August 30, 2024 • 34 mins
This week has seen the Building Nations conference hosted by Infrastructure NZ take place in Auckland, with Ministers, Mayors and a range of experts speaking about the state of the country's infrastructure.
New Zealand is believed to have an infrastructure deficit in the billions, if not trillions - so how can we go about fixing it?
BusinessDesk Infrastructure Editor Oliver Lewis joins Thomas this week to dig into the issue.
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Episode Transcript
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Speaker 1 (00:04):
Hello and Welton to on the tiles the New Zealand
Heralds Politics podcast. I'm your host, the Deputy Political editor
of The New Zealand Herold Thomas Codlin. Today we've got
Ollie Lewis from Business Test, the infrastructure of Business Test
on the show to talk about the Building Nations Infrastructure
Conference and Altum this week, which is New Zealand's big
(00:26):
infrastructure conference. Everyone goes along all the infrastructures post people
literally the opposition and people from the sector head along
to have a chat about all things infrastructure. Ollie, thank
you for joining us.
Speaker 2 (00:36):
Cuda. Thomas, thank you very much for having me on
the show.
Speaker 1 (00:38):
Did you have a good time?
Speaker 3 (00:40):
I did have a very good time. I caught about
a day and a half of it. By the end
of All About Lunch show yesterday, I thought that I
had probably heard about enough about inftructures to ask me
for the next kind of six months. But it was
an illuminating and varying conference. He had people like Francis
for Kiyama there, which is really highlight for me. And
then the Mayor of Auckland, Wayne Brown, delivered a very
(01:01):
cantankerous and quite amusing speech yesterday were not like him,
which led to a lot of joking from MCJ. Tams saying,
you know, tell us what you really feel about these issues.
He essentially told like the nine hundred assembled attendees who
are kind of engineers and such professionals, that he didn't
really like their work. In many cases it was a
(01:23):
very kind of confrontational approach from the mayre, but you know,
laying down a bit of a challenge to the sector
to do things cheaper and faster, right color.
Speaker 1 (01:32):
I mean, I suppose Francis Foam a bit of a
left field you know, well known for the the article
on foreign policy, I think, and then the lad of
the book the End of History and uh this uh
kind of top something, theasis on what the end of
the Cold War, I guess meant for you know, the world.
(01:57):
Why was he there? What was.
Speaker 3 (02:00):
It's a very good question, I actually think. I asked
Nick Leggett, wo's the CEO of Abstruction of Zealand a
while back, how they had managed to get Francis for
Kiama to speak and why? And I think that he
told me that both he and a policy advisor at
the Abstruction Zealand, Martine Marini had been listening to the
same podcast, which I think was probably one you're familiar with,
(02:21):
The Rest is Politics.
Speaker 1 (02:22):
I'm a very good podcast.
Speaker 2 (02:23):
Yes, yes, the.
Speaker 3 (02:24):
Rest is everything. Now the resis history, you know politics.
So I think France is on there. And he happened
to mention or discuss infrastructure, and he's been thinking a
lot about it recently in terms of it being a
challenge to liberal democracies like the United States also here obviously,
and his main kind of position seemed to be that
(02:47):
we have title sales and knots and these kind of
more democratic kind of societies where everyone gets a say
on whether or not a project proceeds.
Speaker 2 (02:57):
He referred to it as the vtocracy.
Speaker 3 (02:59):
And gave a very wishing example about California, which I
didn't know about, where essentially any citizen can kind of
take a suit or a case and do so anonymously
if they want to challenge a project going ahead. So
he referred to know the state having kind of forty
million veto votes about to them suchually being built, and
so not building things funnily enough is bad for economic
(03:19):
growth and bad for societies. So he views that as
a real challenge for Western countries like the US and
New Zealand.
Speaker 1 (03:27):
That's quite an a kind of intervention really in the
national debate around infrastructure, particularly as we sort of agonize
over the extent to which something like the government's fast
Trak bill as a good thing because it's sort of
severely good tales. Right.
Speaker 2 (03:43):
Yeah, I was just gonna say, that's right.
Speaker 3 (03:44):
It's a very kind of prescient message from him, and
it really does kind of tie into the debate that
we're having around the fast Track and Asructional Minister christ
Bishop made similar points that it was just too hard
to get things built in New Zealand and as a consequence,
we had this kind of looming and such a defficent
that everyone likes to put massive dollar figures to. I mean,
(04:05):
who knows if it's a hundred billion, two hundred billion
I think was a ASP Bank referred to the trillion
dollar figure, which gets a lot of derision from some economists,
but there you go.
Speaker 1 (04:14):
Yeah, I feel like I've been doing infrastructure for a while,
like you and every soft and someone like the Infrastructure
Commission a couple of years ago was a two hundred
and ten billion dollars of deficit, and then there was
another two hundred billion dollars or something of of unmet
of demand that was coming down. So I think we
start from the board of two hundred billion dollars behind,
and then there's something like two hundred billion dollars worth
(04:37):
of stuff that we need to build for the demand
forecast going forward. That's right, the trillion dollar figure. Then
we had the three Waters figure of one hundred and
eighty five billion. Do you know these these numbers are big?
Speaker 2 (04:49):
The mind boggles, Thomas, the mind boggles.
Speaker 1 (04:52):
What do you think of? How did the the government
announcers in the coalition agreements that it wanted to build
a new infrastructure agency. We've already gotten Structural Commission, uh so,
so there's this is going to be a new infrastructure
agency built on top of Crown Infrastructure partners. They talked
about this infrastructure pipeline. I mean, like you have been.
(05:12):
I actually attended one of these in person. But you know,
since the Infrastructure Commission was set up under the last government,
we've been hearing a lot about this pipeline issue. Everyone
complains about the pipeline. City Rail Link chief executive. Very
good interview with Katie bredvort On Q and a a
few weeks ago, City Rail Links chief executive outgoing complaining
(05:34):
that you know, there isn't this pipeline. So they bring
in all this expertise and then the expertise just leaves
because there's nothing for them to do. I feel like
we've been talking about that issue for so long now
it's been it's not this isn't new. No one's been
surprised by The Infrastructure Commission has been publishing lists of
the of of projects, the rough cost and when when
(05:55):
they're set to start construction, and you know what sage
of planning human construction art. So we've been talking about
the pipeline for a while. Now Chris Bishop comes along
and and builds us uh tries to build a bit
more on that existing publicly available pipelines with this announcement.
