Thank you for inviting me again to speak at an Automobile Association annual meeting, particularly a conference which is dealing with issues that are so crucial to the future wellbeing and health of our country.

I want to acknowledge my parliamentary colleagues Transport Safety Minister Harry Duynhoven, who is speaking to you later today, and National’s transport spokesperson and former minister Maurice Williamson, who I listened to with interest earlier this morning.

It is difficult to imagine a more appropriate place in which to be discussing issues so vitally affecting our future than in the magnificent setting of Mt Cook, a mighty and proud symbol of our nationhood.

And if this mountain and national park play such an important role in defining New Zealand, then how much more inspiring still is it to be having our discussions today in the Sir Edmund Hillary Alpine Centre Theatre.

Compared to some of the incredible challenges Sir Ed faced, then maybe the ultimate goal for the transport sector, of an “affordable, integrated, safe, responsive and sustainable transport system”, could be seen as one that is much more manageable.

Whatever is the case, no one in this theatre today will be playing down just how much hard work lies ahead in addressing the road safety and environmental challenges that we are focusing on at this meeting.

Before I talk about these issues, I want to say to AA president Noel Vaughan and to the representatives of the 17 AA district councils just how much satisfaction and pleasure I derive from being able to work in such a co-operative way with the New Zealand Automobile Association.

I am not exaggerating when I say that there is contact, either formal or informal between my office and your association at least once or twice a week. No other organisation is better placed that your association to represent the views of New Zealand motorists, and I appreciate both your early input into some policy and your feedback on other policy as it develops.

Your general manager motoring affairs Mike Noon and communications manager Simon Lambourne represent a thoroughly professional, and delightful as well as insightful, team to meet with regularly.

A great example of the AA’s contributions to transport sector debate have been your association’s submissions on the Update of the New Zealand Transport Strategy, and on the Next Steps review and the Land Transport Management Amendment Bill that will set up the new crown entity, the New Zealand Transport Agency.

I will talk about both these issues in more detail shortly, but you only need to take one look at the sizeable AA submission on the Update to realise just how much hard work your organisation is prepared to put in, partly to benefit your members, of course, but also to benefit New Zealand generally.

Thank you sincerely for the positive partnership you have offered since in I became Transport Minister in 2006.

Politicians are not often guilty of understatements, as Maurice and Harry will testify, but it’s an understatement to say much has happened since I spoke at your national conference in Wanganui last year. It is worth recapping on just some of the more important developments, because they give some idea of the scope of the Government’s transport programme.

• In last year’s budget the Government’s investment in land transport reached a forecast $2.75 billion for 2007/08, compared with an investment of just over $1 billion in 1999/2000 when we became the Government.

• We announced an additional capital injection of $145 million for the State Highway Construction Plan and $600 million towards urban rail development projects in Auckland and Wellington.

• We have also introduced several pieces of transport legislation into the House. Among other things, these will ensure value for money in the Government land transport sector, will target drug-drivers, will toughen up on young and novice drivers, develop and improve public transport services throughout New Zealand, enable a regional fuel tax, and create a new transport agency.

• We have launched several new initiatives, which I will also discuss later, to reduce harmful carbon emissions from the transport sector.

• We have announced a range of initiatives to reduce the road toll, to encourage and develop efficient movement of freight, and to develop coastal shipping through a new draft domestic sea freight strategy.

• We have set up a steering group to look at the feasibility of progressing the Waterview Connection section of Auckland’s Western Ring Route as a public private partnership. This will be our largest roading project ever, and it is essential to consider a range of viable procurement options to deliver value for money.

• And, as I have already mentioned, in December last year we launched Sustainable Transport, a discussion document to update the New Zealand Transport Strategy.

It is that latter development that I want to discuss in more detail first today because, as I said, I know the AA has taken a considerable interest in it.

The most important aim behind Sustainable Transport is to include more relevant goals for the sector and reflect what has become a very different operating environment to the one that existed when the strategy was first written. In 2008 we have new challenges that require new measures.

