Hon Gerry Brownlee
Minister of Transport

8 March 2013 Speech

Speech to the Marlborough Chamber of Commerce

Clifford Bay: Inter-island Transport

Thank for inviting me here today; it is a pleasure to be in Blenheim.

The strong export focus in this region means you are well placed as the global economy recovers from the worst economic conditions since the Second World War.

Your regional economy is currently estimated at $2 billion dollars.

The recent ANZ regional trends survey recorded 3.5 per cent annual growth in Nelson/Marlborough, one of the fastest rates in the country.

Over the past four years the Government has embarked on a wide-ranging programme of sensible economic and fiscal management.

We have pursued opportunities to grow our economy; to support jobs and higher incomes; and help families get ahead.

The National-led Government has taken action on a number of fronts to help attract investment and support business growth.

This is because we are not hanging our hat on a single course of action.

We know we must do hundreds of things well, year after year.

For example we’ve worked hard to get an International Convention Centre in Auckland.

Conference delegates are high-spending visitors, spending an average of $365 a night, compared to an international leisure visitor who spends around $200 a night.

Our vision is to have a network of convention centres, bringing high value tourists into this country.

And we know from research that convention visitors are likely to return with their families and visit the rest of the country.

We made sure the Hobbit movies would be filmed in New Zealand, not Australia or the UK.

Millions around the world have now watched three hours of New Zealand scenery and already this is being noticed in forward travel bookings.

And remember, every single DVD and electronic download of the movies will contain a New Zealand tourism promotion film, directed by Sir Peter Jackson.

The Government has chosen a moderate but persistent rate of economic reform.

That has allowed us to take people along with us.

This year the Government will move to make significant change to the Resource Management Act, introduce new housing policies and implement a new framework for the use of water.

The economy is growing at 2.5 per cent and we’re on track to a Budget surplus in 2014/15.

Business confidence is improving and our companies are becoming more competitive.

We’ve reduced tax on work, savings and company profits, while increasing taxes on property investment and consumption.

The government has made it easier to hire new staff with voluntary 90-day trials and a new starting out wage.

Our welfare reforms will support more beneficiaries into work.

We will invest in 14,000 more apprenticeships over the next five years.

Wages are growing and inflation is low.

Net household disposable income is around 20 per cent higher than it was four years ago.

Interest rates are at 50-year lows and households are saving more.

Compared to mid-2009, over 60,000 more Kiwis have jobs – although unemployment remains too high.

We will continue our effort to cut red tape and improve regulations that are getting in the way of businesses and households.

A good example of this approach is the recent decision to change the frequency of warrants of fitness for vehicles manufactured since 2000.

This move recognises the improved safety of post-2000 vehicles and saves the owners of over 900,000 vehicles both money and time.

This Government is strongly committed to creating an environment that encourages investment and business growth.

Many of you will be all too familiar with the impact of the Canterbury earthquakes.

Their devastation was remarkable, and tragically 185 lives were lost.

Over 100,000 homes were seriously damaged.

Two years on from the February 2011 quake, 70 per cent of the Christchurch CBD has been demolished.

I would like to thank the people of Marlborough for their support to the people of Christchurch.

Many of you gave both in time and money.

The initiative to sell and donate the proceeds of wine under the label ‘The Day the Earth Moved Like Jelly’ was one of the many very generous ways your community came to your southern neighbour’s aid.

And I have to say one that went down well.

With the quakes costing the taxpayer in excess of $13 billion, your taxes are also contributing to Canterbury’s recovery.

There will be a domestic stimulus from the recovery.

Marlborough engineering and construction firms have been contributing to the rebuild.

The impact of rebuild has seen Canterbury record 7.5 per cent annual growth.

Jobs are being created – the number of people employed in Canterbury increased by 16,100 from December 2011 to December 2012.

However I believe the economic impetus in the South Island goes beyond the rebuild and is part of a resurgence of the economic base.

We are committed to restoring our second largest city.

People will visit Christchurch to take in the best of sport, culture and commerce.

Some of you will have attended the temporary stadium at Addington, which shows the ‘can do’ attitude driving the rebuild.

Unlike the rest of the country, the topic most related to me in Marlborough is the potential for a cross-strait ferry terminal at Clifford Bay.

