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Gerry Brownlee - Speech to the Road Transport Forum

Hon Gerry Brownlee
Minister of Transport


18 July 2014


Gerry Brownlee - Speech to the Road Transport Forum

Good afternoon.

Today I want to speak on the government’s achievements in transport over the last three years and our future plans.

But before I do that, we are just 64 days from a general election, and I want to quickly give you a few reasons why the John Key-led Government’s economic plan is helping Kiwis get ahead.

New Zealand’s economy grew by 3.8 per cent in the year to 31 March 2014 – the third-highest among the world’s developed economies. Growth is forecast to reach 4 per cent this year – a far cry from the recession we inherited in 2008.

Average wages have increased by $3000 in the past two years and they are forecast to grow by another $7600 to $62,300 by 2018.

An extra 84,000 jobs were created in the year to 31 March 2014, and Treasury forecasts another 172,000 jobs to be created over the next four years.

Cost of living increases are low – inflation was just 1.6 per cent in the year to June, well below average weekly wage increases of 3.2 per cent.

Unemployment is coming down – Treasury forecasts it will fall to 4.4 per cent by mid-2018 from 6 per cent now.

The balance of payments deficit – the difference between what New Zealand earns and spends around the world – narrowed to 2.8 per cent of GDP in the year to 31 March 2014. Helped by record exports, this is less than half the deficit six years ago.

The Government is on track to budget surplus next year, and to post increasing surpluses in subsequent years; so we will have more choices about repaying debt and investing a bit more in priority public services.

Net Crown debt will fall to 20 per cent of GDP by 2020 if we stick to the Government’s plan – this is well below the 60 per cent of GDP debt that was projected to be reached under policies inherited from Labour in 2008.

And mortgage interest rates are expected to remain lower for longer than they did in 2008, when they reached nearly 11 per cent – helped by the Government’s responsible control of its spending.

So I hope you agree, in a general sense, that we’ve managed our inheritance of a difficult situation pretty well, and that we deserve to build on those positive points for another three years.

Three areas where I believe we’re delivering transport step-change for New Zealand are:

· Improvements in Auckland

· The Roads of National Significance programme

· And the regions, most recently highlighted by the $212 million package of extra funding to accelerate regionally important State highway projects

I’m also going to cover a number of other key initiatives which are particularly relevant to transport operators.

I’d first like to share with you a few transport trends we are starting to see emerge.

When we came into government in 2008 we introduced the Roads of National Significance Programme because successive governments had neglected transport infrastructure, and we faced what we assessed to be about a 30 year catch-up task.

Between 2005 and 2012 total road travel – in terms of kilometres travelled – was almost unchanged.

There are likely to have been a number of contributing factors, including the Global Financial Crisis, population changes, and technology changes affecting the way people meet and communicate.

Heavy vehicle traffic was affected more than light traffic, dropping by over 4 per cent in 2009 – clearly an impact of the GFC.

But now we are seeing that vehicle kilometres travelled are beginning to increase again.

Heavy vehicle traffic on all roads increased 2.1 per cent in 2013, while light vehicle traffic grew 1.4 per cent.

NZ Transport Agency traffic counts for State highways shows a 4.1 per cent growth in heavy vehicle travel in the year to May 2014.

New Zealand’s vehicle fleet is also growing.

Average vehicle ownership growth has increased more than twice the speed of population growth, and recently released data shows new car purchases at their highest level since 1981.

These increases are not only because of population increases and the improving economy, but also because of the choices people make about their preferred modes of transport, and this is in the face of the biggest investment in public transport seen in decades.

So the case for investing in strategic State highways through the Roads of National Significance programme has been proved correct.

Auckland

Conversations about transport in New Zealand often begin with Auckland.

It’s home to one-third of our population, and is growing very quickly.

The Auckland region is expected to account for around 60 per cent of New Zealand’s population growth over the next 20 years.

Auckland contributes more than $66 billion a year to our GDP; it is our main gateway to the world; and it hosts our second busiest seaport.

The government is focused on making Auckland a success not just for Aucklanders, but for all New Zealanders.

While there will always be calls for the Government to do more, around $1 billion a year is being invested in the city’s transport infrastructure and services.

Our focus is a balanced one, recognising that getting the most out of Auckland means getting the most out of all its transport modes.

That’s why we’re investing in a mix of State highways, local roads, walking and cycling, and public transport – and a lot of money on metro rail.

Investment in all of these modes provides Aucklanders with more choice about how to move around the city and ensures freight can move effectively and efficiently.

As I’m sure you’re all aware, in Budget 2014 we announced how we were bringing forward an $815 million package of Auckland transport improvements by up to a decade.

