Q+A: Minister of Economic Development and Transport Simon Bridges interviewed by Corin Dann

Economic Development Minister Simon Bridges told TVNZ 1’s Q+A programme that he doesn’t accept National’s record in the regions is patchy.

‘You look at the regions right now, I’d say we’ve got real wind in our sails. Absolutely. That’s not to say they are all as strong as each other. They’ve all got their strengths and their weaknesses. But actually, if you go through them, there’s a dispersed growth – a strong growth.’

When asked whether the regions struggle to attract local workers due to low wages, Minister Bridges told Corin Dann, ‘I think ultimately it's going to have to be a blend of things. It’s going to need some foreign people coming in and doing the jobs where they’ve got the skills.’

Minister Bridges also said, ‘I think the extent Winston may be making gains – that’s off the back of Labour, who are so weak... and I think missing in action.’

As Minister of Transport, Simon Bridges told Corin Dann allowing the regions to raise revenue in the form of tolls or petrol levies would be too complex to administer.

‘because if you do that in a particular area – Phil Goff has talked about that in Auckland – suddenly what you see is the petrol station down the road that’s outside of that area has got all the cars and trucks in it.’

When asked whether a review of KiwiRail would mean fewer services or closed lines, Minister Bridges said, ‘No, it doesn’t. But what it will mean, I hope, is that transparently we will know, actually, here’s where the freight is going. We really need to invest in this. At the moment, we just don’t have sufficient visibility about that. But in other cases, where there is a line, maybe it isn’t making money, but we can understand that, and we will know what it is we need to do.’

Minister Bridges stands by the business case for the East-West road link in Auckland.

‘The benefit cost ratio for east-west link is 1.9. And, look, let’s think about that project. That is going into, not just in a Auckland sense, a New Zealand sense, the most important industrial hub we have.’

When asked about bringing forward infrastructure projects ahead of the America’s Cup, Minster Bridges said, ‘our Government’s position is we are much more interested in the infrastructure components of the America's Cup than we are in sponsorship of Team New Zealand..

‘There are things like that that are possible. All I will say to you is this – and that is for the America's Cup, I don't think it's quite the tourism events that, certainly, Rugby World Cups are. So I don’t necessarily think the numbers will mean that it’s necessary to do some of these things. But certainly I am saying to you that infrastructure is important to us, and for the America’s Cup, we’ll be looking very much at how we can add value.’

Q + A
Episode 1721
SIMON BRIDGES
Interviewed by Corin Dann

CORIN Thank you very much, Jess. Good morning to you, Minister Bridges. Thank you for joining us. Looking at the literature about your ethics to try and restore growth in the regions over the course of the last nine years – a lot of reports, a lot of rehashed reports, a lot of energy and effort, but the record is pretty patchy, isn’t it?

SIMON Look, I don’t accept that. You look at the regions right now, I’d say we’ve got real wind in our sails. Absolutely. That’s not to say they are all as strong as each other. They’ve all got their strengths and their weaknesses. But actually, if you go through them, there’s a dispersed growth – a strong growth. Many of them, Northland being one of them, is telling us the best growth they’ve had in 20 years’ time.

CORIN But still the unemployment rate is a lot higher than the rest of the country?

SIMON Yeah, absolutely. So no one should suggest that it’s perfect or that there aren’t things to do. That is why a couple of weeks ago the Prime Minister announced $50 million going in to dealing with some of those hard cases – actually pretty small numbers, I think, because, look, even in Northland, all around New Zealand, they are telling us clearly they have jobs for skilled workers; they really want to see and take on people. But what we have to do, in a number of cases, is get those workers match fit.

CORIN $50 million is not a lot for the regions, is it?

SIMON Well, look, it's not the only thing we are doing in the regions. I can list out for you the roading projects, the ICT and so on. But, look, in terms of that—

CORIN But for regional growth, it’s not a lot of money. I mean, you gave $300 million to the film industry.

SIMON Yeah, and, look, if you take that, people say, ‘That’s just Wellington.’ No, actually, Bay of Plenty, Central Otago, Southland. They have seen money going in to that. I’ll come back to that $50 million that I was talking about, though. What that will do, effectively, is go into these areas, and all of them are telling us very clearly they need more workers. They have very high employment. It will then go and find those young people – because we can actually find them – we will know them by names – and match them up with those jobs and keep them in it. And, look, they may have a drug issue, they may have other things going on, but if that's their issue, we will put them in the programme, and we’ll make sure we do it.

