Speech to Rural Contractors Annual Conference

Thanks for the opportunity to speak to you today.

Your organisation plays a valuable role as an advocate for rural contractors, and as an interface between your members and the government.

I'm here today as Associate Transport Minister, but also as a farmer. I have a family dairy farm just out of Levin, so I have a bit of insight into some of the issues you face.

Transport is a vital part of your industry, so today I'd like to update you on the government's goals in this area and some issues that affect you directly.

Transport driving the economy

The government is serious about making the New Zealand economy grow faster.

It will be no surprise that our top priority for transport is to maximise its contribution to economic growth.

As a small, remote nation we rely on tourism and exports to earn a living in the world. We need to move freight and people as quickly and efficiently as possible while removing blockages.

We are now well underway in making the biggest investment in New Zealand's roading network that has ever been made.

Over the next decade we are planning to invest nearly $11 billion in new infrastructure for New Zealand's state highway network. 

That's new infrastructure - and that's alongside record spending on maintenance and renewals of the existing network; and record government investment in the local roading network.

The major priority is easing bottlenecks within and around our main cities, and linking our major sea and air ports into the state highway system.

These are the projects that will give the biggest lift to productivity and economic growth.

I noted some comments recently from Jeremy Sole, Head of the Contractor's Federation. He said that this programme of building had created confidence and enthusiasm in an industry that otherwise would be looking at cutbacks.

He also said:

"It is unlikely that New Zealand would have been able to retain the skills and ability to deliver major infrastructure projects during the post recession recovery period."

Road user charges reforms

Another big priority for the government is removing unnecessary red tape.

You might be aware of Transport Minister Steven Joyce's announcement this month on a package of proposed reforms to the road user charges (RUC) system.

The reforms are the most significant changes to the RUC system since it was introduced in 1978.

These reforms will be introduced to Parliament later this year, and are designed to simplify and modernise the system.

We want to reduce compliance costs for transport operators and ultimately for our businesses and exporters.

We also want to reduce evasion, which officials estimate is around $30 million a year. This means that honest users are subsidising those who dodge the system.

The government is proposing to change the definition of licence weights, remove the confusing time-licence system, and simplify the list of vehicles exempted from RUC.

I hope this is good news to this audience.

Of the 580,000 vehicles currently paying a RUC charge, around 7,500 - or 1% - currently need a time license. This is expensive to run and adds a lot of complexity. It's also difficult to set a fair and objective charge for time licenses.

It's not very often in speeches I get to talk about tractors, but I know this will be of interest to you.

We are proposing that all tractors be treated equally. They will be exempt from RUC but instead will pay the standard annual licence fee - currently $43.50.

A new one-off charge would replace the time license charge for other vehicles.

These changes will make the RUC system fairer and easier to understand.

Legislation will be introduced later this year, and there will be further consultation with affected users before changes are implemented.

Vehicle Dimensions and Mass Rule amendment

The government is also changing the use of heavy vehicles on our roads with an amendment to the Vehicle Dimensions and Mass Rule.

The amended Rule, which came into force in May, lets road controlling authorities issue permits for vehicles to operate up to 53 tonnes on certain routes. Previously the maximum allowable weight was 44 tonnes.

This will deliver real gains for both the economy and the travelling public.

It will help to reduce road congestion, operating costs, vehicle emissions and improve the road safety environment by slowing the increase in heavy vehicle movements on New Zealand's roads.

We could see productivity gains in the range of 10 to 20 percent by using fewer trucks to carry a given amount of freight. It could result in an increase in GDP by up to $500 million a year.

The Rule amendment also included a number of other changes that deal with issues raised by your industry.

For example, certain over-dimension farm vehicles no longer need to comply with travel time restrictions if they can travel without taking up more than one lane of the road.

Work Time and Logbooks Rule amendment

Another issue your industry has raised with the government is around work time and log books.

The Land Transport Rule: Work Time and Logbooks Amendment (2010) came into effect this year. This sets a framework for dealing with road safety risks from driver fatigue for users of heavy motor vehicles and commercial vehicles.

I am sure your members will be pleased the compliance burden on your sector has been reduced.

Previously, only farmers were exempt from having to fill in a logbook. This has now been extended to cover all tractors with a limit of 50 kilometres on road in any day, such as those operated by agricultural contractors. 

This was further extended by adding "self-propelled agricultural machinery" to the list of exemptions.

As a farmer myself I fully understand that contractors need to ‘make hay while the sun shines', and that time limits can be frustrating when working on time and weather critical jobs.

Agriculture is vital to the New Zealand economy and there is a need for greater flexibility of work hours at certain times.

We also recognise that much of the work done by contractors happens off-road. Some contractors have been in discussion with the NZTA about short-term variations of allowable hours.

My understanding is that while this helps, we still have some work to do to make the process less onerous.

But like most regulations, it's a balancing act for the government and for officials.

Driver fatigue is a serious road safety risk, especially for the heavy commercial transport sector.

Most other countries manage this risk by legislating maximum driving hours and minimum rest hours. Similar restrictions in New Zealand are there for a good reason.

I understand there have been positive and constructive discussions recently between your representatives, transport officials and Police about this issue.

I know that one area of concern is the requirement to make a request in writing to change the work time. Unfortunately this is required by legislation, which means it can only be changed by Parliament.

The good news though is that later this year Parliament will be considering changes to the Land Transport Act. 

This will be your opportunity to make a submission on transport issues of concern to your sector. 

I urge you to work with your industry leaders so your views can be heard. 

ACC reforms

I want to touch on another couple of new policies, not directly related to transport, which affect your industry.

Last week the government announced changes to ACC to encourage safety and reward good employers.

From April next year, large employers paying more than $10,000 a year in ACC levies will be eligible for a discount or loading of up to 50%, depending on their claims history.

For smaller employers, a simple system of no-claims bonuses and high-claim loadings will apply.

The proposal is that if no weekly compensation claim has been lodged in the last three years, the employer will receive a 10% no-claim bonus on their ACC levies.

Penalties will apply if there has been more than four weekly compensation claims in the last three years.

We expect around 220,000 small businesses will receive a discount under this policy, and around 1000 will pay more because of their safety record.

This will make the system fairer, and reward good employers who take safety seriously.

90 day trial

The other new policy is extending the 90 day trial for new employees to include all employers, large and small.

This is an important step in creating more jobs and opportunities for New Zealanders. 

Jobs are created when a business is prepared to give someone a chance - often someone they've never met before and know very little about.

The trial period gives employers the confidence to give a prospective employee a shot at work.

It gives many disadvantaged people - such as migrants, young people and the long-term unemployed - a chance to prove themselves.

The research shows many jobs have already been created that wouldn't have happened without the trial period.

Conclusion

Can I finish by just reinforcing how committed the government is to maximising economic growth and productivity. This means more jobs, higher incomes and better opportunities for New Zealanders.

To do this we need to keep investing in infrastructure, removing red tape and continuing to build relationships with all the industries that contribute to the economy.

Can I thank you for inviting me today to discuss these issues. I hope that many of the changes I've outlined today will be welcomed by your members.

Thank you.