This investment will:

· deliver a complete motorway-to-motorway link between the Upper Harbour Highway and the Northern Motorway at Constellation Drive, and upgrade the Greville Road interchange;

· widen the Southern Motorway between Manukau and Papakura;

· and upgrade State highway 20A to motorway standard.

These improvements will tackle congestion; capitalise on the benefits of the Western Ring Route; improve access to the Auckland Airport; and improve connections between Auckland and Northland, Waikato and the Bay of Plenty.

We’re also providing $10 million to enable the NZTA to do detailed investigations on the East-West Link.

The East-West Link will address freight access issues in the Penrose and Onehunga areas, which are home to many of Auckland’s industrial and logistics businesses, including MetroPort.

The East-West Link and the Auckland Manukau Eastern Transport Initiative – or AMETI – connect an area which has some of the heaviest traffic flows, highest proportions of freight traffic, and greatest levels of traffic congestion in New Zealand.

The first phase of AMETI is nearly complete, and has included improvements to public transport, along with key infrastructure upgrades such as the replacement of the Ellerslie-Panmure Highway Bridge.

I welcome the Road Transport Forum’s support for this package, and particularly your recognition that it targets several of the most crucial Auckland projects.

Meeting the needs of Auckland’s rapidly growing population, and improving the region’s contribution to economic growth, will require significant and ongoing investment in the region.


I would like to take this opportunity to restate that when we took office in 2008, one of the first things we did was remove the regional fuel tax.

They are an expensive and inefficient way of raising revenue.

This government is also totally opposed to tolling roads which New Zealanders have already bought and paid for, and we remain unconvinced as to the rationale of using congestion charging as a revenue raising tool.

As important as Auckland is, it cannot be considered entirely in isolation.

The government is making sure Auckland remains well connected to other parts of the country, with a flexible network able to meet transport demands now and in the future.

Roads of National Significance

The government’s major commitment to addressing key capacity constraints on our road network is the Roads of National Significance (RoNS) programme.

Based around New Zealand's five largest population centres, the RoNS programme will encourage economic growth, rather than wait until the strain on the network becomes a handbrake on progress.

RoNS are an investment which recognises around 92 per cent of New Zealand’s freight tonnage is moved by road.

Updated data from the Ministry of Transport’s National Freight Demand Study suggests New Zealand’s freight task will grow from 236 million tonnes in 2012 to over 373 million tonnes by 2042.

An efficient freight industry with access to cost effective transport will therefore be more important than ever to the competitiveness of New Zealand businesses.

The first RoNS project, the Victoria Park Tunnel, was completed in 2012.

Most of the six remaining projects will be completed over the next six years, delivering travel time savings, safety and productivity increases.

The benefits of those completed or only partially completed roads are already being felt, with NZTA measuring an average travel time saving of five minutes per trip across three completed sections of highway.

Here in Auckland, the RoNS programme includes the $1.4 billion Waterview Connection – part of the government’s $2 billion investment to complete the Western Ring Route.

The other RoNS projects are:

· Wellington’s Northern Corridor, including Transmission Gully;

· Christchurch’s Northern, Southern and Western motorway corridors;

· Tauranga’s Eastern Link;

· State highway 1 from Puhoi to Wellsford; and

· the Waikato Expressway.

Each of these is a key connection, where investment will help people and freight move quickly, safely and efficiently.

I am pleased to report that progress on the RoNS is proceeding on budget, and on time.

The faster these projects are completed, the earlier the economy and New Zealanders will benefit.

Regional State highways package

The government is also making strong progress on a much larger suite of improvements spanning the country.

In June the Prime Minister announced the Accelerated Regional Roads Programme – a package of State highways around New Zealand, which the government will accelerate by drawing on the Future Investment Fund.

I was surprised at the time to hear that the Road Transport Forum wasn’t supportive of the investment, labelling it pork barrel politics, and questioning the economic rationale for some of the projects.

Well, this wasn’t just a grab-bag of items – these were projects the regions told us were important, and those five projects ready to begin immediately all have positive benefit/cost ratios.

Thankfully, I have had a number of conversations around the country with transport operators, business and locals who tell they me are very supportive of these investments.

Under the programme we’ve committed up to $80 million for five critically important regional projects in Otago, Canterbury, Northland, Gisborne and Taranaki.

Construction on these projects will begin in 2014/15, and be completed by 2016/17.

Another $5 million will be spent finalising investigation for six more projects in Manawatu-Wanganui, Gisborne, Marlborough, the West Coast, Northland and Taranaki.

Subject to those investigations the government will fund these projects with an additional $115 million.

A further $12 million will be available to accelerate investigation and design of three large projects – the Napier Port Access Package, Nelson Southern Link, and Rotorua Eastern Arterial.

Funding for these projects is coming from the Future Investment Fund.

We said when we established the fund that we would use the proceeds of the partial floats for important infrastructure and despite what our opponents say, we believe regional roads easily meet that test.

