Pavement and Bitumen Contractors¡¦ Association Annual General Meeting

Kia ora koutou. Greetings to you all.

May I say particular greetings to your association chair, Paul Bishop and the members of your executive council.

Thank you for inviting me here today. Firstly I would like to convey to you the apologies of my colleague the Minister of Transport, Mark Gosche. I know he would very much have liked to have been here today.

He has asked me to pass on both his apologies and his best wishes for an engaging and constructive meeting.

He and I attach a lot of importance to meeting with groups such as your association. You play a key role in the transport sector.

In my view an active and ongoing dialogue between government, local authorities and groups such as yours is vital to getting the development of New Zealand¡¦s transport infrastructure right.

Overview of Land Transport

I would like to begin by summarise this government¡¦s thinking on roading. There are three main points I would like to make.

The first point is that there is now a broad consensus that New Zealand is facing major problems in the land transport area and these need to be urgently addressed.

The previous government spent nearly five years in debate on roading reform but at the end of the day failed to deliver any meaningful improvement.

This government does not see itself as having the luxury of such a leisurely time-scale.

We have to start applying practical solutions to fix New Zealand¡¦s land transport problems.

A second key point is that any changes in land transport should be incremental and progressive rather than based on some sort of ¡§big bang¡¨ approach. In devising solutions this government favours a pragmatic approach that draws on proven practice in New Zealand and elsewhere.

The third key point is that this government wants to build a sustainable transport system.

To achieve a sustainable transport system, we must carefully balance the interests of safety, customer needs, investment, the environment and social equity.

The government has begun that task.

Road infrastructure problems

You will all be very aware that our roads demonstrate daily that they are becoming inadequate for the task they are asked to do.

The underlying cause of this situation is not a mystery. During the last decade road traffic in New Zealand grew by 4% a year. At this rate traffic volumes will double in the next 18 years.

There are some very vivid examples of how serious the problems are. The most visible sign of inadequacy is the traffic congestion in our major cities. One study estimates that Auckland¡¦s congestion alone costs New Zealanders, not just Aucklanders, some $800 million plus per year.

Nor are road infrastructure problems limited to metropolitan areas. As contractors you will be well aware that some regional networks are having difficulty keeping pace with the financial and operational demands of a growing and changing economy and society.

For example, dairying in Southland, forestry in Marlborough and tourism in Coromandel or Northland put pressures on our roads that local communities struggle to meet.

Plainly, there is a need to upgrade and enlarge our road system.

Yet, at the same time the limitations of our systems for road charging are becoming evident.

Alternative power systems such as hybrids and fuel cells are no longer science fiction. The resultant gains in fuel efficiency will make the current petrol tax system an increasingly unreliable and unfair way of paying for road use.

Growing Consensus

Certainly this government believes New Zealand cannot afford to allow the situation to drift.

Our manifesto set out a number of areas for road management and investment that we wanted to explore, and my discussions with interested individuals and sector groups have raised other issues.

I believe from those discussions that there is a general agreement that we need to change the way we manage and fund our land transport system. Many people believe that we need to find better ways of charging for road use, and that some changes to management structures are desirable.

There is now a growing consensus that we can make pragmatic progress this year in a number of areas:

„h We need to work with our roading partners on systems to manage the external impacts of the road system. This needs to include improving safety and environmental management and our public transport system. In doing this, we need to make it clear that road corridors are for a wide variety of users, including pedestrians and cyclists. They, just as much as motorists, have a right to use road corridors in safety.

„h Secondly, we need to examine, with our roading partners, the way in which we charge for roads. We also need to consider whether the present funding system can be made simpler, while retaining its basic principle of cost effectiveness.

„h Then we want to talk with the other stakeholders about whether our present management structures can be improved, without generating some of the upheavals that have characterised reforms in the past.

Improving the roading system is clearly not just a matter of dealing with a few high profile road projects or ¡§hot spots¡¨. We have to put systems in place which ensure real value for money and let us prioritise our investment. The rules need to be clear and fair. We want to take decisions without the constant air of impending crisis that too often seems to characterise land transport investment.

It also needs to be clear that we cannot continue building roads for roads sake, as we have in the past. We are not about to try and emulate Los Angeles and out-build traffic growth.

Funding for Roading

Having said that, clearly we certainly need some new roads as our economy grows and changes. Freight access to industry, ports and airports is particularly a priority .

Transfund announced recently that it has been able to increase its total land transport funding by 27 percent, compared to only four years ago.

Because of growth in the economy and the fact that New Zealand¡¦s roading systems are providing good value for money, they will have about $940 million to spend on this year¡¦s National Roading Programme.
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About 22 percent of this ¡V that¡¦s about $170.8 million - will be devoted to Auckland¡¦s needs, which acknowledges the region¡¦s rapid growth and the ever increasing demands on its infrastructure.

Projects now with a benefit/cost ratio of 3.0 are being funded, a significant improvement on the level of 4.0 which had been the case for the past few years. Of note is $97.8 million set aside for new projects that are in the pipeline and may commence in the next year. Some of these are on a significant scale such as:

„h realigning and extending the four-laning of State Highway 1 between Auckland and Hamilton;
„h Bypassing State Highway 3 at Bell Block in Taranaki;
„h Realigning State Highway 3 south of Hamilton to bypass Rukuhia.

In addition, 23 investigation projects have been funded which should generate construction projects worth half a billion dollars over the next ten years.

The ongoing increases in spending is good news for the roading infrastructure ¡V and I think it is excellent news for the pavement and bitumen contracting industry as well.