CORIN That's all very nice, but the fact is we heard the regions crying out over the immigration changes. They couldn’t cope with a wage of $49,000 at that bar for lower-skilled workers. They wanted it at $41,000. It's clear they can’t attract local workers, they need foreign workers, and they want to pay them less. Something is wrong.

SIMON I think ultimately it's going to have to be a blend of things. It’s going to need some foreign people coming in and doing the jobs where they’ve got the skills. But we’ve also got to do— That's why we are spending—

CORIN At a low wage.

SIMON …which is why we’re spending that $50 million on making sure that actually where there are Kiwis who are not in employment, education, training who could do the jobs, that we are really helping them, nudging them into those jobs. And I think the important thing, really, because this is the feedback we get – keeping them in those jobs. So, actually, they’ve got motivation issues.

CORIN Winston Peters, your competitor, arguably in the regions – Labour, obviously, as well, but Winston’s been going very hard there and making gains, by the look of it. He’s promising to remove GST on tourism in the regions and give them $1.5 billion.

SIMON Look, I think the extent Winston may be making gains – that’s off the back of Labour, who are so weak.

CORIN You sure about that?

SIMON Absolutely, and I think missing in action. And I come back to it – what is the core case for National in the regions? I think it’s pretty simple, actually. We have regions all over New Zealand, literally almost to a region, that have got wind in their sails, that are going strongly, that are seeing a real adding in value in the things that they do and have done for some time, and actually a real diversification.

CORIN He’s got a point, though, doesn’t he? He argues that many of these regions are the export drivers of New Zealand. They are the ones with horticulture and all sorts of industries – farming. Yet they aren’t seeing the benefits spread. They aren’t getting the benefits that the cities are getting.

SIMON And I simply don't accept that.

CORIN Why not? That’s a fact.

SIMON No, that’s simply not a fact. Let’s go through it.

CORIN Where does the export growth of New Zealand come from?

SIMON I agree with you. Over 50% of our exports are from food, effectively. Then you go through it, and there’s other areas coming up very strongly, whether it’s ICT and technology -- we keep going through that. My point is you’re saying they are not getting the benefits. Let me take you through the benefits. In transportation, we are investing unprecedented amounts in regional New Zealand. You take where he talks a lot, because, of course, now he’s a Member of Parliament for Northland. Northland – we are putting a highway from Auckland through, fundamentally, to Whangarei – four-laning it. We started at one end. Winston tries to pretend that isn’t happening, but it is.

CORIN What he wants is a railway to the port.

SIMON And, look, that's fine. Let’s see a business case for that. Let’s see how that stacks up. But I think certainly on that case, we wouldn’t want to do that if it was simply transferring or taking carriages with thin air.

CORIN One more on this issue – there have been people who have suggested that in fact we can't turn around the decline in some of our regional towns and that maybe with an ageing demographic, we just have to accept they are declining, and that’s just the way it’s got to be. Do you accept that?

SIMON No, I don't. Let’s take an example they’ve used, and I’ve seen some of those reports myself – Gisborne – They say, ‘Gisborne – the demographics aren’t right.’ Actually, the demographics are perfect. They have a young Maori workforce that’s ready to go, in some cases. That's why we put the $50 million in. That is one of our four focus areas, because we know there's work. You mentioned it yourself – horticulture is going gangbusters; viticulture as well. Other areas – wood processing. The Government’s helping them, through our regional growth programme, to do much more in that area. So I think people always say, ‘Let’s pick these ones. These are the losers,’, just like they like to pick winners. But what you see is whenever they do that, they are wrong.

CORIN But aren't you holding those regions back in some ways? Because they are wanting to take control of their own destiny, in many instances. They want to charge tolls, put petrol levies in, and your
Government’s is not letting them.

SIMON I think in relation to the incidences you've used, where effectively we’ll be playing around with the tax system, something like that, I personally think that's too complex,
and we are not a country of a size that we would want to entertain that. But is there something in special economic zones? Is there an idea there about fundamentally going in in a bespoke way, working with particular regions? Look, I think there possibly is.

