Good morning - it's a pleasure to be here with you today.

The topic of your conference - Fast Tracking National Infrastructure - has perhaps never been as topical or as important as it is now.

There is no doubt that times are tough - around the world and here at home.

The global economic meltdown is now having a visible impact in New Zealand, with falling house prices, tighter criteria around bank credit, a weak sharemarket, and rising unemployment.

The Reserve Bank estimates the New Zealand economy is in its most prolonged recession since the 1970s.

Treasury's downside scenario predicted unemployment would peak at 7% next year. That may now seem optimistic.

The economy is expecting to permanently lose about $50 billion over the next three years. Compared, that is, to where we would have been without the recession.

Core crown expenditure in the year ending June 30 is expected to be $63.5 billion - up 51% in the past five years.

But the economy has grown just 23% in that time. And tax revenue has grown by just 24%.

If we continue on the same spending track, preliminary budget forecasts show we would have annual operating deficits of $10 billion. Indefinitely.

The government is working hard to take the sharp edges off the recession for New Zealanders, while ensuring we don't move too far into debt, and the Finance Minister will have more to say about that in the Budget in four weeks time.

But nothing we can do will roll back the deepening global recession.

Since becoming Government we have done a lot to cushion the recession's effects here in New Zealand and lift long-term growth.

Our stimulus is large by world standards - but we can't afford to spend much more.

 

Jobs and Growth

Our comprehensive "Jobs and Growth Plan" will shield us from the worst effects of the world economic meltdown, while preparing us for strong growth.

The "Jobs" part of the plan is a list of immediate measures like personal tax reductions, our Kiwi Business support package, early capital spending on roads, housing and schools, the Jobs Summit, nine day fortnights and our Restart redundancy assistance package. 

They will all help protect Kiwi jobs in the short-term and ease the path to new jobs.

"The Growth" part is about putting the building blocks in place to grow quickly when the world economy turns around. 

It's about a tax structure that rewards hard work, reform of the RMA to allow people to do more things, our Build New Zealand infrastructure plan with investments in roads, schools, housing and broadband, our Frontline Services Plan to improve public services without spending more money, and our Education for Success Plan - which will tackle the long tail of underachievement in our schools.

The government believes better infrastructure will contribute to both parts of the equation - jobs and growth.

And that's why we're here today - to talk about fast tracking infrastructure spending. 

 

Accelerating infrastructure

Governments around the western world are boosting infrastructure spending as a means to preserve or create jobs and support their economies.

We're doing it here at home too.

Earlier in the year we brought forward $500 million in infrastructure spending on roads, schools and state houses.

In my main area of focus - transport - we were able to bring forward five major roading projects, including the Kopu Bridge replacement and much-needed work on the Christchurch Southern Motorway.

I'm pleased to say that after the endorsement of the Canterbury Regional Transport Committee, this project will soon go out to tender.

We also brought forward a further $100 million worth of road maintenance and renewal work around the country, with $34 million spent in 2008/09, and a further $66 million in the following two years.

This will cover smaller scale state highway projects and include safety improvements and pavement renewals. 

The funding is over and above that available from the National Land Transport Fund, and will allow a number of key small and medium size projects to begin construction earlier than planned.

It will give more New Zealand firms the opportunity to lock in long-term contracts and it will give them the confidence to take on new employees. It will also improve the incentives for firms and employers to invest, and it will bolster their confidence in New Zealand's future growth opportunities.

The cash injection is providing immediate economic stimulus in the regions with the majority of suppliers and subcontractors expected to be regionally based, using a regional workforce and material so local contractors and their communities will benefit from the increase in work.

This is a critical way in which the Crown can use its balance sheet to provide New Zealanders with jobs and security in the midst of domestic and global recession.

 

Overall funding boost

The second point I want to make today is that while boosting infrastructure spending is important in these difficult times, beyond that it's vital to ensure we have the infrastructure we need to encourage and support longer term growth.