This Government was elected on a platform of growing our economy and lifting incomes.

Investing or enabling investment in strong infrastructure is an important aspect of delivering growth policies.

The Clifford Bay proposal is based on an assessment that time benefits to moving freight would have an economic benefit for the country as whole.

We could not leave the Clifford Bay prospect on the shelf without doing a proper assessment.

By bringing travel times down between our major population centres, we could increase trade between the two islands and in doing so increase economic prosperity.

We have made no decisions, but information to date has suggested we need to further test the viability.

Clearly any benefits must be weighed against the cost of developing and operating a port.

It would need to be a commercially viable and sustainable operation.

The case for Clifford Bay has always been held back by the financial costs of developing a new port, which would need to capture enough of the economic gain from its location to show acceptable returns.

Understandably recent debate has focused on the potential impact on Picton.

I will return to that debate but first I want to talk about how this proposal came about.

Linking North and South across the Cook Strait has long been a topic of debate, almost going back to when James Cook first established it was indeed a strait in 1769.

But it was a stretch of water that Maori had crossed for trade and conquest for many decades before.

In the 1920s a ferry terminal was proposed at Clifford Bay.

Last year, the Interislander ferry service celebrated 50 years of operation between Wellington and Picton.

The original inter-island service was conceived to better connect the North Island and South Island rail network.

The launch of the roll-on, roll-off ferry the GMV Aramona in 1962 meant that rail freight didn’t need to be loaded into coastal shipping and off-loaded into trains at the other end.

The Aramoana took just three hours and twenty minutes, a considerable saving on the overnight, 11-plus hour ferry journey from Lyttelton to Wellington.

The combined travel time on road and ferry between Wellington and Christchurch was just nine hours.

With modern roads that has fallen to eight hours.

By way of comparison a Clifford Bay terminal would cut 30 minutes off the ferry trip between North and South Islands.

The road trip from Wellington to Christchurch would be 50 minutes shorter and the same rail journey would reduce by 80 minutes.

Because of the steep terrain between Picton and Clifford bay, there would be a one-third reduction in fuel burnt when transporting freight by rail to Christchurch.

The shorter ferry journey would mean ships could be more productive, making more journeys.

They would also burn less fuel.

The combined time savings would mean a six-and-a-half hour journey between Wellington and Christchurch.

The time saving for rail would be two hours.

So does that time matter?

The Cook Strait ferry service carries a large proportion of time-sensitive inter-island freight.

Getting it there fast is important.

Economists have studied this and simply put, the closer you are to your market, the more likely you will trade with that market.

A good example is the development of refrigerated meat exports to London.

This was a transformational technology that meant that New Zealand could provide its product in to the London market.

Time also matters in the tourism trade.

Many will recall how the Marlborough Food and Wine festival was boosted by the fast ferry service from Wellington.

It was easier to get here and made a weekend in Marlborough logistically similar for Wellingtonians to one in the Wairarapa.

This is a potential benefit to the region, including Picton, which I don’t think has been adequately recognised, should a Clifford Bay ferry terminal proceed.

The original inter-island service was once a day except Sunday.

We now have round the clock service carrying considerable volumes of freight.

This would never have been imagined when it was first started in 1962.

That steady increase in volumes of freight and traffic are important factors when looking forward for the next 50 years.

We need to make choices that will allow economic growth to continue.

An efficient transport network is integral to New Zealand’s economic growth and is a vital component in our import, export and domestic supply chains.

This government has invested heavily in seven Roads of National Significance, the first of which are already reducing travel times and moving freight and people more efficiently.

The National Freight Demands Study concluded that freight volumes will continue to grow; and that it is unlikely there will be a significant market shift to coastal shipping.

Cook Strait ferries are therefore vital to moving freight, regardless of where they land.

I want to reiterate today that no decision has been made about moving the terminal.

But one thing we know is that there will be future costs in maintaining the cross-strait link.

There is no do-nothing option.

If Clifford Bay doesn’t go ahead then over a relatively short time Picton will need to have improved wharfage and handling facilities.

The capital expenditure would fall on the Marlborough District Council as owners of the Ports of Marlborough.