CORIN So they could raise revenue?

SIMON Look, let’s take a number of examples. These are things we’re doing – aquaculture in Southland. There’s a number of issues—

CORIN Yeah, that’s fine. That’s an economic zone. I get that. But they want to be able to raise revenue themselves. Would you let them?

SIMON I think ultimately, as I say, for a country our size, that is too complex.

CORIN Why is it complicated to put a couple of cents on a litre of petrol?

SIMON Look, I think what is true is your fundamental idea of getting some competition between regions, of making sure we look at what their needs are and doing the right thing by them.

CORIN Just answer my question – why is it complicated to put in a petrol tax?

SIMON Ok, very simply, actually, because if you do that in a particular area – Phil Goff has talked about that in Auckland – suddenly what you see is the petrol station down the road that’s outside of that area has got all the cars and trucks in it. And you shrug your shoulders, but I can tell you, Corin—

CORIN Surely there’s ways around that.

SIMON What that means, and what the evidence shows is very seriously leakage of the revenue to other areas.

CORIN Sounds like your Government just doesn’t want to give up control.

SIMON I don’t think that’s true. I think through the regional growth programme, actually, you have seen us in a number of examples going into regions, let them do the leading and us come up with some ways that we can enable it. I’ll give you an example – the West Coast – where we have put in a minerals and materials centre in there. We’ve announced that very recently. That is all about helping them – we know they have a strong mineral sector – diversify that, move on in the future.

CORIN Helping the mining industry, isn’t it?

SIMON No, no. Actually, look, it’s about things like, in that instance, taking the waste they’ve got and finding high-value uses for it. And I think most people would agree with that.

CORIN All right, let’s move to transport – your Government has pumped billions of dollars into the KiwiRail over the last few years. Billions. Billions and billions of dollars. Why are you now reviewing it again?

SIMON Basically, because you’re right. I think rail’s got very strong strengths and works really well for freight over distance.

CORIN But why isn’t it fixed if you’ve put all these billions of dollars in? Why do we need to review that?

SIMON Well, I think in a sense, that answers the question. Let me be quite straightforward with you why we are reviewing the funding model. And that’s simply because above track, I think it does wash its face. I think KiwiRail has found real efficiencies and productivity gains in their business there. Below rail, though, look, it doesn’t.

CORIN You mean it requires infrastructure? You’re just pouring money into that?

SIMON Exactly. And, look, at one level, you say, ‘Well, what’s wrong with that? But I think what we owe it to KiwiRail to do, what we owe it to the Government and New Zealanders to do look if we can’t find a more transparent, sustainable model.

CORIN Let’s get to the crux here. Is that going to mean fewer services, closed lines?

SIMON No, it doesn’t. But what it will mean, I hope, is that transparently we will know, actually, here’s where the freight is going. We really need to invest in this. At the moment, we just don’t have sufficient visibility about that. But in other cases, where there is a line, maybe it isn’t making money, but we can understand that, and we will know what it is we need to do.

CORIN Would you close those lines?

SIMON No, I’m not making any—

CORIN Well, what’s the point in doing the review?

SIMON Because at the moment, I think KiwiRail is in a position where they don't necessarily know year from year what they are getting from the Government. It is quite ad hoc. And the Government’s also in that position. So I wouldn’t overstate what this review is about, simply to say that I think it is right that we go back and we look through all this calmly and dispassionately and try to find a transparent, sustainable model.

CORIN There will be people worried because your government doesn't seem to have a lot of enthusiasm for rail over the years. Let’s take this example of the third rail line in Auckland. You didn't want to release the details of that plan. The unredacted version has been released. It looks like a good idea. Why were you trying to suppress it?

SIMON Come on, let’s be a little bit real about this. This is a business case that I commissioned because I absolutely see the case for this in the bigger picture.

CORIN So why much effort not to let it go public?

SIMON If I can just get a sense of that – that’s because fundamentally, because of the electrification the National Government has funded, we’ve seen many more commuters use those rail lines that used to be for freight. So I see the case for it. But look, as the Greens and others would say, you need a serious business case. We want all the details on the roading projects. We also need to go through some process on these other ones. And so that is all I've been seeking to do on this third main rail line.