A successful transport system must be sustainable in all facets. Economically it must deliver for industry and users in a sustainable way. Socially it must meet our needs for access and mobility in a sustainable way. And environmentally it must deliver a service that is sustainable for our planet.

I know from your submission that the AA felt the Sustainable Transport document focused too heavily on environmental sustainability and set lofty transport targets.

Officials at the Ministry of Transport are currently analysing submissions for input into the final NZTS update, and I know your views will be seriously considered. I cannot pre-empt what the final strategy will say, but I would like to make just a few comments.

The creation of a truly sustainable transport system – one that delivers on our economic, social and environmental needs – is not optional. We cannot carry on with ‘business as usual’. Reducing transport’s contribution to greenhouse gas emissions is vital. It is non-negotiable for the success of our transport system and for our position as a responsible international citizen.

Marrying the needs of everyone in society, from industry, to vehicle owners, to local government, to public transport users is an incredibly difficult task, and I probably don’t need to tell you that compromise and collaboration will be the key to success.
I am expecting the final update of the New Zealand Transport Strategy to be released in June. The document will provide a high-level strategic plan for transport through to 2040. It will include targets and some specific actions, but we will need to keep working with all transport stakeholders on implementation details, so you can expect further opportunities to contribute -– something I know you are always happy to do. I look forward to your continued interest in this project.

Strategic plans cannot work by themselves, however. All strategic plans need short-term actions or priorities, and in July this year the Government will release its first Government Policy Statement - or GPS - on land transport funding.

The GPS was a new concept recommended following the Next Steps Review of the Land Transport Sector in May last year. It will establish the short to medium-term funding policy and investment priorities for the land transport sector.
It will be a statutory document which is produced every three years under the Land Transport Management Amendment Bill, currently before Parliament and expected to be passed mid-year.

The GPS will ensure funding decisions reflect and help achieve the high-level targets set out in the New Zealand Transport Strategy, and it will provide local government with direction on land transport investment.

The first GPS will be released in July and officials have this week sent a select few stakeholders, including the AA, information on trends, issues and options in the sector.

Officials are seeking feedback from stakeholders on where our expenditure priorities should be and how much funding is needed. This feedback will inform the development of the GPS and I look forward to your input.

The Next Steps review and subsequent Land Transport Management Amendment Bill also signalled other major changes that I will cover now, including the ability of regions to levy a fuel tax if they wish to for accelerating projects that would otherwise not be completed within the region’s desired time frame.

All of the changes in this Bill are designed to ensure value for money and effective leadership in the sector.

The legislation proposes the hypothecation – or full dedication – of fuel excise duty, road user charges and motor vehicle registration fees for land transport expenditure to the National Land Transport Fund, and this change has been welcomed by the AA.
As the graph shows, the ongoing forecast revenue available after hypothecation is significantly higher than NLTF fund would have been without hypothecation. This puts the transport sector in a better position than it would otherwise have been, but it doesn't make the tough decisions go away --- the current list of demands for transport investment already exceeds forecast revenue.

Next year the Crown will make up the difference between the revenue received and the forecast expenditure, but after that expenditure pressures will be funded from the fully hypothecated revenue. The GPS provides a process for us to consider these pressures, and determine the appropriate level of funding, and whether this requires increased revenue from full hypothecation.

The Bill will also seek to establish a new crown entity – the New Zealand Transport Agency – replacing Transit New Zealand and Land Transport New Zealand. This change aims to improve collaboration in the Government sector and ensure cohesive and efficient outcomes.
I know the AA submitted on this Bill through the Select Committee process, which is due to report back on 23 May, and I also know the AA has concerns over the representation of AA members on Regional Land Transport Committees.
I appreciated your qualified support for the new agency, and noted that your submission on the Bill emphasised the need for greater transparency. This is certainly being addressed by the select committee, and I too want to see transparency.
When the Bill was introduced to the House it retained the principle that only direct funders of transport will vote on the Regional Land Transport Programme. The AA, like other groups, will have an opportunity to be a non-voting member in representing one of the NZTS objectives.