Environment

The government is also determined to carefully manage the environmental effects of our transport systems

Before the end of this year, the government expects to put in place new emission standards for all vehicles arriving in New Zealand for the first time. We need to make sure that all imported vehicles ¡V whether new or used ¡V meet the best international practice for air emissions.

I also believe that we need to review those sections of the Resource Management Act that deal with land transport. I can see no valid reason why roads and railways should be exempt from the air emissions requirements of that Act. I strongly believe that new road and rail projects would greatly benefit from full public evaluation and monitoring of their impacts, as part of the wider community overview of the environment for which local authorities are responsible.

We are also working on new rules to govern smoky road vehicles. While the intent of the current law is a good one, its administration is unreasonably complex, and plans for a simpler approach to dealing with smoky vehicles are well advanced.

In addition. the government has decided to accede to the Kyoto Protocol on Climate Change in the second half of 2002.

This means that we will be making a commitment that by 2008 we will have reduced our greenhouse gas emissions to no more than they were in 1990.

This is no small task.

Currently the transport sector generates about 15% of New Zealand¡¦s total greenhouse gas emissions. The bulk of those emissions are CO2 generated by the burning of fossil fuel on our roads.

This means that we are going to have to make a serious effort to improve road vehicle fuel efficiency.

Making progress on climate change is a high priority for the government. If we work together in a pragmatic way, I believe that we can both meet our environmental goals, while making more efficient use of our transport system.

Safety strategy to 2010

Transport safety is another high priority goal for this government.

Our most immediate task is to continue to improve our road safety record. Over the last decade, the road toll has been substantially reduced, but we are still well below the best results achieved by similar countries.

The government has now made a series of decisions that will enable us to make substantial immediate improvements in road safety, while we develop a more strategic approach.

These decisions included funding 225 extra police officers to work exclusively on road safety on the State Highways, the most highly used part of the road system.

In addition we have almost doubled the amount of money going to community driver education initiatives, with particular emphasis on initiatives coming from the Maori and Pacific Island communities.

The government is now considering a long term road safety strategy for the next ten years to 2010, which we plan to release for discussion in the near future.

Over the last three years a wide variety of government and community organisations have worked together on this strategy, and the result does them credit.

The first key question in that strategy will be: how far can we push the road toll down over the next ten years?

If we adopt current world best practice as our goal, then we are looking at a reduction in our road toll from just over 500 deaths per year to 280 per year. That is no mean target when we also expect substantial growth in traffic over the same period.

The second key question will be: how do we achieve our chosen road safety goal?

There is a wide range of possible options ranging from substantial increases in enforcement standards and activity through enhanced and improved education programmes to a massive programme of road rebuilding and improved ways of managing road infrastructure.

Each option has its costs, both social and financial, and I will be seeking wide community input into these issues before the government sets a long term direction later this year.

If this road safety target setting process proves successful, then it is my intention to use the same analytical and consultative approach to set long term safety targets for other modes of transport, such as shipping, aviation and railways.

I hope that your association will give the 2010 discussion document careful consideration. The government would value your input on this issue.

Public Transport

Turning now to public transport, I believe that New Zealand needs a better public transport system.

As part of the Budget, the government has already announced a series of immediate measures to begin the improvement of public transport in New Zealand.

„h The artificial limits on public transport spending imposed by the last government have been abolished.

„h From October this year, we will put in place a new system of funding that pays extra money to Regional Councils in direct proportion to the number of passengers using public transport in their region.

„h Transfund New Zealand is reviewing the rate at which financial assistance is given to Regional Councils, with a view to increasing the share of funding from the National Roads Fund, thereby releasing additional regional funds for further passenger transport service improvements.

„h Current requirements for cost effective expenditure will be kept in place.

We estimate that if Regional Councils seize these opportunities, as we expect they will, passenger transport funding from the National Roads Fund could rise from $46 million last year to $93 million in 2003, with large benefits in terms of accessibility in our major cities.

Bringing it all together

If the transport sector is to support a positive future for New Zealand, then we have to work towards an integrated and sustainable transport system.

Uniting all the elements in that system into a comprehensive package that sets a clear path for the whole transport sector is a complex and challenging exercise, but one to which we are committed.

The government intends to develop, with stakeholders, a New Zealand Transport Strategy to bring together all the issues I have discussed today into a comprehensive package that will give certainty for future investment and development.

The New Zealand Transport Strategy will have to set long term directions in terms of safety, environmental performance and accessibility. It will emphasise that the core issues of investment and innovation will depend on a commercially focussed transport and distribution sector that will thrive by providing high quality service to all its users.

The Role of Contractors

Finally I would like to reiterate my earlier comment on the importance of organsiations such as yours.

Your industry has an indispensable role in helping achieve the government¡¦s land transport objectives.

From the government¡¦s perspective we want to see an industry that continues to be responsive and innovative in delivering its products and services.

In my view, the contracting industry has every reason to be confident. After all, you have a government that appreciates the role and the value of the private sector as a partner in building New Zealand¡¦s transport infrastructure.

You also have a government that is taking a pragmatic approach to solving the country¡¦s transport problems. We are looking for workable solutions that are cost-effective and appropriate to New Zealand¡¦s circumstances.

We want solutions that will allow the investment to build the transport infrastructure New Zealand needs.

Conclusion

There is a lot to do. That is evident from the range of issues that I have covered in this speech. This government wants to continue to work with key interest groups such as yourselves to make progress in transport. That means that we have to keep talking to each other. Dialogue with groups such as yours must be on-going.

As my speech has indicated I firmly believe that change is necessary in a number of key areas in the transport sector. I also believe that any change must be progressive rather than an upheaval, and that evolutionary change can only work if people talk to each other to find pragmatic solutions.

I look forward to working with you to make that change happen.