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Brownlee Defends Shortfall in Roads Funding

Brownlee Defends Shortfall in Roads Funding

Transport Minister Gerry Brownlee is emphatic that the Puhoi to Wellsford road of national significance will still go ahead even though he does not know how much it will cost.

Speaking this weekend on TV3’s “The Nation”, Mr Brownlee said the New Zealand Transport Agency was going trying to sort out the geological challenges “that you have through that part of the country, but it is on the books for construction beginning in the 2015/18 period, and we intend to stick to that.”

Asked if that meant the Government would go ahead no matter how much it cost, he said: “I think at this stage we're doing all of the investigations that are necessary to build a strong road.” 

“There is no indication yet that there will be cost problems that would make us change on that.

“So the position is that we are going to build that road.”

And Mr Brownlee rejected claims on the programme by Southland District Council Mayor, Frana Cardno, that cuts to roading expenditure there to help pay for the roads of national significance could end up endangering tourists’ lives in the Catlins.

Ms Cardno said Mr Brownlee needed to learn some facts.

“He needs to learn where the economy of New Zealand is based and he needs to look at the roads of national significance and say what harm would be done if we just put them off for a while, until as a country we can afford them.”

Mr Brownlee agreed that Southland was this year getting only $160 million of the $200 million it had asked for to maintain its roads.

But Mr Brownlee said that was till an increase on their previous allocation.

“When it comes to just the road maintenance part, it's a 6.2% increase and in the previous period they didn’t use all the money that they had and returned some to NZTA,” he said.

And he said the Government was continuing to look at public private partnerships building toll roads as a way of taking pressure off roading funding.

He singled out Wellington’s Transmission Gully as a potential candidate for tolls.

“I know that there is a process going on at the present time to consider that possibility,” he said.

But he said no new roads in Christchurch would be toll roads.


'THE NATION'
GERRY BROWNLEE MEETS THE PRESS
with ALEX TARRANT & JOHN HARTEVELT
Hosted by RACHEL SMALLEY

Rachel Welcome to Transport Minister Gerry Brownlee who joins us from Christchurch. Good morning Minister. Thanks so much for joining us. I want to open – you would have seen the report that we just ran on the programme. We have asked Minister for progress reports on the costs so far on the 'roads of national significance'. The NZTA says they couldn’t supply us with that information. Why not?

Gerry Brownlee – Transport Minister
Well I think it depends on how you interpret the question that was asked. So the first point is that the New Zealand Transport Agency is the client when it comes to getting roads done. So they send a specification. They put together a project that they ask someone to bid to build it. Now the internal costs for those things are a matter for the contractors, not for NZTA. NZTA does of course as a public body publish its accounts, and so I think there's a problem here with the way the question might have been asked. Can I also say look you made the extraordinary statement in that piece there that the Waikato Expressway had all sorts of problem and was facing cost overruns. The estimate at the moment is that it will come in 40 million dollars, by the middle of next year, under the 2009 price.

Rachel So you can monitor the costs then?

Gerry Well of course, we're the payer, and you know we don’t know what the day to day decisions are by the contractors as to how they complete a particular piece of work that they have put a price in to complete, but we certainly do have a budgeting process, no question about that.

Rachel So where is that budgeting process then at at the moment. We can't get that information Minister. Are the roads under budget and on track?

Gerry Well with all due respect, I think it maybe the way it's asked. I was also surprised by the comment from the one Opposition MP that you spoke to. Yes the NZTA appear before the Select Committee twice a year, and annually you get the Ministry of Transport there as well. So on those occasions the reach in for information is quite extensive.


John Hartevelt – Fairfax Media Political Journalist
Minister, putting aside the cost issues for a moment, what about the benefits here. Now we know there's some argument about the cost benefit ratio for something like the central city rail loop, but it is at least as good is it not, as something like the Puhoi to Wellsford road for national significance?

Gerry No, I think the two are entirely different. Puhoi to Wellsford is one of those projects that will significantly benefit the North and open up the prospects for greater economic benefit up there. You’ve got a part of New Zealand up there with massive potential, but also a number of problems around the sort of employment that’s available, levels of household income, that type of thing, and a connected road like this will make a difference there. You know and I think the other thing when you look at these cost benefit ratios, we do them in a particular way that gives us a figure that is a guide for whether we should go ahead or not. Many other countries use different sort of calculations. What I can say is that if you went back to the 50s, none of the motorway projects, or the Auckland Harbour Bridge, or a number of other projects would have been done at that time if they'd simply slavishly looked at cost benefit ratios. So you do try and look like the whole network of roads, the benefit to New Zealand's economy, and therefore the pockets of New Zealanders, over that longer period of time. We would estimate that by 2020 the roads of national significance will have about a billion dollar annual effect on our economy in a positive way.

John Specifically on the Auckland rail loop again though, why is it that your cost benefit ratio is only 0.4 that the Auckland Council's is 1.1?

Gerry Well that’s what we're discussing with them at the present time, there's analysis being done by the two groups there. It is an extremely expensive piece of infrastructure for a very short distance, and we are interested in trying to understand whether or not it will make that much different to Auckland's congestion. There are those of course who are really committed to rail, and so that’s what it will achieve. What we are seeing though is a picture that on current planning would suggest that by 2040 and in infrastructure terms that’s virtually tomorrow, we could have similar all hours of the work day congestion that you get at peak times at the present time. So you know you’ve got to consider not just one little project but a number, and on the particular project of the central rail link there is work ongoing with Auckland authorities and our Ministry of Transport.

John Mr Brownlee is there any prospect of a section of Puhoi to Wellsford being flaked off. We know 300 million has already been taken out of Otaki to Levin. Could the same happen with the Wellsford to Puhoi part of that road?