(06:18):
How did how did it go down in the room?
It was a secret The politician of the opposition clearly
that not that.
Speaker 2 (06:26):
It was. It was well received. I think.
Speaker 3 (06:28):
I mean these this is a group of people who
obviously kind of experts in their delivery and consenting and
kind of planning of infrastructure, and so they like to
hear politicians say that they're going to create a stable
pipeline of projects. As you said, Sean Sweeney got a
lot of kudos for that interview that he gave around
his concerns that there wasn't this kind of ongoing pipeline
(06:50):
of kind of tunneled projects in particular I think New Zealand.
So yeah, the room definitely received Bishop's speech well, it
was well received. It's as you say, though, it's the
constant discussion and infrastructure. I like to joke about how
many times the word pipeline will be kind of mentioned
at these kind of conferences and place bets about will
(07:12):
be fifty or one hundred or twohndred times, and it yeah,
it dominates the thinking from a lot of people in
the sector that there needs to be a stable kind
of list of kind of forward projects that the governments
are committed to funding, and that gives certainty obviously to
the sector to scale up, equip and actually kind of
deliver things. So it was definitely a well received speech
from Bishop, and I think there were some there was
(07:35):
a bit of positivity as well about the creation of
this National Instructure Agency just as kind of retooling Crown
of Search Partners and kind of beef it up the
real kind of emphasis that the government seems to be
placing on this is that it wants it to be
a shop front, is how they've described it, so to
kind of funnel outside capital, sovereign wealth fund capital and
(07:56):
get those kind of PPP partners in to partner with
the government to deliver these kind of roads and other
bits of instructure that we that we need.
Speaker 2 (08:05):
So, yeah, it was a really interesting speech.
Speaker 1 (08:06):
Actually, one of the interesting as you say this is
this big attempts on the part of the government sort
of has this two track approach to kind of physical
management and infrastructure. On the one hand, it wants to
be a probe for the structure government, uh and and
and to build a lot and to to get a
lot of investment into this infrastructure. And on the other
(08:29):
hand it is it is trying to position itself as
a government of a physical restraint, low debt and and
and reducing reducing, reducing levels of debt. So so it's
emphasizing the role that private capital and having building and
building a lot of this stuff. And so obviously that
the ball is really in the in the court of
(08:52):
private capital in terms of this is actually sustainable and
can succeed when you look at them when the here.
This year we published those estimates from from Wakotahi about
what some of the brons the roads of national significance
might cost tens of billions of dollars governments. When you
tend to get private capital involved there, do you get
(09:13):
the sense from the secret that, I mean, there is
there enough appetite for all of what we want to do.
Speaker 2 (09:21):
Yeah, it's a very good question.
Speaker 3 (09:22):
So I caught up on the sidelines with some people
from Plenary, which is an Australian kind of PEPP investor.
They came over for the conference. They've expressed and been
very public in their enthusiasm for New Zealand as a
possible kind of market for them, and I think there
was a remark made that it was kind of one
of the busier building nations in some time, and there
(09:45):
was quite a large Australian contingent, So I think there's
definitely some There's definitely appetite from investors wanting to put
money towards kind of insectual projects in New Zealand.
Speaker 2 (09:55):
There were some very interesting speakers.
Speaker 3 (09:58):
There was the head of transactions at Treasure I think
same as Alistir Birchall made this kind of comment that
the direction of travel that the government has signaled is
kind of moving more towards this kind of user pays
or beneficiary pays approach to instructure where the Crown is
more kind of seen as a funder of last resort,
where you know, perhaps the first kind of point of
care would be to se whether or not there are
(10:19):
private investors interested in delivering and building these projects. But
as you say, on the other hand, these are very
expensive projects. I think that Northern Expressway linking Fuga Day
to Auckland, there's been some estimates for that one corridor
kind of requiring about ten billion dollars in investment. The
government has been very enthusiastic.
Speaker 2 (10:40):
It's broad.
Speaker 1 (10:42):
You kin of look like nothing.
Speaker 3 (10:44):
Well, that's a funny thing actually, Like Bishop likes to
do this and talk about projects in terms of their
kind of like number of transmission guns.
Speaker 1 (10:52):
I've heard this as well. Everything was quitified in terms
of multiples of transmissions. I think you've even talked about
it as emergency housing was like one transmission gully or
something that every year or period of time.
Speaker 3 (11:04):
It's like the new gold standard for comparing the cost
of projects New Zealand how many transmission galleies. So yeah,
I think in this case the Northern Expressway would be
about what five or six And so there was a
very interesting kind of remark by Karen Mitchell, who is
a partner at KPMG, and she has I think advised
on like five of the last eight PPPs that we've
ever done in New Zealand. She's an expert on the sector.
(11:27):
She I think I read her comments as her wanting
a lot more kind of informed discussion around the costs
associated with some of these PPPs, because the point was that,
and everyone raises this, the crown has a lower cost
of borrowing than the private sector. Therefore it's cheaper to
off its own balance sheet. But there are advantages with
(11:47):
doing PPPs, namely kind of driving innovation and you kind
of sign up to maintaining one bit of road for instance,
for like ten twenty thirty years, which were not very
good at doing so.
Speaker 2 (11:56):
Sermainly benefits.
Speaker 3 (11:57):
But what she was saying is that the benefits need
to be you need to extract value from PPPs and
try and get as much value as the difference between
the crown boring costs and the private sector borrowing costs
and where you can do that, it might make sense
to do a PPP, but otherwise the case looks a
bit more shaky for things like hospitals, for instance, or
(12:19):
things where there's not a kind of clear revenue tool
attached to them, like holding when it comes to roads. So, yeah,
it was it was a very interesting discussion about the
merits of PPPs, and the government certainly seems very keen
to do a number of them.