This programme is in addition to between $1.7 and $2.5 billion which the draft Government Policy Statement on land transport for 2015 proposes be spent on local road improvements and maintenance over the next three years.

This investment will be increased even more by funding contributions from local government.

The new Regional Improvements activity class in the draft GPS will ensure extra resources are ring-fenced and available to areas outside large cities.

This is recognition of the importance of our regional economies, and a commitment to see them appropriately funded.

These are record levels of funding, they will make a difference for the regions and demonstrate the government’s commitment to a transport system which works for all New Zealanders.

The projects in our Accelerated Regional Roads Programme are good investments, and will address economic efficiency, safety, and resilience issues for regional networks.

They will improve travel for regional communities, and upgrade the road links between rural towns and cities.

Other key initiatives

Some other key initiatives which I would like to touch on today are the Vehicle Dimension and Mass rules, Vehicle Licensing Reform, Operator Safety Ratings, and changes to Road User Charges.

Vehicle Dimension and Mass

My officials are working with the Road Transport Forum on reforming the Vehicle Dimension and Mass framework, as we seek to drive productivity and road safety by allowing more freight to be moved with fewer trips.

To encourage the uptake of High Productivity Motor Vehicles (HPMVs) the government is investing around $45 million over three years to deliver a 4500 km strategic HPMV network nationwide.

To extend some of these benefits to areas where road infrastructure is not suitable for full HPMVs, the NZTA has also developed the 50MAX concept.

This new class of vehicle allows for up to five tonnes of extra freight, but requires minimal infrastructure upgrades.

This is because an extra axle means the impact on pavements and bridges is similar to current 44 tonne truck combinations.

The majority of New Zealand’s road network is now available to 50MAX vehicles.

I have also heard that the permit system for the 50MAX vehicles is working very well with quick turnaround times and simple processes.

I also heard calls for those simple rules to be applied to lesser loadings, so I have asked NZTA to speed up talking to councils about the possibility of bringing them into a single permit system for all HPMVs, as a few councils already have, notably Gisborne, Napier City, and Marlborough.

Vehicle Licensing Reform

The Vehicle Licensing Reform programme is delivering improvements to New Zealand’s Warrant of Fitness, Certificate of Fitness, Annual Vehicle Licensing and Transport Services Licensing systems.

Our aim in undertaking this reform was to save motorists and businesses time and money, while taking care to preserve driver safety.

Changes to the Warrant of Fitness system are seeing cars built since 2000 move from six monthly to annual warrants.

This change alone will save New Zealand drivers up to $1.8 billion over 30 years.

For commercial vehicles, we are progressing changes which will see Certificates of Fitness able to be issued by a wider variety of inspection agents, breaking down the near-monopoly provider situation you face presently.

Inspecting Organisations will also be able to offer repair services, reducing the time vehicles are out of action while they are inspected, moved to a repair site, then returned for re-inspection.

The NZTA will make sure there continues to be robust approval criteria and processes for appointing inspectors, and effective audit and monitoring systems for Inspecting Organisations. These changes are expected to save operators up to $460 million over the next 30 years.

Of course, safety is a key consideration throughout the Vehicle Licensing Reform programme.

While most vehicle operators will continue to have six monthly Certificate of Fitness inspections, the NZTA now has the ability to offer an option of annual inspections for vehicles maintained to exceptionally high standards, and can move poorly maintained vehicles to three monthly inspections.

Operator Safety Ratings

Another tool for improving safety for all is the Operator Safety Rating System.

As you know it collects safety information from the following sources:

· Certificate of Fitness inspections

· Roadside inspections

· Fleet audits

· And, relevant traffic offences and infringements.

I have heard that some aspects of the ratings analysis are unfair and unworkable.

If the NZTA and the Police are to use information provided to identify higher-risk operators and target those operators, the industry as a whole needs to be happy with the system.

While NZTA is not publishing ratings, and there is no naming and shaming, I will be asking NZTA to advise on further refinements to the system and give operators the opportunity to voice any concerns.

I have also asked NZTA to report back to me once they have collated feedback from operators.

Road User Charges

The government has also undertaken the most significant change to the Road User Charges system since it was introduced in 1978.

An initial evaluation last year found the changes have been relatively successful in creating greater equity, and that the new system is recognised as having greater integrity – with fewer opportunities for evasion.

Conclusion

To catch up on a national infrastructure deficit, the government has invested in roading networks around New Zealand – from large Auckland motorway projects to strategic regional priorities.

Given the opportunity on September 20, we will continue making significant investments in Auckland, push ahead with the Roads of National Significance and regional projects across the country.

Our transport focus will remain on high priority strategic initiatives that support the economy, improve road safety, and deliver value for money.

Thank you.

ends

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