I have the power under the Bill to issue Ministerial Guidelines and I will in future be issuing guidelines for RLTCs as to how they select their non-local government members. Organisations with large memberships, like the AA, must be considered.
I want to talk now in more detail about the transport and environment policy developments in the past year. There is absolutely no doubt that this Government is committed to addressing the effects of climate change and air quality. I would like to highlight some of the steps we have taken in the past year to honour that commitment, but firstly I want to show you two graphs that illustrate transport’s contribution to total CO2 emissions.

On 3 January this year, the Vehicle Exhaust Emissions Rule 2007 came into force, imposing higher minimum emissions standards for all new and used vehicles entering the New Zealand fleet.

The Rule gives clear guidance to the new and used car industry that New Zealand will adopt new standards as they are adopted internationally. Emissions from vehicles, particularly older diesel vehicles, are costing the New Zealand environment and costing New Zealanders their health.

The HAPINZ Report released last year showed that 500 New Zealanders are dying prematurely every year as a result of vehicle emissions. That number has grown from 399 in 2002. This Rule is an important part of our plan to arrest that trend.
To address the effects of climate change, the Government has also introduced a biofuels sales obligation. From April this year, the proportion of cleaner-burning biofuels on sale will increase. This will lead to a drop in greenhouse gas emissions and increase energy security. The move was a vital step in increasing New Zealand’s environmental and economic sustainability.

The obligation requires 3.4 per cent of the total fuel sold by oil companies to be biofuel by 2012. The obligation will be reached by the sale of varying mixes of biofuel petrol and diesel. This move will reduce greenhouse gas emissions by more than a million tonnes between 2008 and 2012.

The obligation not only provides an opportunity to reduce emissions, but also opens up new opportunities for the agriculture sector, since most of the biofuels are expected to be made in New Zealand.
This decision is a starting point. Once the infrastructure is in place, biofuels are expected to make up a greater proportion of our transport fuel than these mandated minimum levels.
Another step towards becoming a sustainable nation has been taken with the release of a discussion document on a Vehicle Fuel Economy Standard for all new and used light vehicles entering the fleet. Submissions on the proposals actually closed today.

The proposals aim to set an appropriate standard to improve the fuel economy of vehicles entering New Zealand and in doing so will reduce both harmful emissions and the amount of fuel we use.
The light vehicle fleet currently makes up 93 per cent of New Zealand's total vehicle fleet. In 2005, transport represented 18 per cent of New Zealand’s total greenhouse gas emissions.

The fuel economy standard should influence importers and consumers to buy vehicles with better fuel economy. It will contribute to a reduction in carbon emissions, and help move us closer to a sustainable transport system for all New Zealanders. Further, by purchasing more fuel efficient vehicles, and driving and maintaining them well, New Zealanders will benefit from reduced running costs.

The final major step the Government has taken to improve the environmental performance of the light vehicle fleet has captured headlines recently. I’m referring to emissions from noisy vehicles.

The Vehicle Equipment Rule comes into force on 1 June and the Government recently announced further proposed amendments to complement that rule. These further amendments are yet to be consulted on and I will leave it to my colleague, the Minister for Transport Safety, to discuss this with you later this afternoon.

I now want to turn my focus from environmental sustainability to that of the first objective in the New Zealand Transport Strategy, and that is “assisting economic development”. The development of new freight initiatives is a key to the efficient and improved movement of freight throughout New Zealand and around the world.

In November last year the Government launched Sea Change, a draft domestic sea freight strategy. In the strategy we outlined a target of wanting to see at least 30 percent of all inter-regional freight carried by coastal shipping by the year 2040. At present about 15 percent of freight is carried by coastal services, including the Cook Strait ferries.

There is wide acceptance that by around 2020, the amount of freight that must be moved around New Zealand is expected to double, putting pressure on the existing transportation system and network.

