The Nation: Minister for Infrastructure Shane Jones

On Newshub Nation: Simon Shepherd interviews Minister for Infrastructure Shane Jones

• On the claim the newly established infrastructure entity was a National Party idea, Minister of Infrastructure Shane Jones says the concept has been talked about since Helen Clark's era, without implementation. "Hey, they’ve had nine years to put this in place. All they delivered was a glossy 80-page report full of pictures about cranes and ports."

• The entity is not due to be up and running until the end of 2019 but Shane Jones says he wants it operating before then. "I’m not happy with the notion that we’re going to have to wait till the end of next year, and I’ve asked the prime minister and the senior ministers to back me that we expedite its development."

• He says his top priority for infrastructure is broadband in the provinces. "If we’re going to have, you know, flourishing provinces, people need to be connected."

• He says while he is "faithful" to Grant Robertson, and therefore his 20 per cent debt cap, he is conscious that there is an "enormous capital expectation" and supports overseas investment in key areas (outside of schools, hospitals and prisons).

Simon Shepherd: It's called our "infrastructure deficit" - what it means is that we are 70,000 houses short, our hospitals, schools, prisons and water networks need rebuilding and our roads are gridlocked and getting worse. Add in the challenges of climate change and that deficit starts looking like a pretty big problem. Solving those problems could add more than one and a half billion dollars to our economy each year. Infrastructure Minister Shane Jones has just announced plans for a new agency to get things moving, and he joins me now. Good morning, minister. Thanks for your time.

Shane Jones: Kia ora.

At this weeks’ infrastructure conference, the government was sort of blasted for institutional rigor mortis — so too many stakeholders, no real action. How’s this new agency actually going to get things moving?

Well, I’m delivering to the industry what they’ve been asking for, for over 10 years. And the essential compromise is how much political authority do I give up as a decision maker in order to create credibility in the industry, domestically and internationally? And if I can buy, through an agency on behalf of government, greater credibility, more certainty, more confidence, then I’ve got no qualms whatsoever about heading in this direction.

Okay. How are we going to get that confidence? Because we’ve had years of stop-start, projects being cancelled, ATAPS has been around for quite a while, but not a lot’s been done. Are you sure that this agency can actually break through that credibility barrier?

Well, the backers of the concept, they’re confident. I think that it has to attract the right sort of people. I’m looking forward to key industry people being involved with it. Also ensuring that we’ve got a clear set of standards as to how we should use taxpayers’ money. But, hey, I think it’s a fair challenge. Whereas the 10, 20-year pipeline — can we have some certainty around the pipeline that doesn’t exist as a consequence of urges in every electoral cycle? And, look, I’m willing to serve up a recipe and hopefully I’ll deliver something that the industry will back.

A couple of things there about the pipeline. I mean, this entity, agency, whatever it’s going to be called, isn’t going to be up and running until the end of 2019.

Well, the cabinet has mandated $4 million or $5 million to get the thing up and running. I’d prefer a slim organisation that earns the right to grow rather than start with something that’s too fat to start off with. But I’m not happy with the notion that we’re going to have to wait till the end of next year, and I’ve asked the prime minister and the senior ministers to back me that we expedite its development.

Right. So, when would you like to see it up and running?

Mate, I’d like to see it a key feature of at least next year’s budget announcement. I accept that Treasury, they move at their own pace, and they’re very worried that it will have significant implications for fiscal settings in terms of getting a better sense as to how much capital we ought to commit on behalf of the Crown, regulatory settings and national settings. But I’m a retail politician. The next election is 2020, and I want to get the thing up and running.

Well, that’s right. Let’s talk about the electoral cycle. How can you make sure that this agency isn’t subject to the vagaries of politicians? Come the next election cycle, it’s gone.

Well, I’m told that the Tories are keen to see it remain in place. And to be honest with you, although I’m an aggressive politician — not in a personal way, but in terms of my kaupapa — I actually think infrastructure should enjoy a broad, cross-parliamentary level of support. But I would say that us politicians, we guard jealously our decision-making rights.

I’m glad you support the idea of the infrastructure agency, because National came up with the idea at the end of last year.

Okay. Now, I got lambasted by, I think, your television channel as to, ‘Oh, aren’t you just nicking? Are you a magpie nicking their ideas?’

Yeah.

Hey, they’ve had nine years to put this in place. All they delivered was a glossy 80-page report full of pictures about cranes and ports. This is something that the industry had been barracking for, for over 10 years. I recall the industry lobbying me on this in Phil Goff’s time, when he was our leader. And I didn’t have the role for more than three to five months, and I said to Cabinet, ‘I’m bringing back a paper. I’m going to Australia.’ And not even a year’s gone by, and we’ve got the organisation.