Speaker 1 (12:35):
It is interesting that that remark you made the government
being the funder of last Resorts sort of the key
government's experiments with with with PDPs. Well, it did. It
did feel, particularly in the road space that they were
they were they were test cases for for for what
this government might be looking to do, rather than a
(12:58):
kind of full on this. This government seems to have
taken those test cases and thought like, well, right, this
is our we're going to We're going to fundamentally rethink
the way that we fund most significant transport projects to
to to to have a private capital is really the
first cab off the rank, rather than you know, sort
(13:21):
of alio portfolio next.
Speaker 3 (13:23):
Yeah, that's right, And like the point that I found
really interesting was Karen Mitchell was asked by an audience
member just sturing the Q and A about was there
a trade off whereas you know, would it be a
bad idea to rush into some short term PPPs that
might look very good, but does that then kind of
constrain future government's abilities to invest in their own priorities.
(13:46):
And there's a good example with this, So like the
two routing products that we currently have, which is PERO
to walk with and Transmission Gully. I think it's about
two dred and twenty six million dollars a year in
availability and maintenance payments that come out of the NLTF
to service those two roads alone. So Carrie Mitchell said,
like some work had been done when the government was
looking to get into those contracts around you know, how
(14:07):
many kind of pepp arrangements was it feasible to enter
into before the nl ETF gets kind of overly or
too overly constrained. And so there was a suggestion that
there is definitely a limit to how many you can
actually feasibly do and that you really do need to
seek the most high value projects to pursue as PPPs
where you can kind of extract some revenue back from
them because you still have to fund them. You just
(14:29):
pay them back over you know, thirty years as opposed
to upfront.
Speaker 1 (14:32):
Thanks Sali. We've going to quickly hit to a break
and then we'll be right back with more on the tiles.
Welcome back to on the Tiles. I'm talking to Olli Lewis,
Business Desks Infrastructure editor, who was at the Building Nations
(14:56):
Infrastructure Conferences week. We were just talking about p p
p s and the pressure that they place on the
road funding system. Really making the interesting point that that
the you know, the the revenue or the the income
that we have from from from the transport system, the
(15:16):
revenue we have from the transport system might not be
sufficient to pay for the the vast numbers of p
pp so we have to sort of prioritize in a
very interesting interesting point that the government is. The government
also announced it, well I supposed re announced it and
announced an acceleration of of some revenue work that was
(15:38):
doing in the in the in the transport space. We've
been talking about We've been talking about getting rid of
fuel taxes for a long time now, but the government
seems to be quite keen to to really bring that about,
moving the light vehicle fleet to road user charges as
early as as early as potentially twenty twenty seven, and
(15:58):
then and then looking at making it easier to begin
tolling some some roads to to and and create value
capture regimes to create revenue sources, presumably to make it
make it easier for some of these PPP business cases
to to stack up. Did you get the sense that
I mean, is there what are the numbers sort of
(16:19):
look like if you're if you're going if the government
sort of goes out to market with with a coroller
that it wants to develop into a p p P,
they say, look, you know we can we can work
out some value capture around this area. We can work
out some tolling for this particular road. They seem keen
to say, well, if if the business case of torolling
(16:39):
stacks up, then we'll we'll really like tolling. Does that
make that's Does that sweet and sweetened the deal for
some of these some of these people, some of these
providers looking to to do PPPs in New Zealand.
Speaker 3 (16:51):
Yeah, it certainly. It certainly helps the government in terms
of funding the cost of the PPPs. So for minderstanding,
there's a pretty clear prefer from peer partners not to
tie their payments to tolling, so they prefer just a
straight availability payment from the government. And the reason being
is that they don't want to accept this kind of
(17:12):
patronage risk because if you you know, for instance, told
this ten billion dollar Northern Expressway corridor, you'd have to
set a really kind of artificially high toll in order
to kind of make a return on that and to
kind of cover the costs of your capital, and so
it wouldn't be used. It's like, it's unfeasible to toll
those kind of very very high cost, relatively low patronage
(17:34):
roads and kind of cover the costs of the investment.
So it makes sense for the New Zealand government to
be looking at how does it offset or try and
get more revenue from a road that is constructed from
the PPP model. But the private partner themselves wouldn't necessarily
want any risk associated with the number of kind of
vehicles that are willing to pay.
Speaker 2 (17:55):
Those kind of rules. So yeah, it's a very interesting area.
Speaker 3 (17:58):
Actually that the Inmstry Commission did some work suggesting that
kind of you know, tolling was likely to kind of
cover the long term costs of you know, less than
a quarter of most new roads and the instances in
which it would kind of cover those full costs over
the you know, a set period. The Harbor Bridge is
a good example that kind of covered its face with
tolling over a period of time. As you have to
(18:19):
have very significant time savings of like fifteen minutes or more,
you've got to have very decent kind of traffic volumes
of kind of forty thousand vehicles a day or plus,
and for comparison's kind of like the busiest points of
the christ Which motorway network. I think bro I'm s right.
And you also have to have relatively kind of low
build costs, which is quite difficult in New Zealand with
(18:40):
some of the roads that we've seen. I know that
you've covered a lot of this Thomas with things like
all Tucky to north of Leven. We've seen big blowouts there.
PenLink was a recent kind of cautionary tail and that
the delivery time has slipped out to twenty twenty eight.
It was meant to be twenty twenty six, and so
we seem to have like a hard time to ring
(19:00):
roads for you know, relatively affordable prices in New Zealand
got for a challenging geography, and it makes it harder
to kind of recoup those costs from tolling.
Speaker 1 (19:10):
Right and so yes, when you when you think about that,
so first of your if, the if the if that's
what you're looking for. There can't be many on the
PPP or on the runs list many just off the
top of my head that would that would stack up
in terms of traffic volumes and low build costs. They
all seem quite expensive and and and I mean they
(19:32):
don't seem incredibly low traffic volumes, but none of them
would seem to be a high traffic volumes or to
have high trap of volumes to the extent that they
would they would give what a day? Did you say?