To reduce the transport system’s heavy dependence on fossil fuels and to reduce greenhouse gas emissions, we need to actively develop the coastal shipping sector.

Sea Change offers a practical action plan to help transform domestic freight services, including establishing an Maritime Liaison Unit within the Ministry of Transport, addressing perceived barriers to coastal shipping, working with industry to address the supply of skilled workers and gathering more information to get a clear picture of services, their performance and required improvements.

Following extensive consultation with the sector, the final domestic sea freight strategy is now in the final stages of production and I hope to release that publicly in the next few months.

Also on the freight front, the Government has commissioned a freight study which is being jointly undertaken by the Ministries of Transport and Economic Development. The purpose of the Study is to enhance our understanding of freight issues and future freight needs. There is a significant information gap on freight movements in New Zealand that needs to be overcome for the Government to make informed decisions on freight issues. The Study is a starting point for this.

I expect the study to be complete by June and the findings will be made public. The findings will help inform future policy decisions on freight and I look forward to sharing those findings with you.

A third aspect of our work around freight over the past year has been a decision to do further work on developing a controlled permit system to allow heavier vehicles on specific New Zealand routes.

I recognise there are concerns around heavier vehicles and these will be worked through. Under a permit system access to roads and bridges would take into account the impact on infrastructure. The developing role of rail and coastal shipping will also be considered. These modes are relatively energy efficient and will contribute to a reduction in emissions. They are also likely to play a critical role in logistics for import and export cargoes.
Public safety issues are also critical, but we know that, if properly managed, heavier vehicles can enable the freight task to be undertaken by a reduced fleet with superior steering and braking systems.

I expect a permit trial to begin later this year and I know AA has a very keen interest in this trial. We will keep you informed of the trial as it progresses, and its eventual outcomes.

I certainly cannot let today’s event pass by without a mention of public transport, and in particular of a huge success story in Auckland that is going a long way toward freeing up space on Auckland’s congested roadways.

Auckland’s $300 million Northern Busway opened this year and has surpassed all patronage forecasts, taking around 500 cars off the Northern Motorway each day. Five hundred fewer cars means less congestion, 1000 tonnes less carbon dioxide emissions, and 400,000 litres of fuel saved every year.

If we want people to use their cars less, we must provide affordable, efficient, public transport. This busway is an excellent example of what the Government envisages for the Auckland region – a world class public transport system that meets the needs of everyone.

We are achieving that vision through sustained investment. In the 1990s, public transport spending was frozen at around $40 million per year. In the 2007/08 year, the government expects to spend more than $480 million on public transport, and we don’t see that investment slowing down any time soon. The total government spend on public transport will top $2.5 billion over the next five years.

Finally today I want to touch on road safety, although I know you will be hearing much more on this issue later from Harry.

New Zealand is facing testing times for road safety. While our road toll has continued to trend down since 1990, it is still too high and every Monday morning we are hit with story after story of tragic and avoidable road deaths.

Harry will take you through the number of initiatives the Government has undertaken to address road safety, however, there are two issues I would like to highlight briefly.

I want to highlight one initiative that is close to my heart --- that is the introduction of 40km/h speed zones around schools. In the past five years, more than 1200 child pedestrians and cyclists have been killed or injured during school terms.

I visited Hamilton earlier this year to launch the introduction of 40km/h speed zones around 18 Hamilton schools. The 40km/h speed limits send a strong message that speeding around schools is dangerous and won’t be tolerated. Because children are small and often easily distracted and unpredictable, drivers have to be extra vigilant when driving near schools.

It is encouraging to see so many schools, the Police and local authorities working together to make the roads safer for our children. It also gives parents peace of mind that the school gate is a much safer place.

The trouble with speaking at an annual meeting is that there is always so much to cover, but I hope what I have said today has given you an insight into the Government’s plans for the transport sector in the coming years and highlighted what we all need to achieve together to reach our own Mt Everest for the transport sector.

I want to thank you once again for your association’s contributions to the sector, and I look forward to our relationship going from strength to strength. Thank you for inviting me to join you today