre increase in the excise tax would all be spent on new roads. But it now seems clear from decisions made by the Auckland Regional Land Transport Committee and announced last week that, contrary to the initial commitment, a large chunk of the extra revenue from the 5 cents per litre tax will be spent not on roads but on subsidising a variety of public transport projects.

I know that it would be hugely popular for me to announce today that the next National Government will repeal this new 5 cents per litre tax. But I don’t propose to announce what our tax policy will be at this stage. Indeed, it is likely that I will defer any detailed announcement on National’s tax policy until after the Labour Government’s Budget, on 19 May. Instead, I want to keep the focus of this speech on our crucial need to build more roads.

But before doing that, let me make just one more comment about the tax on petrol. It is important to remember that Labour has promised to increase the tax on petrol still further if they are re-elected. Labour’s promised carbon tax in response to their flawed Kyoto policy is expected to add another 6 cents per litre to the price of petrol, and not a cent of this is intended to go on road construction. While this is not the place to get into detail about National’s tax policy, as I have said, I can confirm what I have said previously, namely that we are totally opposed to Labour’s carbon tax, and will repeal any law to enforce it if passed before the election. Labour is just using Kyoto as an excuse to prise even more money off the motorist.

And what we really need to do is to start building the roads.

Most reputable international research shows that investments in roads can and do generate excellent returns.

Studies by the US Federal Highway Administration, for example, show that the average net rate of return on total highway capital investment between 1950 and 1991 was 32% per annum.[3]

By the 1980s, that had fallen to 16%.

The reason for the declining but still very satisfactory rate of return is that the major foundation developments generate higher returns than later refinements.

The US National Bureau of Economic Research found that, during the eighties and nineties, “higher local government spending was associated with lower economic growth, unless that spending was on highways.”

Roads generate growth.

Modern transport runs on roads.

New Zealand doesn’t have enough of them.

We can expect to see significant productivity gains arising from investments in the improvement of New Zealand’s road network. By not investing, we are keeping New Zealanders poorer than we need be.

The Allen Consulting Group report which the AA supported indicates that the total benefits from just four major road network projects in New Zealand would heavily outweigh total costs – generating $4.75 in benefits from every dollar invested.[4]

A Tauranga Strategic Roading project, with an estimated capital cost of $482 million and involving a major upgrade of the roading network from Katikati through Tauranga and Mount Maunganui to Te Puke, was estimated to generate $6.50 in direct and indirect benefits for every dollar invested.

A Highways Passing Lanes project, with an estimated capital cost of $214 million and designed to improve safety on rural roads by providing passing lanes every 5 kilometres on roads carrying between 4,000 and 12,000 vehicles per day (a total of 402 separate passing lanes), was estimated to deliver $5.70 in direct and indirect benefits for every dollar invested.

An Auckland western ring road project, with an estimated capital cost of $1,293 million and involving completion of the proposed SH20 and SH18 motorways from Manukau through Avondale to the northern part of the North Shore (and including an additional four-lane crossing of the Manukau Harbour), was estimated to deliver $4.60 in direct and indirect benefits for every dollar invested.

A Wellington Regional Land Transport project, with an estimated capital cost of $415 million and involving the roading components of the Wellington regional land transport strategy, was estimated to deliver $2.60 in direct and indirect benefits for every dollar invested.

There’s still plenty of scope for argument as to whether the four projects selected and studied by the Allen Consulting Group are the most beneficial major road investments for New Zealand as a whole.

But I’ve seen no argument from any reputable analyst suggesting that the methodology of the study is flawed, or that it does not support the fundamental point: investment in major road network developments generates excellent returns, both economically and socially.

And interestingly, the highest return from those four projects was on the Tauranga road project, closely followed by improvements to rural roads. Road congestion is an Auckland problem, but it is certainly not only an Auckland problem. More investment in our road network is a New Zealand priority.

The Clark-Cullen Government inherited a healthy economy in 1999 and has had five years to get on with the job.

It’s long past time for them to be looking around for someone else to blame. The fact is that they have squandered some of the best international conditions for our exports in a generation, and have made no serious attempt to deal with the deficiencies of our roading network.

There are currently three major obstacles standing in the way of making rapid improvements in our road network.

First, the Resource Management Act.

The National Party has recognised for some time that the way in which the RMA is working constitutes a significant barrier to dealing with problems in our roading network in a timely manner. In 1999, while still in Government, we introduced a bill to amend the RMA and speed up the consents process. But when Labour won the 1999 election, they sent the bill off to a Select Committee chaired by Green co-leader Jeannette Fitzsimons and there any hope of constructive reform died.

And so getting consent to build a new road now takes an almost interminable time. Some three years ago, Transit New Zealand – the Government’s own road building agency – told a Parliamentary Select Committee that it often takes longer to get the necessary consents for a new road than it does to actually build the road itself.