Speaker 3 (19:46):
Yes, that's right? That so Peinlic's are a good example. Like
that's the seven kilometer highway Lincoln kind of set how
one north of Auckland to the Fung Peninsula that that
has very substantial time saving.
Speaker 2 (19:58):
I think it's about fifteen minutes.
Speaker 3 (20:01):
It's been talked about as a toll road project since
the early two thousands. It's always been kind of thought
of as something would only happen if it was told
the last government accepted a proposal from NDITTA to toll
the road. And I've been quite obsessed with this example
because I see it as a bit of a bowe
weather in terms of the government's kind of political appetite
(20:22):
to follow through and it's tolling rhetoric. So while the
last government agreed to toll PenLink, this government has yet
to make any formal decisions around it, despite saying in
the GPS that it would accept all recommendations from NDTA
to toll new roads. INDITA definitely wants to toll Peenlic.
They're very keen to do that, and they say that
(20:43):
if you don't do that, the operating and the maintenance
costs that would be covered by tolling needs to kind
of come from the that increasingly broken in LTF kind
of pool of money that we have to pay for transport.
So yeah, I just find it really interesting that the
Transporte mister sim Brown has yet kind of make that call.
He just says that there's the reason he hasn't is
(21:03):
because there's a delays with the project and that ENTITA
currently is a very inefficient kind of system for collecting
tolls where I think he said, like thirty two percent
of costs of the kind of revenue you receive from
tolling as used just to operate the tolling system. And
so he wants to see that improved to make it
(21:23):
more kind of efficient to roll out tolling more broadly
and more widely.
Speaker 1 (21:27):
I heard apparently as we get more, as we get
more toll roads, that the administration cost can be shared
between the toll roads, so as a proportion of the
total tolling system, the admin cost would would reduce. That
is that your understanding as well?
Speaker 3 (21:40):
That certainly makes sense, and I think NDTA has got
a bit of a program of work underway to look
at that having kind of a more efficient kind of
back office tolling function that could be you know, implemented
across different roads.
Speaker 1 (21:52):
Certainly an interesting as you say that, that is an
interesting belt. Whether it's a government that's kind of self
consciously positioned itself as pro tolling to an extent that
I haven't I can't remember, I told her, I mean,
all charges are unpopular. So governments in the past have
been you know, historically really well lukewarm to anti tolling
(22:16):
is the first one I can remember that it's been
self consciously pro tolling, and as you say, brother, they
have the opportunity to about that they are on the
fence on.
Speaker 3 (22:27):
Yeah, I find it really bizarrely because there's political cover
and that obviously the last government, Labor government up to
two toll PenLink. And I made the point when I
attued to me and Brand about this recently that surely
the local residents would want clarity sooner rather than later,
regardless of not of whether there's any delayed with the
road opening. But yeah, as you said, it's not popular.
I think when ZTA consulted on PenLink it was like
(22:49):
sixty percent opposition I think for local residence or more.
We're going to see later this year the Transform Minister's
announced it's going to be ant consultation on three additional
kind of North Island toll road proposals. One of them
is Awtucky to North have live in. So it makes
a lot of sense as a way of kind of
(23:12):
funding your kind of cost of doing the road and
the maintenance and operating cost of running them, but people
don't really like them. It's if you ask someone would
you rather a free road or would you rather pay
three dollars to travel on the road. It's pretty hard
to build a case with that. And so I think
the transformentis has been very clear that he wants to
(23:32):
kind of make sure that any kind of toll road
has very demonstral benefits for the traveling public. They have
to see a return and a reason that they are
getting charged money to use it.
Speaker 1 (23:55):
I just kind of shop with them with these changes
to the revenue system, so moving to moving to moving
like light vehicles away from fuel fuel excise duty to rucks,
and and I suppose I just just covered off the
tolling tolling stuff. I mean there are obviously this is
(24:15):
as you said before, the review system is broken. Is
struggling with with with with with the amount of revenue
that that that the system is generating at the moment.
But you know, no silver bullet in terms of moving
millions of vehicles to road user charges for some concerns
that that that the WA which is you know, struggling
(24:37):
struggling to which has struggled to roll out this national
ticketing solution for for for people who use public transport.
You know, that's that difficulty enough with that, I mean
to say nothing of of creating the system whereby millions
and millions of of of light vehicle drivers will will
(24:58):
will need to buy road user charges. I mean it
feels it feels like there's a reason why there's a
reason why governments have been so keen to well, I
have been so tensative to move in this direction because
it seems like a sort of no overpay waiting to happen.
Speaker 3 (25:16):
Yeah, it's a good reference there. I mean, it's very
complicated about it, and so I was. I think the
most new bit of information around this revenue action plan
that the Transport Minister announced yesterday was the date.
Speaker 2 (25:29):
So as you say like it's.
Speaker 3 (25:31):
Been in the works for a long time, I think
under the last government there was a review initiated of
the Land Transport even news system because both parties except
that the kind of current system is fundamentally broken. I
think of the twenty two billion in spending in this GPS,
only about thirteen point eight billion of that comes from
FED and Rock. So it's no longer the kind of
(25:53):
user or cost recovery system that was meant to be.
We're continuously plugging the gaps with kind of Crown loans
and grants, and as the instuct Commission sees that as
actually that very scarce crown capital could be applied to
other priority areas like health or education. So you start
to kind of see that direct kind of competition for
(26:14):
scarce resources getting sucked up into the transport system, which
is meant to be user pays yea with moviehead and
moving all of the fleet from I'm not sure if
it was from twenty seven or by twenty twenty seven.
It was a slight ambiguity around the way it was phrased,
but I mean to me, that seems an incredibly ambitious target.
(26:35):
If it's to transition the fleet by twenty seven, even
if it's from twenty twenty seven, it's a huge administrative
kind of exercise to do that, and it's going to
be a logistical kind of I don't want to say nightmare,
because I think it's a good direction of travel. It's
not a night mirror situation by any means, but it's
going to be incredibly difficult for the government in the
(26:56):
ZTA to achieve those kind of time frames and to
get public buy in for it as well.