The productivity benefits of sound transport infrastructure cannot be overlooked.  Our economy relies on the state highway network - when traffic isn't moving, neither is the economy.

That's why the government announced additional spending of close to $1 billion over the next three years on our state highway network. 

And that's not a one-off - it's here to stay.  This means we'll now spend about a billion dollars each year on the network.

This will provide around $10.7 billion over 10 years for investment in the state highway network, and that is a much more appropriate level given the importance of the network to New Zealanders.

In contrast, the previous government had signed off on a 9% decrease in the state highway budget over the next three years.

Our funding boost is about realigning the land transport programme to ensure it reflects the realities of how New Zealanders get around and how we transport our goods.

It's about ensuring we're as productive as we can be and that we spend less time stuck in traffic and more time growing the economy.

 

Transport Funding

Last month the Prime Minister and I announced changes to the transport funding system which will ensure the extra funds required to address the infrastructure deficit are available.

To make this happen we will be amending the Government Policy Statement on Land Transport Funding.

Our political opponents would like you to think we are slashing funding from public transport, road safety and walking and cycling so we can direct the money to state highways.

I want to assure you this is not the case.

The money is coming from three areas:

• o $258m in new crown investment (paying for NZTA's share of Wellington Passenger rail infrastructure).


• o $283m increases in FED and RUC (commencing 1 October and replacing regional fuel taxes).


• o $420m reallocation from non-state highway classes.

I want to stress again here that this does not mean cuts elsewhere - in almost every case funding levels will continue to increase over time.

Removing rail from the National Land Transport Fund will not only simplify rail funding,  but will also make sure that money paid by road users, such as fuel excise duty and road user charges, is spent on the roads.

We are replacing inefficient and expensive regional fuel taxes with small increases in excise and road user charges.

This is a much simpler system and will deliver benefits to road users across the board.

 

Roads of National Significance

We've also announced the first seven Roads of National significance. 

These are routes that we've identified as requiring work, as a matter of priority, to reduce congestion, improve safety and support economic growth.

And as such we've asked the New Zealand Transport Agency to come up with plans to significantly advance all seven within the next ten years.

So these routes are focussed around our main centres of population and growth.

They are:

Puhoi to Wellsford

The current Northern Motorway is subject to high traffic demand and experiences a number of bottlenecks, particularly around Puhoi.

Further development of this route will cater for the expected future growth and development north of Auckland and ease peak and seasonal congestion.

Focusing on the development of this route will make areas north of Auckland even more attractive for community growth, tourism and businesses looking beyond Auckland for growth opportunities.

 

Auckland projects

The Auckland Western Ring Route includes state highways 16, 18 and 20 and when completed will form a 48 kilometre motorway bypassing Auckland city and linking the cities of Manukau, Auckland, Waitakere and North Shore. This will relieve congestion and provide a viable alternative to State Highway One.

The completion of this route will also contribute to better links for business and freight between key industrial hubs in the cities of Manukau, Auckland, Waitakere and North Shore.

The Victoria Park bottleneck is also a Road of National Significance and I'm pleased to be able to say that last month the New Zealand Transport Agency advised that they could accelerate by almost a year the $430 million Victoria Park Project in Auckland.

Construction was originally set down to start in November 2010 but we've been able to bring this forward, with a new start date of January 2010.

Its acceleration will create a significant boost in the Auckland construction and contracting market.

I have been advised that because of the forecast reduction in state highway funding under the previous government, the entire project may not have been affordable and may not have been able to start.

 

Waikato Expressway

Providing a continuous divided four-lane highway between Auckland and Cambridge will improve safety and reduce travel times and congestion on State Highway 1.

This section of SH1 is the main southern road access to Auckland, and links New Zealand's 'Golden Triangle' of population and economic growth - Auckland, Waikato and the Bay of Plenty.

Pre-election National committed to having the Waikato Expressway completed within ten years of National taking office.  We remain firmly committed to this in government.