There’ve been cases where getting the consents to build just one major road has taken seven or eight years. This is nuts.

Labour’s latest proposals to amend the RMA have been uniformly condemned as unworkable. Submissions to the Select Committee say they will treble the costs of getting a consent and add a further year to the delays.

I have committed the next National Government to introduce a substantial Resource Management Act amendment bill within three months of being elected to office.

We will scrap legal aid for objectors. It is a nonsense having one arm of government spending taxpayers’ money arguing that a road should be built and another spending taxpayers’ money arguing that it should not. The only winners are the lawyers.

We’ll introduce new mechanisms to prevent vexatious and frivolous objections, allow for direct referral to the Environment Court, and rewrite those parts of the Act that are inconsistent with our commitment to having one law for all New Zealanders, regardless of race. We will not have public authorities making decisions on roads involving millions of dollars and the safety of motorists distracted by arguments over the home of the taniwha.

Overall, the objective will be to speed up the process substantially in order to deliver a final and certain outcome within a defined timeframe.

I have committed to have these changes passed into law within nine months of National being elected to office.

As if the Resource Management Act is not enough of a problem, Labour’s new Building Act comes into effect today, making road building still more difficult and bureaucratic.

The effect of this new Act is that, rather than Transit needing a single consent to build a new road, they need to get dozens. A case in point involves the extension of SH20 from Hillsborough Road to Richardson Street in Auckland: Transit has had to withdraw its building consent for this project, and instead apply for 39 separate consents. These are in addition to the 17 resource consents granted under the RMA. This is bureaucracy gone mad. And we will need to amend this Act also if we are to get on and efficiently build the much needed roads.

Next, the Land Transport Management Act, pushed through Parliament by the Labour Government in 2003.

This is the kind of Act you pass if you don’t want to build roads!

Its real purpose was to secure support for Labour from their allies, the Greens.

As you know, the Greens are people who prefer walking paths to cycling trails, and both of them to roads and that terrible word “growth”.

The Land Transport Management Act is a major impediment to road construction.

It imposes narrow limits on private sector participation in road development, and very onerous obligations on Transit New Zealand to consult with iwi.

Iwi must be consulted not just about individual road projects in their area of interest, but also about the overall prioritization of the road-building programme.

The combined effect of these provisions provides further obstacles to roading investment and a major deterrent to private sector investment in road development.

We intend to remove these restrictive provisions in the Act, and streamline the bloated bureaucracy that’s been developed in the land transport management sector.

The bureaucratic streamlining will start in Auckland, where we will establish a stand-alone, single agency – Transport Auckland – to oversee all parts of the public transport system in the Auckland metropolitan region.

We are committed to changing the Land Transport Management Act within one year of taking office.

Our goal, to be achieved within one year of being elected, is to reduce the time between a decision to build a road and the day work starts on site to no more than one year.

Finally, funding.

In a speech in May last year I gave an absolute commitment that the next National Government will ensure that the Auckland Corridor Network is built within 10 years of our election. That should have been done years ago. We will get the job done.

Chart: Auckland Network

I am announcing today a major new National Party policy commitment.

Over the course of our first two terms in office, we will move all the petrol tax that currently goes into the consolidated fund to the National Land Transport Fund (Transfund). In other words, all the petrol tax collected on the roads will be spent on the roads.

We will increase the funds available for roading above what is currently planned by $100 million in the first year, and thereafter by a further $100 million per year, so that by the end of our second term all of the roughly $600 million that is currently collected in petrol tax but used for purposes other than roading is spent on developing and maintaining our road network.

Over six years, this means an additional $2.l billion will be added to the sum currently placed in the Land Transport Fund.; an additional $4 billion over nine years. We estimate that this would nearly double the amount actually available for the construction of new roads over the nine years.

Why not do it all at once?

If we did that, construction costs would go through the roof. The road construction industry simply does not have the resources of people and equipment to absorb an additional $650 million next year.

There’s already strong competition for the limited resources currently available to do the job.

We want to give the road construction industry a clear signal, and the time to gear up and prepare for a major increase in its work.

Unlike Labour, we will also involve private investors in the development of our road network.

There’s been plenty of puffery from Labour about the new ability for the private sector to become involved in BOOT projects – projects where the private sector builds, owns, operates and finally transfers a road back to the government, or a local authority partner.

But there’s been precious little action. There’s not one BOOT project up and running.

Not one step has been taken to remove the big hurdles to an efficient road network that have been clearly identified to this Government.

We believe there will be more private sector interest once we knock down the hurdles in the Resource Management and Land Transport Management Acts – and demonstrate more determination to develop the road network.

Unlike Labour and its allies, we have no ideological hang-up about private sector investment in public infrastructure – or the use of tolls as a mechanism to accelerate infrastructure development.