Speaker 1 (27:00):
Yeah, it would be very it would be. I mean
for millions of people who aren't used to fill going
online and buying a rock and then you know, what
do you so do you as you say, you know,
one can't imagine that the entire one can't imagine on
one July twenty twenty seven that that that you just
(27:21):
flick a switch and it's all gone. I would imagine
a transition period of some kind, and so what do
you what do you do? You fill up and then
you claim and exam you know, do you claim it back?
Speaker 3 (27:30):
Yeah, that's right, because I think you wrote about this.
It was a good piece, by the way, referring to
the increase or the planned increase in kind of fuel
excess texts from twenty twenty seven. Obviously, this government attacked
the previous government and it's GPS for wanting to put
up few exercise charges to kind of cover that, you know,
increasingly large gap between revenue and expenditure. They're now saying
(27:54):
that actually we do, we do very much want to
use existing kind of funding tools to kind of increase.
Speaker 2 (28:00):
Revenue.
Speaker 3 (28:00):
And so one of those was increasing fuel taxes from
twenty twenty seven I think twelve CENTI letter. So yeah,
it's going to be a very tricky balance. I think
to kind of price ruck at a good enough level
and then to have that kind of certainty of revenue
in as you transition the system whilst you've got some
very expensive bills to maintain.
Speaker 2 (28:20):
So it's going to be a very inting balancing act.
Speaker 1 (28:22):
And what if you're what if you're a car someone
who's you know, paying for ruck, you've sort of got it.
I mean, these households don't actually don't really have the
time or the energy to sort of be buying ruck
and then claiming back fuel excise that they have paid,
you know, especially if it goes up by twelve cents
a letter, that's that would be you'd be giving up
(28:44):
to close to ninety cents. I think by the if
it was twelve CENTI leader, there would be just under
ninety cents. I think that's a lot of that's a
lot of money to have to be out of pocket
buy until you enclaim it back. Of that sort of system.
If that's what a transitional system looks like, I don't know,
if it's just it just seems to be, you know,
(29:04):
that's I'm not sure that many people will be will
be there grateful one. But as you say, maybe that
maybe they'll do something around pricing rock competitively, I suppose
you get into a situation where where that doesn't really
help you in terms of the long term sustainability of
the land transport fund.
Speaker 3 (29:21):
Yeah, and I mean there are technology providers like e
road who offer technology solutions to make the payment of
ruck a lot easier. I imagine that any transition to
this new system will have to have a technology component.
I think the Transportenis was pretty clear that the existing
system where you kind of log in or go in,
(29:42):
where do you go.
Speaker 2 (29:43):
To buy a rock and person?
Speaker 1 (29:46):
I have no idea.
Speaker 3 (29:49):
So probably know that, but yeah, he mentioned that it
was very clunky.
Speaker 2 (29:53):
It's very kind of.
Speaker 3 (29:55):
Old fashioned system that was kind of revolutionary when it
was in Tuose in the sixties, but were now in
the twenty twenties. So there will definitely have to be
some kind of back end tech to support this transition.
Speaker 1 (30:05):
Road just for listeners, this list is like a GPS
style system that models is how far you're driven and
what you are.
Speaker 2 (30:10):
Yeah, that's right.
Speaker 3 (30:11):
So they provide into listed company, they provide technology solution
for largely for trucking fleets and so that's kind of
like an in vehicle kind of transponder uses GPS technology
to kind of calculate, you know, your distance traveled and
then automatically kind of purchased ruck for you.
Speaker 2 (30:30):
It's very clever.
Speaker 3 (30:30):
Actually using satellite tech means that you don't pay ruck
for traveling on private roads for instance like Forest Street
and States, et cetera. You only pay for the use
of public roads.
Speaker 1 (30:40):
Something that infrastructure builders actually use this because when when
they're driving on roads they have not yet been built,
they shouldn't be paying for you know, it's you're not
using a piece of publicly fundel infrastructure which hasn't actually
when it hasn't actually been built yet.
Speaker 3 (30:54):
Yeah, So a very nerdy and interesting kind of area
the use of this like GPS kind of style charging,
and like I think Singapore is a really good example.
They have now enabled with their electric road Pricing two
point zero system, there's kind of transponders and receivers in
every single car. I think it's mandated now, but even
they have not yet moved to a GPS tracking style
(31:15):
of charging because there's I think there's a lot of
kind of reservations from the public around privacy concerns and.
Speaker 1 (31:22):
National opposition, where Judith Collins was very hot on the
privacy issue and she was leader.
Speaker 3 (31:27):
Yeah, that's right, because I mean some people who are
perhaps more kind of anti government or anti authority wouldn't
want the government to kind of have any kind of
detailed records of their movements, et cetera. So it's going
to be a very interesting kind of like logistical and
privacy minefield to kind of to transition to this new
system and then to actually have it getting enough revenue
(31:48):
to fund out increasingly kind of perilously broken transport funding system.
Speaker 1 (31:54):
As you can imagine the years we've had with the
controversy over the vaccination rolled out there and how that went.
Any government mandating tracking in people's cars is probably going
to be quite cautious about the way that it does,
given the pushback something is sort of benign as vaccination,
(32:16):
as vaccinations generated.
Speaker 2 (32:17):
Yeah, that's that's right.
Speaker 3 (32:18):
And I think obviously, like the first iteration of this
wouldn't be kind of GPS tracking. It'd be kind of
as the existing rock system does. You just kind of
pay for a pre determined amount of kilometers and then
your odomesa or you're kind of is checked or kind
of made sure that you are paying for what you
you are. But there's something kind of set of reforms
(32:40):
that the Transmit Minister is kind of pushing ahead with
at pace, and it's going to be very interesting to
watch how it plays out, given that we've got some
very big bills coming up each of us in transport.
Speaker 1 (32:49):
And because well hopefully there's enough money to pay them. Ali,
thank you so much for joining us and none the
titles this week. I hope you hope you had a
good time at the conference, and you're off traveling soon,
so I hope you very much enjoy your travels.
Speaker 3 (33:03):
I thank you so much as for a real pleasure
to be here. It's been fun chatting in Strucure with you.