So politicians, all hues, have been lax in this regard, haven’t they?

Yeah. Right back to Helen Clark’s time.

Okay. As Infrastructure Minister, it’s more than roads and bridges — it’s schools, hospitals, digital divides, all those kinds of things. Do you have one top priority?

Well, naturally, I’m focused on the provinces. So let’s not hide what I’m doing on a day-by-day basis. I hate going to our provinces and both our air connectivity and our ICT connectivity is hopeless for places like us in the north, on the West Coast. And if there’s one thing I can push is an expansion of what I thought was a good idea that Steven Joyce and them began to roll out, which essentially, was ICT connectivity.

Okay. Broadband for everybody up and down the country.

Yeah. Well, if we’re going to have, you know, flourishing provinces, people need to be connected.

How are you going to pay for it all, given that the government has its self-imposed debt cap? So does it mean you have to have private investment?

Yeah, yeah, yeah, yeah.

Okay, what sort of private investment?

Well, Treasury, at the moment with Phil Twyford, is working through a whole host of innovations as to how we can blend private and public capital. The ideological neon light, though, lies with hospitals, schools and prisons. And that’s the stuff of politics. Now, the other side of the house—

So they’re off-limits. No private investment in hospitals, schools—

But, obviously, private sector will help deliver the creation and the construction.

But they won’t own it.

In terms of equity, no. That remains core ownership Crown assets.

Okay, so it’s okay for private ownership of roads and bridges, but not schools, hospitals and prisons?

Yeah, the envelope, the permission space that I’m operating in as a part of this coalition government is that prisons, schools and hospitals. Now, I know that there are those who are pushing for those outcomes. Well, join me in the fray of the next election. That is the kaupapa of our government, and we’re not moving away from it. There are some historical—

So you don’t agree with it. That sounds like you don’t agree with that restriction.

No, I mean, on the question of schools, I know that there is a case for greater innovation in the provision of education. Obviously, my kids went to a kura kaupapa. I’ve got lots of relations in a wananga. Those are innovations. But I have to tell the truth. There will be no private infrastructure deals on schools, prisons and hospitals. But everything else, we don’t have enough capital within the Crown coffers, and I’m really open for all sorts of deals.

So, ideology is going to hamstring the development of this country in terms of the infrastructure that it needs. That’s what you’re saying.

No, what I’m saying is that when you vote, you vote for a set of ideas, and if you don’t like them, then have a crack at tossing me out next time. But you’ll find I’m not a tag-and-release politician. I’ll be back. But we have a deficit in relation to other types of infrastructure. I’m all for being as innovative as possible.

What about… I mean, we’ve talked about— or Grant Robertson’s talked about using KiwiSaver funds, the super funds, talking about investing in light rail, but there’s $21 trillion worth of pension funds out there sloshing around, looking for investment opportunities. Is that where we’re going to target?

Yeah, there’ll be a blend. I do think, though, that we’ve been less than spectacular at serving up deals that meet the thresholds for a lot of these investors from overseas. But, like I say to you, we’ve opened up the transmission of dough now back into the Cullen Fund from the taxpayers. I expect the Cullen Fund to get innovative and start spending a lot of that dough on domestic infrastructure. I’ve gone out there and defended the growth of the Cullen Fund, the replenishment of the Cullen Fund of more taxpayer dough, then I expect the guardians and the new CEO, Mr Whineray, to be innovative.

But we don’t have enough local money, so it’s okay to get international money into all this key infrastructure.

Yeah, well, we’re already doing it, when you look at Transmission Gully and other things. But the key — I mean, you raised ideology — the key threshold, which we have agreed to go over is that there will be a blend of private and public money in all of these infrastructure projects. But the challenge for the Crown is to serve up projects that are bankable and that one can execute. And the Crown’s ability to do that in the absence of an infrastructure agency, I would say to you is less than— is lacklustre.

Okay, well, you’re talking about things being bankable. Investors, especially from overseas, will want to see that there’s an income stream from these projects that they’re going to invest in.

Correct.

Does that mean that we’re going to see more user-pays infrastructure, like tolling on roads?

Well, there’s a variety of interventions. I mean, at the moment, we’ve gone for, essentially, an additional excise duty tax that’s going to pertain to Auckland in relation to the fuel tax. But as an infrastructure minister, I would rather serve up, within my permission space, all of the options. I’d rather that my fellow senior ministers and the Cabinet made choices. And then we’ll go out, and we’ll defend why we did things and why we didn’t do things.

You sound a little bit frustrated. You keep talking about your permission space and what’s allowable on the envelope. Are you frustrated?