We’re one of the few developed countries in the world that seems intent on excluding private investment from development of our transport infrastructure.

Many New Zealanders have enjoyed the new highways, bridges and tunnels that now serve Sydney, Melbourne, and Brisbane – funded by tolls.

The cost of using a properly designed toll road should be lower than the costs motorists now incur through delays caused by congestion, or through burning more fuel because the existing road network didn’t offer a short-cut.

We see tolls and the private sector making a useful contribution to the solution of our road network problems – not the total answer of course, or even the major part of the answer. But a part of the answer.

The real solution requires a government determination to spend more money on our road infrastructure.

That is what the next National Government is committed to doing.

Within one year, we’ll knock down the major legislative hurdles in the RMA and Land Transport Management Act that stand in the way of efficient and urgently-need road building.

Within a year, we’ll have a streamlined Land Transport Management structure – a structure that’s capable of carrying out more sophisticated analysis of costs and benefits, and with wider funding options to move road developments from the drawing board to the commencement of construction in no more than 12 months.

From our first budget, and in no more than six years, we’ll see that every dollar that comes from the roads through fuel tax goes back to the roads.

That’s an additional $2.1 billion over six years, and an additional $4 billion over nine years. And then, on top of that, there is the potential for private investment in some projects.

What would all that buy? Well, I am not going to get into the business of promising particular roads because it is clearly undesirable for political pressures to become the main driver for the allocation of road investment funds. But there is not the slightest doubt that there is a crying need to complete Auckland’s long-agreed strategic road network as rapidly as possible. And as the Allen Report has made abundantly clear, there is an urgent need for more investment in roads in many other parts of the country also.

On the basis of what we know from Transit, and from the Allen Consulting Group’s report, it is fair to suggest that moving all the funds off the roads into road investment would, over nine years, permit an enormous acceleration in the rate of road investment as compared with what is currently planned. In other words, all high priority projects, wherever they are, would be accelerated as compared with present plans.

It seems certain that the four projects identified in the Allen report would be completed within nine years (and some should be completed much more quickly than that), together with other urgent priorities such as the Auckland Harbour Bridge-to-City widening, four-laning SH2 from its junction with SH1 just south of the Bombay Hills to its junction with SH27, completing the motorway from Auckland to Cambridge, dealing with congestion in Christchurch, Hawke’s Bay and Nelson, and fixing such other local bottlenecks as the Kopu Bridge on SH25 and the Awatere Bridge on SH1.

The contrast with the timid and confused approach of the Clark-Cullen Government couldn’t be clearer. They don’t even seem to know what is planned by their own agency, Transit New Zealand.

Two weeks ago, in response to a Parliamentary question from my colleague, the Hon Maurice Williamson, we were told that the Avondale section of SH20, part of the western motorway ring project, would begin by 2010-11 and be completed within five years. Last week, the Auckland Regional Land Transport Committee dumped this project from their 10 year plan based, they said, “on Transit advice that the Avondale section of SH20 could not be done in 10 years, with the best will in the world.”

So we know that, under Labour, there is not the slightest prospect of Auckland’s roading needs being met in anything like a timely manner. The same is true for other priority parts of the country.

It is my judgement that New Zealanders would not mind paying so much in petrol tax if that tax was going on improving our roads. What they resent is some $600 million being siphoned off for other purposes when there is a desperate need to deal with a deficit in our roading infrastructure as a result of under-investment on roads going back decades. It’s highway robbery.

What we need to do now is start building the roads, and stop pussyfooting around the Green Party, who themselves drive around the countryside in great convoys telling people what is good for them. We need to bypass the report-writing, form-filling bureaucrats who burn most of their fuel at the taxpayers’ and ratepayers’ expense. We need to build the roads.

With Labour, any enduring solution to our road problems is decades away. National says that is simply not acceptable.

That’s the essential difference. That’s the choice.

If you want safer roads for safer drivers in safer cars, you know where to come.

Under National, all the petrol tax collected from the roads will be spent on the roads.

Again, thanks for your contribution to our understanding of transport issues, and for the opportunity to speak to you today.

[1] Hon. Peter Hodgson, media release, 25 August 2004.

[2] World Development Indicators, published by the World Bank in 2004, shows that New Zealanders had 578 cars for every 1,000 people in 1999-2001, well ahead of Italy in second place (with 542 cars per 1,000 people) and even further ahead of the United States in seventh place (with 481 cars per 1,000 people).

[3] "Contributions of Highway Capital to Industry and National Productivity Growth ", Nadiri, M. Ishaq and Theofanis Mamuneas, September 1996 (updated August 1998).

[4] “Benefits of Investing on New Zealand’s Road Infrastructure”, The Allen Consulting Group, August 2004, page 51.


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