CORIN It looks like you didn’t want it out there because it might weaken the case for your east-west link.

SIMON No, I mean, it’s simply not related. East-west link has a very strong benefit cost ratio. It has been put through the wringer.

CORIN Does it really have a cost ratio? Because Simon Wilson sitting over there – he’s done some work on The Spinoff, and he would argue that in fact the New Zealand transport authority has put a report saying there isn't an up to date one.

SIMON Look, Simon has very trenchant views on this.

CORIN No, no, no, no, no. It’s not about Simon. This is the New Zealand Transport Authority report which says there is no up to date cost benefit for that link.

SIMON No, no. There is. It’s 1.9. I’ve said that on a number of occasions. I have never been shown to be wrong, and that is because I’m not. The benefit cost ratio for east-west link is 1.9. And, look, let’s think about that project. That is going into, not just in a Auckland sense, a New Zealand sense, the most important industrial hub we have. It is deeply congested, it doesn't work for public transport, and we want to fundamentally improve it.

CORIN I guess the question is, is it the best use of $2 billion in Auckland? Is it going to get the most trucks off the road? Is it going to make the transport system the best?

SIMON Look, it’s not a silver bullet. Waterview Tunnel wasn't a silver bullet. But what we have seen is that it had a very deep impact right at the moment, and commuters are feeling that. But is it an important project? Is it one of the three long-term priorities for the region for a very long time? Yes. Is it something that business absolutely--

CORIN Phil Goff doesn’t think it’s a priority.

SIMON Well, look, I’d be surprised to hear that, actually.

CORIN Well, he’s quoted again in The Spinoff saying it’s not one of their top priorities.

SIMON Well, that’s in a sense, perhaps, because it’s banked. But I tell you what – you go back through all of the regional land transport plans for the last 30 years – it has been there as a very important project. I can tell you the ABF business forum, the Chamber of Commerce, the EMA – they all see it as a top priority. And I come back to it – the benefit cost ratio well and truly does stack up. But it’s not a silver bullet, and I agree with you fundamentally – when it comes to rail, more electrification, third main line – some of these other projects…

CORIN It's taken your government a lot of time to get there, though, hasn’t it? You’ve dragged your feet all the way.

SIMON No, Corin, because, in fact, as you said, we have invested more than any other government ever in rail at the moment, with the last billion dollars from this budget—

CORIN I guess the point is you stand in Parliament and call your critics haters of roads. And it looks like you’ve been dragging your feet, and you’re not really that enthusiastic at all about rail.

SIMON I think it’s a range or projects that matter, actually. Because you’re speaking about Auckland, I am more confident, actually, about Auckland and what we are doing for transport here than I’ve ever been. That is kind of because of Waterview, and we’ve seen what a palpable effect that has been.

CORIN On this issue – just quickly before we go – the America's Cup, APEC in three or four years’ time. Can you bring forward any Auckland infrastructure projects to meet that extra pressure? I’m thinking obviously the rail link out to the airport.

SIMON Because you mentioned the mayor – look, I had a fantastic meeting with him on Friday. We discussed all these things. In terms of transport, we are very close together in terms of what we are trying to do. We talked about the America's Cup. I think, without speaking for him, certainly our Government’s position is we are much more interested in the infrastructure components of the America's Cup than we are in sponsorship of Team New Zealand, so we do have interest in doing things there.

CORIN Could you bring forward those projects? Specifically that rail project out to the airport?

SIMON There are things like that that are possible. All I will say to you is this – and that is for the America's Cup, I don't think it's quite the tourism events that, certainly, Rugby World Cups are. So I don’t necessarily think the numbers will mean that it’s necessary to do some of these things. But certainly I am saying to you that infrastructure is important to us, and for the America’s Cup, we’ll be looking very much at how we can add value.

CORIN The rail link to the airport – could that be brought forward?

SIMON Well, of course it could, but again – I’m not trying to be cute here – it has to- just with all of these projects, be weighed up against the other projects, such as north-west busway such as AMETI these other things. Right at the moment, we are going through an ATAP refresher. We are refreshing our processes with Auckland. In the next few weeks, I think we’ll have a lot more clarity about that.

CORIN Simon Bridges, thank you very much for your time. Appreciate it.

SIMON Thank you.


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