Well, we have elected to abide by a 20 per cent figure in terms of debt, and I remain very faithful to what Grant Robertson has said. But I’m also conscious that there is an enormous capital expectation. How are we going to fund these projects? I’ve got that issue even with my billion trees. So to make our MMP government work, I’m very faithful to my colleague Grant Robertson. But I’m also a pro-industry person. So I’m going to look very innovatively, which is why I led the charge to loosen up the overseas investment rules for forestry. Now, it sounds like it’s inconsistent with a more tightening approach, but unless we bring international capital into key areas, I say to you, ‘Where’s the capital going to come from?’

Well, it’s a politically charged area that you’re trying to walk a tightrope through.

Yeah, but if we’re going to meet this $32 billion deficit in terms of climate change identified by both the Green Party and National, and if we’re going to use trees to do some of the heavy lifting to sequester your climate badies out of the atmosphere, we don’t have enough money to do it ourselves. Forestry’s a case — 72 per cent already internationally owned. We’re not going to nationalise it, so I’d rather use international capital providing that they abide by our regulatory settings, certainly in the forestry sector, which I’m professionally responsible for.

Yes, well, let’s talk about trees and the Provincial Growth Fund. Two-thirds of the One Billion Trees programme are going to be natives now, despite the original plan for about half to be exotics, like pines. That seems like a compromise with the Greens. Are you satisfied with that compromise?

Yeah, it’s not where I started. I’ll be straight up with you. I mean, I’m a— Well, I have to watch out when I say I’m an exotic politician, but exotic trees — I saw a greater role for them. But we worked through the process. I accept that the Green Party probably have a longer term view about these things, in terms of decarbonisation. To be straight with you, mate, I’m living in a two-year cycle at the moment, because I’m getting ready to ensure the legacy I leave behind after three years finds favour with the electorate. And then I’m a 25-year cycle guy, cos 25 years is how long it takes for a pine tree to grow. But I accept that the Green Party had a different view. We’ve come to common ground. And it does resonant with lots and lots of Kiwis that we head off to the native direction.

It sounds like the policies that you favour are based around the electoral cycle. I mean, you want pines to grow quickly so you can get re-elected.

Well, I’m a retail politician, but I don’t think you should cheapen everything I do based on the threshold of 5 per cent, but one never loses sight of that 5 per cent or then you become a ‘has been’. And as I said, I’m not a tag-and-release sort of politician, but we’ve got to get a balance between the very long-term. But pine trees have a tremendous role to play in terms of sequestration, regional development and exports.

Okay. You’re putting a lot of money into tree planting — another $240 million this week. Do you know how much of all the money that you’ve put in or set aside that you’ve allocated to trees?

Yes, of the $3 billion notational figure over three years, about $480 million has been circumscribed and dedicated—

So you’ve ring-fenced that. But of that, what’s actually been allocated?

Well, therein lies my challenge. I can only move as fast as Mother Nature. And the nurseries are gearing up. And we have two planting seasons — we’re nearing the end of our first planting season. So I’m confident by 2021, we will have struck our figure of 100 million trees in the ground per year, which over a 10-year period will give the billion trees. The aficionados of the native approach tell me it will be higher. I’ll just wait and see. I’ll be happy to get to a 100 million trees by the next election.

And so far, you’ve only allocated $37 million to trees.

Yeah, well, the Budget process required us to observe probity. But look, the money is now set aside. We’ve got our— we’re standing up our agency, Te Uru Rakau — the forest service —and we’ve got to get onside the ‘doubting Thomas’, otherwise known as the farming community. It’s a work in progress.

So you want to get to that 100 million tree figure, but there’s currently about 11,000 forestry workers. You’ll need a lot more — maybe up to 1000 a year. So where are you going to get these workers from to get these trees planted?

Well, some of the gangs are coming from the Pacific at the moment; some of them do. We are spending a considerable amount of dough on bringing young people back into the workforce. And the reality, mate, is that I’ve got to strike a balance— I shouldn’t say ‘mate’, sir. I’ve got to strike a balance between training our own people — which, as a Maori, is what I’m on about — and also what scope is there to draw workers over the short- to medium-term, like we do for the kiwifruit industry, from the Pacific.

So do you want to expand that Regional Seasonal Visa programme to bring in people to plant these trees to get to the 100 billion a year?

I think we’ve got to have a blend. But we have to start with our own people first.

Okay. So does that mean you want to expand something like the Mana in Mahi programme, where you could perhaps get forestry included in that sort of apprenticeship?