Speaker 1 (33:08):
It's always fun chatting. Infrastructure that was on the tiles
for another week. I have a quick correction to make
about something that was on the tiles a couple of
weeks ago. I was talking about the Green Party constitution
and the way that the constitutional changes of a couple
of years ago relatively disempowered some of the networks and
(33:29):
empowered the lived experience networks. Actually they have not literally,
they the changes empowered their lived experience networks, but they
did not literally disempower the non lived experience networks. They
only relatively changed in the level of power. I'm very
grateful to Eagle led Green Party listeners who pointed that out.
(33:53):
They guard their party constitution jealously and fair enough. Everyone
should care about this sort of stuff, So thank you
very much of it. And that was on the tiles
for another week. Thank you to Ollie Lewis the infrastructure,
we different businesses for joining us, and we'll be beating
next week. Look for more on the task. Thanks again
for listening. Ethan Sills as always as our producer
Hello and Welton to on the tiles the New Zealand
Heralds Politics podcast. I'm your host, the Deputy Political editor
of The New Zealand Herold Thomas Codlin. Today we've got
Ollie Lewis from Business Test, the infrastructure of Business Test
on the show to talk about the Building Nations Infrastructure
Conference and Altum this week, which is New Zealand's big
(00:26):
infrastructure conference. Everyone goes along all the infrastructures post people
literally the opposition and people from the sector head along
to have a chat about all things infrastructure. Ollie, thank
you for joining us.
Speaker 2 (00:36):
Cuda. Thomas, thank you very much for having me on
the show.
Speaker 1 (00:38):
Did you have a good time?
Speaker 3 (00:40):
I did have a very good time. I caught about
a day and a half of it. By the end
of All About Lunch show yesterday, I thought that I
had probably heard about enough about inftructures to ask me
for the next kind of six months. But it was
an illuminating and varying conference. He had people like Francis
for Kiyama there, which is really highlight for me. And
then the Mayor of Auckland, Wayne Brown, delivered a very
(01:01):
cantankerous and quite amusing speech yesterday were not like him,
which led to a lot of joking from MCJ. Tams saying,
you know, tell us what you really feel about these issues.
He essentially told like the nine hundred assembled attendees who
are kind of engineers and such professionals, that he didn't
really like their work. In many cases it was a
(01:23):
very kind of confrontational approach from the mayre, but you know,
laying down a bit of a challenge to the sector
to do things cheaper and faster, right color.
Speaker 1 (01:32):
I mean, I suppose Francis Foam a bit of a
left field you know, well known for the the article
on foreign policy, I think, and then the lad of
the book the End of History and uh this uh
kind of top something, theasis on what the end of
the Cold War, I guess meant for you know, the world.
(01:57):
Why was he there? What was.
Speaker 3 (02:00):
It's a very good question, I actually think. I asked
Nick Leggett, wo's the CEO of Abstruction of Zealand a
while back, how they had managed to get Francis for
Kiama to speak and why? And I think that he
told me that both he and a policy advisor at
the Abstruction Zealand, Martine Marini had been listening to the
same podcast, which I think was probably one you're familiar with,
(02:21):
The Rest is Politics.
Speaker 1 (02:22):
I'm a very good podcast.
Speaker 2 (02:23):
Yes, yes, the.
Speaker 3 (02:24):
Rest is everything. Now the resis history, you know politics.
So I think France is on there. And he happened
to mention or discuss infrastructure, and he's been thinking a
lot about it recently in terms of it being a
challenge to liberal democracies like the United States also here obviously,
and his main kind of position seemed to be that
(02:47):
we have title sales and knots and these kind of
more democratic kind of societies where everyone gets a say
on whether or not a project proceeds.
Speaker 2 (02:57):
He referred to it as the vtocracy.
Speaker 3 (02:59):
And gave a very wishing example about California, which I
didn't know about, where essentially any citizen can kind of
take a suit or a case and do so anonymously
if they want to challenge a project going ahead. So
he referred to know the state having kind of forty
million veto votes about to them suchually being built, and
so not building things funnily enough is bad for economic
(03:19):
growth and bad for societies. So he views that as
a real challenge for Western countries like the US and
New Zealand.
Speaker 1 (03:27):
That's quite an a kind of intervention really in the
national debate around infrastructure, particularly as we sort of agonize
over the extent to which something like the government's fast
Trak bill as a good thing because it's sort of
severely good tales. Right.
Speaker 2 (03:43):
Yeah, I was just gonna say, that's right.
Speaker 3 (03:44):
It's a very kind of prescient message from him, and
it really does kind of tie into the debate that
we're having around the fast Track and Asructional Minister christ
Bishop made similar points that it was just too hard
to get things built in New Zealand and as a consequence,
we had this kind of looming and such a defficent
that everyone likes to put massive dollar figures to. I mean,
(04:05):
who knows if it's a hundred billion, two hundred billion
I think was a ASP Bank referred to the trillion
dollar figure, which gets a lot of derision from some economists,
but there you go.
Speaker 1 (04:14):
Yeah, I feel like I've been doing infrastructure for a while,
like you and every soft and someone like the Infrastructure
Commission a couple of years ago was a two hundred
and ten billion dollars of deficit, and then there was
another two hundred billion dollars or something of of unmet
of demand that was coming down. So I think we
start from the board of two hundred billion dollars behind,
and then there's something like two hundred billion dollars worth
(04:37):
of stuff that we need to build for the demand
forecast going forward. That's right, the trillion dollar figure. Then
we had the three Waters figure of one hundred and
eighty five billion. Do you know these these numbers are big?
Speaker 2 (04:49):
The mind boggles, Thomas, the mind boggles.
Speaker 1 (04:52):
What do you think of? How did the the government
announcers in the coalition agreements that it wanted to build
a new infrastructure agency. We've already gotten Structural Commission, uh so,
so there's this is going to be a new infrastructure
agency built on top of Crown Infrastructure partners. They talked
about this infrastructure pipeline. I mean, like you have been.
