OPENING SPEECH FOR APEC URBAN TRANSPORTATION FORUM ON ENERGY, TECHNOLOGY AND THE ENVIRONMENTTransport
Welcome to New Zealand and the APEC Urban Transportation Forum on Energy, Technology and the Environment.
Last year I attended the first meeting of APEC Transport Ministers in Washington DC.
Many of the topics discussed revolved around the themes of energy, technology and the environment which you are discussing here today.
Later this year, Korea is hosting an Urban Transportation Forum under the auspices of the APEC Transportation Working Group.
New Zealand is currently lead shepherd of this group.
We hope that the discussions you hold here are communicated to the Transportation Working Group and vice versa so that there is no duplication of initiatives.
My message today is the same one I gave to my colleagues at the Ministerial Forum in Washington DC.
It is that market driven solutions are the best option for sustainable transport operations.
Energy, technology and environmental solutions will only be effective if they take place in an effective market framework.
New Zealand, more than many other countries, has had to learn this lesson.
As a small nation a long way from the major markets of the Northern Hemisphere, we rely heavily on efficient transport.
To make our transport sector more efficient, we have moved large parts of the transport sector into private ownership, removed bureaucratic barriers to competition and encouraged innovation.
By privatisation, I mean private business sector ownership, not corporatised Government owned operations.
The urban transport sector, like all facets of transport, has undergone significant change.
Between 1983 and 1989, New Zealand progressively removed all competitive restraints from the land transport sector.
In addition, local and regional government were required to separate their planning, funding and service activities.
Since 1989, Competitive Pricing Procedures have been introduced which require local and regional government to tender out services.
Greater operator efficiency, and more services purchased for less funding.
Urban passenger transport
In urban passenger transport, we removed route protection for all urban passenger commercial services.
We removed Government approval of fares and charges.
And we removed quantitative controls for a stronger qualitative, that is, a fit and proper person, environment.
We also introduced Compulsory Pricing Procedures for all passenger funding on contracted services.
Regional councils were no longer able to own public transport and had to divest.
Local authorities had to corporatise bus operations or divest them to the private business sector.
In 1989 there were 12 such operations, now there are only two.
The benefits derived from these changes include more competition on commercial services.
We have gained greater efficiencies through Compulsory Pricing Procedures, especially where local government has been involved.
There has been a slight increase in commercial services.
And there has been an increasing level of innovation.
In some areas, taxi companies are now running total passenger services.
In the regional centres of Palmerston North and Wanganui, mini buses with 10 to 12 seats have completely replaced big bus services
And in the Hutt Valley in Wellington, the use of smaller 25 seater buses providing more frequent services has substantially increased patronage.
Taxis Deregulation of the taxi industry has taken place by removing quantitative controls for a stronger qualitative environment.
There is no longer any central approval of fares and charges.
Companies set their own fares.
They are however, required to notify these to the appropriate regional council and to the Land Transport Safety Authority.
That Authority is the organisation responsible for overall land transport safety and regulation following reform of the transport sector.
What have the benefits been?
We now have reduced fares.
In metropolitan areas, 71% of taxi companies have reduced their flag fall and 77% have reduced tariff fares.
We have more cabs on the ranks, with cabs queuing for customers instead of customers queuing for cabs.
Both vehicle and driver appearance standards have generally improved.
And we have taxis involved in activities other than traditional taxi work, including providing scheduled route services.
The message is clear.
Privatising public passenger services and removing quantitative restrictions leads to a more flexible and responsive urban passenger transport market - one that is customer-driven and with prices reflecting market demand.
Land Transport Pricing
Privatising transport operations is one part of the equation; getting the price signals correct for the land transport sector is another.
For the land transport sector to operate efficiently, it needs to bear the total cost of its operations.
To gain a handle on the true nature of these costs, New Zealand has embarked on a Land Transport Pricing Study.
This study has three main components:
Costs of Roading Infrastructure
Costs of Safety
Costs to the Environment
For the first time, we are on the way to a clear picture of what it costs to provide and maintain our physical roading network.
We need to know these costs if we are to develop a roading network which is sustainable in the long term and which can cope with economic growth.
Putting road transport on a similar footing to other transport sectors is important.
We need to be able to compare road transport to rail, coastal shipping and aviation which already operate in a commercial environment.
If people are to make proper choices about the journeys they make or the way they transport their goods, they need accurate information about the costs of the transport modes they use.
The Land Transport Pricing Study will enable us for the first time to make full cost decisions with respect to our land transport operations.
Funding Mechanisms and Processes
Another important facet to delivering sustainable transport operations is the manner in which roads and road transport is funded.
Funding decisions for the road network must not be in the hands of politicians at any level if cost effective investment decisions are to be made.
New Zealand has recently established an independent funding agency called Transfund.
Transfund will be responsible for distributing money from a dedicated national fund for land transport.
It will decide on the funding priorities between different roading projects, including between state highways and local roads and between roading and other alternatives.
In the urban context, this will enable public transport to be funded where this provides a cost effective alternative.
Where should funding be delivered in the urban passenger context?
Most journeys are made by car.
Whatever your personal view of them, cars provide tremendous advantages.
They are ready when you want them, they go where you want them to go and they provide a comfortable way to travel.
In my view, alternative forms of passenger transport will only have a long term future if they can offer a serious alternative to the private car.
For too long, public transport has operated for the convenience of the operators and not for the travelling public.
New Zealand spends about $100 million a year supporting public transport.
Most of that goes to operators of public transport.
I believe we need to target that money better by giving it to those who travel, not to those who run buses, trains and ferries.
If we funded individuals in this way, through a system of user side subsidies, transport operators would face a straight commercial market.
For energy, technology and environmental strategies to be effective for urban transportation, and for that matter, any transport sector activity - effective operator, pricing and funding environments need to be in place.
New Zealands experience has shown that the private business sector is the most effective and efficient at delivering urban transport services, not Government entities in any shape or form.
Comprehensive pricing of the land transport sector is necessary.
In New Zealand, the Land Transport Pricing Study opens up the debate on how we should cost and charge for our roads and their use.
Funding structures for roading need to be driven by effective cost information and delivered through non political mechanisms to provide for the needs of the 21st century.
Orderly development of public transport is necessary to help the smooth running of our cities.
At the same time, we have to recognise that for most people, public transport only becomes relevant when it offers a better service than the private car.
We cannot force people on to public transport because bureaucrats think it a good idea - it has to be attractive in its own right.
This is where I believe the private sector has a bigger role to play.
It is my belief that private operators are more capable of providing public transport services.
In order to break new ground, we need to think of wider options than in the past.
This way, both the private car and public transport systems will be driven by effective market signals and operate in a manner that reflects sustainable urban transport solutions.