Yeah, I think that the apprenticeship scheme — working for— Actually, it was on your programme, I got in trouble by talking about working for the dole. But sanctions are very important as well; the carrot and the stick is both very important. A lot of our young people, they, with the right sort of training and intervention, they will come back into the workforce. But this is hard work. But then they should be made to work. I’m a Maori leader, and I’ll continue to say to my own people, ‘We’ve got the putea. Here’s the land. And if you need to move to the Wairoas, if you need to move to the Hokiangas for a period of time to take part in this nation-building, industry-building kaupapa’— Then if I had my own way, my own people, they will be moving there.

Let’s look at one of the projects that you have set aside money for — it’s the Ngati Hine Forestry Trust in the far north, $6 million joint venture. Well, the Trust says it’s an exceptionally good deal for them and far superior to previous arrangements. Did they get a sweet deal?

Yeah, well, that’s the allegation. But look, this deal went through Treasury, it went through the officials. It is a forest that was initially created in the days of— at the end of the Muldoon Government and the Lange Government. So it’s a brilliant opportunity to ensure that that resource is restored for the tertiary processes and the wood manufacturers of the north. But any suggestion that there was dodginess around it, it borders on libel. And of course, I would never have anything to do with that. But it does— I accept that it is a step that we first took in the north. And that has raised a few hackles with my political opponents. But that’s— they were the people who were ready.

Okay. But your political opponents are basically saying, you know, these are election bribes; this is all about getting re-elected. $3 billion worth — great election fund.

Yeah, I mean, we’ve got to expect that they’ll make those cheap and sort of insubstantial remarks trying to create a sense of doubt and other sort of badies. But the reality is this has been called for by the leadership of the regions for ages. They love it. They’re lining up with suitable projects. And, indeed, a number of the National MPs constantly lobby me to make sure their region is not left out. So I think a lot of what you hear about is the theatre of politics.

You said to us in February that the PGF — the Provincial Growth Fund — projects wouldn’t end up looking like some sort of untidy scrum.

Mm-hm.

Still seems fairly piecemeal.

Yes.

Do you actually have a cohesive plan for how you’re going to allocate these funds?

Yes, we do have a cohesive plan, but I also said I had to meet people halfway. Like, I’m reliant on civic and economic leaders of the regions themselves. They tell me they have their own strategies, they developed them in the time— they were developed in the time of Steven Joyce. I didn’t want to be capricious. They’ve probably gone a tad more slower than I would’ve liked. I could have outsourced it and given it to the water irrigation company or something like that, but we didn’t do that. We kept it as a core part of government. And I’m confident that by the end of the year, you’ll see a host of major interventions, and they will show that there’s coherence around the regions in terms of what they want.

Because in six months, you’ve allocated $126 million of projects out of $1 billion available. It sounds like you’re having trouble spending this.

No, the number of projects certainly outstrip the money. The quality of the projects is the test. And that’s, I think, a reasonable test that I as a politician should stand up and account for. And that’s why it takes quite a lot of time to ensure that the projects not only are robust, but they actually are going to deal to the problems that collectively central government or regional government have developed, whether it’s the roads on the East Coast, whether it’s the ICT on the West Coast.

So are you saying you’re declining a lot of projects, a lot of applications?

Look, the biggest one that was declined was the $145 million port at Opotiki — necessary for the development of their massive aquaculture aspirations, started by the National government. Michael Cullen looked at it and did nothing about it in Helen Clark’s time, and unfortunately, I was the guy — it just got too big, was too loose, and we turned it down. But I’m hoping they’ll bring back something that’s defensible. So you cannot say that I’m not being fair to my critics and my supporters. I am turning, on behalf of Cabinet, down various things.

Right, okay. I just wanted to talk about the PGF, whether it will consider local water projects, improve productivity of Maori land. Will that include consultation with David Parker’s proposed Maori fresh water advisory group?

Well, I’ve got zero patience for the iwi leaders group.

Yep.

Yep. I’m more interested in the Indians than the cowboys. They’re the ones who vote for me. But when I go into the provinces, I deal with all the Maori asset owners, and if there are projects that’s going to unleash the productivity of their land, then fine.

Yeah, but you might get caught up in the courts. Cos the iwi leaders forum is talking about taking the government to court over this.

Yeah.

Is this going to hamstring you being able to improve those kinds of projects in the regions?

Let’s just wait and see if they do go to court. Everyone’s got the right to go to the Supreme Court, and I don’t want to worsen the prospects politically or culturally of any Maori, but I’m not going to tolerate a handpicked group of people believing that they’re some type of Maori senate and their authority rivals those of us who have been elected into parliament who are Maori ancestry. I will never ever tolerate that.

Shane Jones, Minister for Infrastructure and other things, like the provincial growth fund, thanks very much for your time.

Kia ora.