However, if freight demand increases as predicted over the next 30 years it will place great pressure on the existing infrastructure of the inter-island link.

It is expected that freight demand on the Cook Strait link will increase broadly in line with national freight demand growth, placing increasing pressure on the existing ferry capacity.

Speed restrictions through the Marlborough Sounds limit the number of return sailings ferries can make each day.

Two of the ferries have ‘grandfathered’ speeds – meaning they do not have speed restrictions – and can complete three return trips a day.

That fleet is nearing the end of its economic life and will need expensive replacements.

And replacements are going to be harder to find, as internationally rail ferries are rapidly falling out of favour with operators.

Larger, faster ships are becoming the norm.

But if the route stays the same those replacement ferries will also be speed restricted.

These restrictions affect operating efficiency and cost, and any potential tightening of the speed restrictions will further constrain ferry services.

If you can’t get as many sailings out of the fleet, more ships will be need to provide the same capacity.

And that comes at a high cost.

However, Clifford Bay would be a challenging build, in exposed waters.

The Ministry of Transport is leading a specialist project team to work through the complexities.

They are testing all the assumptions with the key stakeholders.

Even if a decision was taken to proceed with Clifford Bay, there would be a long lead time until it was operational.

It has been estimated that the resource consent process, including preparation of the application and the process for obtaining consents, could take over two and a half years to complete.

Resource consents would need to be received before the construction phase could begin.

The Government has also signalled that it does not want to be the owner of a Clifford Bay facility.

That would require the selection of an appropriate other player to undertake its development.

This would not be a simple task.

On the most ambitious timetable the earliest construction of a facility at Clifford Bay could begin is 2016 with completion in 2020.

But let me be clear: No decision has been made to proceed.

So far the local debate on Clifford Bay has been most closely considered in Picton.

Clearly no longer being the landing point for the ferries would change the town.

I am lucky enough to spend a lot of time in the Marlborough Sounds.

I have a deep love of the Marlborough Sounds.

I am a Marlborough ratepayer.

I was bemused to be criticised by some for saying Picton is a wonderful place with enormous potential.

But let me be clear that is not driving any decision-making.

Regardless of the ferry terminal location, the region must continue to develop the potential for greater tourism.

And I believe that Picton can capitalise on its surroundings.

Clearly, the loss of the inter-island ferry trade could have an economic impact on Picton.

But economic models struggle to capture potential, especially for innovation.

If you did an economic impact study at the time of the freezing works closure in 1983, the predictions for Picton would have been dire.

The census recorded a population of 3220 in 1981.

By the census in 2006, Picton had over 4000 permanent residents.

Today there would be little appetite for putting an abattoir in Shakespeare Bay.

Now Shakespeare Bay is a superb deep water facility.

The cruise ship trade has gone from nine in 2009/10, with 7600 passengers – to a scheduled 21 in 2013 – delivering 47,500 passengers to your region.

Picton’s foreshore is currently dominated by the ferry operations and industrial land.
The rail footprint alone is 86 hectares.

Meanwhile, Auckland’s Viaduct Basin and Wynyard Quarter are good examples of how we are reclaiming the waterfront for human use.

Tourist towns like Pahia and Whitianga are examples of small towns that have used their waterfronts to great effect.

Picton would be impacted by building a port at Clifford bay, and so would Blenheim.

Construction of a $422 million dollar port would have significant impact on the $2 billion Marlborough economy.

This does not include the inevitable movement of supporting infrastructure to southern Marlborough.

Development would not stop at the ferry terminal.

Freight and logistics bases would be built around the terminal.

There would ancillary services supporting the port operation, such as rental cars, restaurants and accommodation.

As we have seen with the Canterbury rebuild, often it is the service providers to the workforce that gain the greatest benefit.

I acknowledge the Clifford Bay proposal is challenging for Marlborough and also the rest of the country.

But it is a debate worth having.

If we do not keeping looking for opportunities to grow our economy, we will not be able to afford the lifestyle and high quality social services we enjoy today.

I want to encourage you to keep an open mind and engage in the discussion.

We will continue to consult with your local council and mayor.

Colin King MP has been assiduous in keeping me well informed of views and concerns from the region.

Thank you for your time today; I’m now happy to take a few questions.

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