Gerry No. We're going through the exercise at the moment of trying to sort out the geological challenges that you have through that part of the country, but it is on the books for construction beginning in the 2015/18 period, and we intend to stick to that. I think our opponents would love us to start backing away from this, because in the end they are the sort of projects that make a big difference to people, and actually make a statement that New Zealand is a country that wants to have a first world growing economy.

Rachel Will you construct that road regardless of cost, Mr Brownlee?

Gerry Well I think at this stage we're doing all of the investigations that are necessary to build a strong road. There is no indication yet that there will be cost problems that would make us change on that. So the position is that we are going to build that road.

Alex Tarrant – interest.co.nz
Minister we've had Mayors on the story there, and also other Mayors around the country in regional places claiming that the funding for roads of national significance is taking funding away from what they want for their local roads. What do you say to that?

Gerry Well I was staggered by the Southland story, quite honestly. I mean they're getting a 4.5% increase in their overall allocation in the next three years.

Alex It's not as much as what they want though.

Gerry Well hang on I'm coming to that, just give me a minute. So they're getting a 4.5% increase over the previous period. When it comes to just the road maintenance part, it's a 6.2% increase and in the previous period they didn’t use all the money that they had and returned some to NZTA. So I'm really perplexed by that particular piece.

Alex But there are other regions saying that they're not getting as much as they want. Timaru, there's Southland, Clutha District Council, all in the South Island really. These guys are being faced with intensification of dairy, of forestry, they're wanting to improve their roads to help get that milk out, get those trees out. They're saying the money isn't there and claiming that it's being sucked up by the roads of national significance. I mean what's the chance of giving them the money, and why can't that happen, why can't the roads of national significance perhaps be on a longer timeframe to allow for that to happen?

Gerry Well that would deny that you need to have a transport network that does facilitate export out of our ports and airports, and they are in place because we do need to improve productivity in a freight sense. What I can tell you is that there is a big programme to replace bridges south of Christchurch, south of Ashburton actually. Kurow Bridge etc, which is more inland, which will bring a lot of stuff through to the port operation.

Alex You’ve gotta get the milk from the farm though don’t you?

Gerry That’s right, and that’s why you do have to have a very solid network of roads. Fonterra are about to build the world's biggest drying plant, well they're in construction. It will be opened in Darfield, some of that milk may well end up going as far north as that. So it's not a simple matter of saying just give us our bit and we'll fix it. We're looking at this from a network perspective, and I want to say again that this is the biggest roading budget in New Zealand's history – 12.28 billion dollars. A lot of money.

Rachel Wouldn’t you be better placed Minister to fund some of that local roading around those intensified dairy areas, because the cost benefit surely would be better there than if you focus on this socalled 'holiday highway' north of Auckland.

Gerry Well the first point is the 'holiday highway' is a political term applied by our opponents, because it tries to make it of less significance. It is not.

Rachel But there's a point, because you’ve said yourself there are challenges in the Far North in terms of you know the positions of people.

Gerry That’s right and you won’t help them by denying them infrastructure.

Rachel But largely it's used by people who pop off the Bay of Islands on holiday isn't it?

Gerry Well that’s your assertion. I don’t see it that way. I think the potential for economic growth in the north of New Zealand is considerable and that highway will help with that. But let's just go back to your point about putting extra money into the regions. The regions have all got extra money, and the point I'd make here is that you need to consider all of this as a network, and I go back to the Southland situation. They asked for 200 million, they got 165, but in the previous period they couldn’t spend all they got, so you know you're getting a little bit of I think bandwagon stuff going on here as well, with all due respect to them.

John Minister are there other ways of funding these roads of national significance – PPPs, toll roads?

Gerry Oh we're certainly looking at those options and we would hope to have something more to say about that perhaps in the early part of next year. There are a number of toll roads around New Zealand, they are well used, and they do make a big difference.

John Which roads do you have in mind then Minister?

Gerry Well I think I've already said that we're looking at the prospect for Transmission Gully in that regard, and I know that there is a process going on at the present time to consider that possibility.

Alex Christchurch?

Gerry I think we owe it to New Zealand's – no, there's no need to toll in Christchurch.

Alex So there won’t be any toll roads in Christchurch as you rebuild those roads?

Gerry As I can see that is not likely to be the case, and we've got the Southern Motorway which is due for opening later this year, and also the Western Bypass which is due for some of the preliminary work around the construction, starting later in this current period.

Rachel Are tolls likely Minister then through Transmission Gully in Wellington. Will Wellingtonians possibly have to be paying tolls?

Gerry Well you started the question by saying are you considering the prospect of public private partnerships…

Rachel And you said yes.

Gerry ...with toll road, and I said that we are looking at those things, and one of the roads that we would look at would be Transmission Gully, but I can't say that there is a decision on that. I'm trying to be straight upfront with you. You're wanting to push me to a decision before we've even done the consideration.

John But what about a theoretical figure or a proportion of that road that would need to be funded by tolls?

Gerry Well as I say let's do the work and see how it all comes out. What we can be comfortable with is that that project is consented, and so it becomes a live prospect. But I'll just go back to Christchurch because I think that is a challenge for us. National and transport budget is committing 50 million a year to that rebuild, it's a very very big big project and we are going to look at other ways of funding that, but we're not looking at tolling. At the moment we've taken out of our Earthquake Recovery Fund close to 300 or 400 million I think that we've committed over a period of time, and you know when you get extreme events like that, you need to have some capacity to work it, and the point I'd make is that for other parts of New Zealand that have their roading budgets, they do get a different look at things when they're faced with emergency situations.

Rachel Alright Transport Minister, Gerry Brownlee, we do have to leave it there. Thank you very much for your time though this morning.

ENDS

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