Roading New Zealand conference

A world-class land transport infrastructure is vital to New Zealand's economic transformation, Transport Minister Annette King says at the 2006 Roading New Zealand conference in Wellington.

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This is a most appropriate year in which to be holding a conference on the theme of Better Value Roading, and I thank you very much for inviting me to open the event.

The theme is particularly appropriate for a number of reasons, including the fact that this year's Budget made it very clear that the level of Government investment in land transport infrastructure involves recognition that the more efficient that infrastructure becomes, the stronger our economy will grow.

The theme is significant also because in providing greater certainty of funding over a longer time period, the Government's intention is to provide better value for the land transport sector generally, including roading contractors.

And, of course, the theme has added merit because of two current initiatives, the Ministerial Advisory Group on Roading Costs and the Review of Value for Money in the Land Transport Sector. Both these initiatives are designed to ensure the country is receiving value for money.

You will hear more about the reviews later today, but I can tell you I have just received a draft copy of the Ministerial Advisory Group's report and recommendations, and I am currently reading and considering it with a great deal of interest.

I shortly have an announcement to make which I believe will provide you with even better value for your investment in roading, but before I talk about that I want to congratulate the winners of last night's Excellence in Roading Awards.

If I needed convincing, and I assure you I didn't, then the quality of the winners of those awards gave ample evidence that New Zealand has the skills and expertise in planning, design and construction to provide our country with roading infrastructure that is second-to-none in the world.

I received first-hand evidence when I went on a bus tour of the completed State Highway 1 Mercer to Longswamp expressway after opening the stretch of highway on July 28. It might only be 12km long, but it is a magnificent feat of roading construction, and it eliminates a black spot that has claimed the lives of far too many New Zealanders.

This project is a fine example of how Government funding combined with the engineering and technical expertise available in New Zealand can come together to make a huge difference in the quality, efficiency and safety of our land transport infrastructure. This $83 million project will provide value for years to come in the form of lives saved, travel times reduced and fuel used more economically.

I received more evidence of home-grown New Zealand expertise when I flew in a helicopter over the AlpurtB2 project in early August. What I saw was all the more remarkable for its environmental sensitivity, and I am sure that when the project is completed, and New Zealanders drive over this new stretch of roading for themselves, they will be extremely impressed with the ingenuity of our roading sector.

As I said earlier, the Government recognises how important it is to invest in world-class land transport infrastructure as a foundation of our country's economic transformation, and the 2006 Budget demonstrated just how committed the Government is to funding that infrastructure in a way that provides certainty for the sector.

New Zealanders have always adapted quickly to meet changing economic conditions. If we are to retain our competitiveness in the global marketplace, we must continue to transform our economy, but we cannot do that without transforming our infrastructure as well. That task involves everyone here in one way or another. Quite clearly, the roading sector has a pivotal role in the economic future of all of us.

That's why you saw, and I hope welcomed, Budget 2006's unparalleled funding package. In developing this package, the Government recognised that funding uncertainty was having a detrimental impact on the roading sector.

Since 2004 the roading industry has been gearing up, investing in people and plant, and the Government knew it was important to act decisively so that industry was reassured it should continue making that investment.

As you know, to address the shortfall in the State Highway Forecast and across the whole National Land Transport Programme, Budget 2006 provided an extra $1.3 billion over the next five years. This funding will reinstate all the state highway projects deferred in the draft forecast released earlier this year, but goes beyond that, adding an extra $425 million to speed up major state highway projects in the main centres.

The funding means that over the next five years the Government will spend roughly $300 million more on land transport than the total revenue collected from fuel excise duties, road user charges, and motor vehicle registration fees. I am not sure if those outside the sector have fully grasped the significance of this yet.

But the Budget did not simply provide funding. To give greater certainty, we are taking a bold new approach to funding and planning land transport, providing a cost and revenue guarantee for state highway construction and guaranteed revenue for all other land transport activity through a five year appropriation. This will create a buffer against cost increases and revenue decreases.

The package also introduces a regular cycle of review and updating of construction activity. This is the first time such certainty has been provided. In the past, funding had only been allocated by Land Transport New Zealand on a year-by-year basis.

And now to get back to that announcement I mentioned, a statement from Finance Minister Michael Cullen and me that has been timed to coincide with the opening of this conference.

The guaranteed five-year State Highway Plan announced in the Budget is now about to become a guaranteed six-year plan to give the land transport sector even greater certainty.

The plan will still be updated at three-yearly intervals, but the Government has decided that it wants the roading construction industry to have even more information to make sure it has the capacity and capability to do the work expected of it, particularly given the considerable extra funding the Government has provided.

Extending the State Highway Plan to six years means there will be at least three years of certainty for Transit New Zealand, local government and the construction industry at any point in the Plan, including at its three yearly update. This Government is committed to improving New Zealand's transport infrastructure and I certainly hope this latest change will help do just that.

Officials are now finalising details on how the revenue and cost guarantees will work and how the update process will be undertaken, and I am looking forward to seeing the final outcome. I am sure you will be also.

Along with all the initiatives I have mentioned so far, the Government will continue to invest in other ways our relationship with the roading industry.

I am pleased to learn much progress has already been made through the Buildability, Labour and Skills Action Plan agreed between industry and the Government in Manukau nearly two years ago.

I want to acknowledge the industry's hard work, alongside government agencies, in completing so many tasks in the action plan. The industry can be congratulated on innovative efforts to recruit new people, as well as training, developing and retaining existing staff.

In particular, I want to applaud the industry for promoting itself as providing a dynamic, rewarding, safety conscious and attractive long-term career path, and I certainly welcome the move, celebrated in style at last night's awards, to recognise more widely technical and project management success and achievement in the industry.

I understand that there are now more than 1000 extra people employed in this sector than there were two years ago.

This trend is likely to continue given the Budget announcements, although I understand recruitment of skilled people is not always easy in the current environment. The roading industry has an edge because it has shown it is prepared to explore ways to improve working conditions to attract and retain quality people, and I hope it continues to be innovative in this respect.

As part of the Government's contribution, Transport Safety Minister Harry Duynhoven signed off new rules in March to allow young people entering the industry to operate construction vehicles. While people outside the sector may not have realised how important this heavy vehicle licence rule amendment was, the Government certainly did through our involvement in the Action Plan.

In another initiative, Government agencies are looking at innovative contracting and procurement procedures, while making sure the procurement process is still transparent, robust and provides value for money.

Agencies are also working with industry to improve communication about rolling out projects and to facilitate more stable work programmes to help ensure sufficient capacity to deliver the growing number of projects each year. This will also help reduce costs to industry and the Government and deliver better value for money.

I am pleased that one theme for this conference is that better value can be obtained through better relationships. It was no coincidence that on Budget day most key representatives of the transport sector were in my office for a special briefing. I hope that shows my commitment to working with the sector to make sure that the communication lines are open and operating well.

We will achieve the best results by continuing to develop our working relationships. I know the roading industry has new ideas and initiatives to further develop the sector in the future, and I look forward to hearing these ideas over the coming months. This conference is an opportunity for you to share your ideas and develop them further.

It is worth repeating ---- the Government regards a world-class transport network, which moves people and goods safely, sustainably and efficiently, as a centrepiece of our drive to transform the New Zealand economy. I know you agree. Thank you again for inviting me to join you today.

ENDS

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