(05:12):
I actually attended one of these in person. But you know,
since the Infrastructure Commission was set up under the last government,
we've been hearing a lot about this pipeline issue. Everyone
complains about the pipeline. City Rail Link chief executive. Very
good interview with Katie bredvort On Q and a a
few weeks ago, City Rail Links chief executive outgoing complaining
(05:34):
that you know, there isn't this pipeline. So they bring
in all this expertise and then the expertise just leaves
because there's nothing for them to do. I feel like
we've been talking about that issue for so long now
it's been it's not this isn't new. No one's been
surprised by The Infrastructure Commission has been publishing lists of
the of of projects, the rough cost and when when
(05:55):
they're set to start construction, and you know what sage
of planning human construction art. So we've been talking about
the pipeline for a while. Now Chris Bishop comes along
and and builds us uh tries to build a bit
more on that existing publicly available pipelines with this announcement.
(06:18):
How did how did it go down in the room?
It was a secret The politician of the opposition clearly
that not that.
Speaker 2 (06:26):
It was. It was well received. I think.
Speaker 3 (06:28):
I mean these this is a group of people who
obviously kind of experts in their delivery and consenting and
kind of planning of infrastructure, and so they like to
hear politicians say that they're going to create a stable
pipeline of projects. As you said, Sean Sweeney got a
lot of kudos for that interview that he gave around
his concerns that there wasn't this kind of ongoing pipeline
(06:50):
of kind of tunneled projects in particular I think New Zealand.
So yeah, the room definitely received Bishop's speech well, it
was well received. It's as you say, though, it's the
constant discussion and infrastructure. I like to joke about how
many times the word pipeline will be kind of mentioned
at these kind of conferences and place bets about will
(07:12):
be fifty or one hundred or twohndred times, and it yeah,
it dominates the thinking from a lot of people in
the sector that there needs to be a stable kind
of list of kind of forward projects that the governments
are committed to funding, and that gives certainty obviously to
the sector to scale up, equip and actually kind of
deliver things. So it was definitely a well received speech
from Bishop, and I think there were some there was
(07:35):
a bit of positivity as well about the creation of
this National Instructure Agency just as kind of retooling Crown
of Search Partners and kind of beef it up the
real kind of emphasis that the government seems to be
placing on this is that it wants it to be
a shop front, is how they've described it, so to
kind of funnel outside capital, sovereign wealth fund capital and
(07:56):
get those kind of PPP partners in to partner with
the government to deliver these kind of roads and other
bits of instructure that we that we need.
Speaker 2 (08:05):
So, yeah, it was a really interesting speech.
Speaker 1 (08:06):
Actually, one of the interesting as you say this is
this big attempts on the part of the government sort
of has this two track approach to kind of physical
management and infrastructure. On the one hand, it wants to
be a probe for the structure government, uh and and
and to build a lot and to to get a
lot of investment into this infrastructure. And on the other
(08:29):
hand it is it is trying to position itself as
a government of a physical restraint, low debt and and
and reducing reducing, reducing levels of debt. So so it's
emphasizing the role that private capital and having building and
building a lot of this stuff. And so obviously that
the ball is really in the in the court of
(08:52):
private capital in terms of this is actually sustainable and
can succeed when you look at them when the here.
This year we published those estimates from from Wakotahi about
what some of the brons the roads of national significance
might cost tens of billions of dollars governments. When you
tend to get private capital involved there, do you get
(09:13):
the sense from the secret that, I mean, there is
there enough appetite for all of what we want to do.
Speaker 2 (09:21):
Yeah, it's a very good question.
Speaker 3 (09:22):
So I caught up on the sidelines with some people
from Plenary, which is an Australian kind of PEPP investor.
They came over for the conference. They've expressed and been
very public in their enthusiasm for New Zealand as a
possible kind of market for them, and I think there
was a remark made that it was kind of one
of the busier building nations in some time, and there
(09:45):
was quite a large Australian contingent, So I think there's
definitely some There's definitely appetite from investors wanting to put
money towards kind of insectual projects in New Zealand.
Speaker 2 (09:55):
There were some very interesting speakers.
Speaker 3 (09:58):
There was the head of transactions at Treasure I think
same as Alistir Birchall made this kind of comment that
the direction of travel that the government has signaled is
kind of moving more towards this kind of user pays
or beneficiary pays approach to instructure where the Crown is
more kind of seen as a funder of last resort,
where you know, perhaps the first kind of point of
care would be to se whether or not there are
(10:19):
private investors interested in delivering and building these projects. But
as you say, on the other hand, these are very
expensive projects. I think that Northern Expressway linking Fuga Day
to Auckland, there's been some estimates for that one corridor
kind of requiring about ten billion dollars in investment. The
government has been very enthusiastic.
Speaker 2 (10:40):
It's broad.
Speaker 1 (10:42):
You kin of look like nothing.
Speaker 3 (10:44):
Well, that's a funny thing actually, Like Bishop likes to
do this and talk about projects in terms of their
kind of like number of transmission guns.
Speaker 1 (10:52):
I've heard this as well. Everything was quitified in terms
of multiples of transmissions. I think you've even talked about
it as emergency housing was like one transmission gully or
something that every year or period of time.
Speaker 3 (11:04):
It's like the new gold standard for comparing the cost
of projects New Zealand how many transmission galleies. So yeah,
I think in this case the Northern Expressway would be
about what five or six And so there was a
very interesting kind of remark by Karen Mitchell, who is
a partner at KPMG, and she has I think advised
on like five of the last eight PPPs that we've
ever done in New Zealand. She's an expert on the sector.
(11:27):
She I think I read her comments as her wanting
a lot more kind of informed discussion around the costs
associated with some of these PPPs, because the point was that,
and everyone raises this, the crown has a lower cost
of borrowing than the private sector. Therefore it's cheaper to
off its own balance sheet. But there are advantages with
(11:47):
doing PPPs, namely kind of driving innovation and you kind
of sign up to maintaining one bit of road for instance,
for like ten twenty thirty years, which were not very
good at doing so.
Speaker 2 (11:56):
Sermainly benefits.