 

Tauranga

The Tauranga Eastern Corridor has been singled out as crucial to supporting growth in the Bay of Plenty - one of New Zealand's fastest growing regions, and providing freight access from across the region to Tauranga.

Wellington

Improved access to areas north of Wellington for commuters and freight will aid the development of New Zealand's economic growth by catering for growth in the lower North Island and improving links to other major urban centres

This route is crucial for the efficient north-south movement of freight and people - 6 to 7 million tonnes of long distance freight enters and leaves Wellington by road and rail every year, with 1-2 million tonnes crossing Cook Strait.

Its development will also put to bed the decades long debate about which route north of Wellington should be progressed.   I'm not sure what the Dominion Post will have to write about.

Christchurch motorway projects

As I mentioned earlier, we have already seen real movement with the Christchurch motorway projects. 

Once complete, this work will improve the city's southern and northern approaches, and provide a western bypass to our second biggest metropolitan area.

There is significant congestion in the northern Christchurch key corridors.  Freight transport performance is declining and public transport performance is constrained by the existing congested route.

Routes of National Significance will be a key plank of our 20 year Infrastructure Plan. 

This Plan is being developed by the new National Infrastructure Unit within the Treasury.  

Its goal is to link infrastructure with targeted, coordinated investment and asset management expertise for our transport system, energy and resources, and communications technology.

From a transport perspective this extended plan will look at longer term larger projects like a third harbour crossing in Auckland, a rail link between Auckland's CBD and its airport, and further four-laning around the country.

I want to spend a moment talking about rail. 

In opposition, National was less-than-delighted by the Labour government's purchase of KiwiRail and the eye popping, philosophically driven price they paid.  But now that it's back in state ownership I can assure you we are committed to making the investment deliver for New Zealand.

Under Labour, rail was managed out of the Minister of Finance's office and by Treasury.  We are about to transfer that responsibility to the Ministry of Transport to ensure more integrated decision making and greater efficiencies.

We want to encourage an environment where rail can operate as efficiently as possible, with strong commercial imperatives to provide the greatest benefit to the New Zealand economy and rail passengers.

The government has made a significant public transport investment through rail in both Auckland and Wellington. 

In Auckland, especially, this investment is well ahead of the demand curve but in time, as we see more Auckland shift from their cars to rail, we'll see real benefits through reduced congestion.  That's got to be a good thing as in Auckland we are going to need all transport modes to work well as the city grows.

There will be an expectation that investment in the national rail network provide a commercial rate of return. Taxpayer subsidies should be the exception, not the rule, and be provided only as a last resort and where there is clear evidence that it will improve service and provide public benefit.

Another key infrastructure plank for the government is ultra fast broadband.

During the election campaign our Prime Minister John Key committed to the roll out of ultra fast broadband to 75% of New Zealanders - where they live, work and study - within ten years. 

The productivity advances and efficiency gains we believe this will bring are enormous.

We've set aside up to $1.5 billion for this and we expect that to be matched by private sector investment.

We remain committed to this goal in government and we have no doubt that it's achievable.

But if we're serious about better, more productive infrastructure spending we need to ensure the regulatory environment is right. 

Our reforms to the Resource Management Act - which are currently before the Parliament - are critical to that.  Our changes are about reducing cost and speeding up the process, whilst at the same time treating the environment with the respect it deserves.

You can see we have a lot to go on with.

In the current environment, infrastructure investment is hugely important.  But it's not about what - or how much - we're spending, but what we're spending it on.

We've made a call not to cut overall investment in this area.  To do so would be a serious negative when the private sector is making cuts.  We're focussing on investment in infrastructure projects that will boost productivity and allow us to grow aggressively out of this current global recession.

New Zealand is a small country that can be a huge success again if we back ourselves, unleash our competitive spirit and give ourselves permission to grow strongly and prosper.  

I commend you for your focus on accelerating infrastructure as a means to achieve that and I look forward to working with you to that end.

Thank you.