Speaker 3 (11:57):
But what she was saying is that the benefits need
to be you need to extract value from PPPs and
try and get as much value as the difference between
the crown boring costs and the private sector borrowing costs
and where you can do that, it might make sense
to do a PPP, but otherwise the case looks a
bit more shaky for things like hospitals, for instance, or
(12:19):
things where there's not a kind of clear revenue tool
attached to them, like holding when it comes to roads. So, yeah,
it was it was a very interesting discussion about the
merits of PPPs, and the government certainly seems very keen
to do a number of them.
Speaker 1 (12:35):
It is interesting that that remark you made the government
being the funder of last Resorts sort of the key
government's experiments with with with PDPs. Well, it did. It
did feel, particularly in the road space that they were
they were they were test cases for for for what
this government might be looking to do, rather than a
(12:58):
kind of full on this. This government seems to have
taken those test cases and thought like, well, right, this
is our we're going to We're going to fundamentally rethink
the way that we fund most significant transport projects to
to to to have a private capital is really the
first cab off the rank, rather than you know, sort
(13:21):
of alio portfolio next.
Speaker 3 (13:23):
Yeah, that's right, And like the point that I found
really interesting was Karen Mitchell was asked by an audience
member just sturing the Q and A about was there
a trade off whereas you know, would it be a
bad idea to rush into some short term PPPs that
might look very good, but does that then kind of
constrain future government's abilities to invest in their own priorities.
(13:46):
And there's a good example with this, So like the
two routing products that we currently have, which is PERO
to walk with and Transmission Gully. I think it's about
two dred and twenty six million dollars a year in
availability and maintenance payments that come out of the NLTF
to service those two roads alone. So Carrie Mitchell said,
like some work had been done when the government was
looking to get into those contracts around you know, how
(14:07):
many kind of pepp arrangements was it feasible to enter
into before the nl ETF gets kind of overly or
too overly constrained. And so there was a suggestion that
there is definitely a limit to how many you can
actually feasibly do and that you really do need to
seek the most high value projects to pursue as PPPs
where you can kind of extract some revenue back from
them because you still have to fund them. You just
(14:29):
pay them back over you know, thirty years as opposed
to upfront.
Speaker 1 (14:32):
Thanks Sali. We've going to quickly hit to a break
and then we'll be right back with more on the tiles.
Welcome back to on the Tiles. I'm talking to Olli Lewis,
Business Desks Infrastructure editor, who was at the Building Nations
(14:56):
Infrastructure Conferences week. We were just talking about p p
p s and the pressure that they place on the
road funding system. Really making the interesting point that that
the you know, the the revenue or the the income
that we have from from from the transport system, the
(15:16):
revenue we have from the transport system might not be
sufficient to pay for the the vast numbers of p
pp so we have to sort of prioritize in a
very interesting interesting point that the government is. The government
also announced it, well I supposed re announced it and
announced an acceleration of of some revenue work that was
(15:38):
doing in the in the in the transport space. We've
been talking about We've been talking about getting rid of
fuel taxes for a long time now, but the government
seems to be quite keen to to really bring that about,
moving the light vehicle fleet to road user charges as
early as as early as potentially twenty twenty seven, and
(15:58):
then and then looking at making it easier to begin
tolling some some roads to to and and create value
capture regimes to create revenue sources, presumably to make it
make it easier for some of these PPP business cases
to to stack up. Did you get the sense that
I mean, is there what are the numbers sort of
(16:19):
look like if you're if you're going if the government
sort of goes out to market with with a coroller
that it wants to develop into a p p P,
they say, look, you know we can we can work
out some value capture around this area. We can work
out some tolling for this particular road. They seem keen
to say, well, if if the business case of torolling
(16:39):
stacks up, then we'll we'll really like tolling. Does that
make that's Does that sweet and sweetened the deal for
some of these some of these people, some of these
providers looking to to do PPPs in New Zealand.
Speaker 3 (16:51):
Yeah, it certainly. It certainly helps the government in terms
of funding the cost of the PPPs. So for minderstanding,
there's a pretty clear prefer from peer partners not to
tie their payments to tolling, so they prefer just a
straight availability payment from the government. And the reason being
is that they don't want to accept this kind of
(17:12):
patronage risk because if you you know, for instance, told
this ten billion dollar Northern Expressway corridor, you'd have to
set a really kind of artificially high toll in order
to kind of make a return on that and to
kind of cover the costs of your capital, and so
it wouldn't be used. It's like, it's unfeasible to toll
those kind of very very high cost, relatively low patronage
(17:34):
roads and kind of cover the costs of the investment.
So it makes sense for the New Zealand government to
be looking at how does it offset or try and
get more revenue from a road that is constructed from
the PPP model. But the private partner themselves wouldn't necessarily
want any risk associated with the number of kind of
vehicles that are willing to pay.
Speaker 2 (17:55):
Those kind of rules. So yeah, it's a very interesting area.
Speaker 3 (17:58):
Actually that the Inmstry Commission did some work suggesting that
kind of you know, tolling was likely to kind of
cover the long term costs of you know, less than
a quarter of most new roads and the instances in
which it would kind of cover those full costs over
the you know, a set period. The Harbor Bridge is
a good example that kind of covered its face with
tolling over a period of time. As you have to
(18:19):
have very significant time savings of like fifteen minutes or more,
you've got to have very decent kind of traffic volumes
of kind of forty thousand vehicles a day or plus,
and for comparison's kind of like the busiest points of
the christ Which motorway network. I think bro I'm s right.
And you also have to have relatively kind of low
build costs, which is quite difficult in New Zealand with
(18:40):
some of the roads that we've seen. I know that
you've covered a lot of this Thomas with things like
all Tucky to north of Leven. We've seen big blowouts there.
PenLink was a recent kind of cautionary tail and that
the delivery time has slipped out to twenty twenty eight.
It was meant to be twenty twenty six, and so
we seem to have like a hard time to ring
(19:00):
roads for you know, relatively affordable prices in New Zealand
got for a challenging geography, and it makes it harder
to kind of recoup those costs from tolling.
Speaker 1 (19:10):
Right and so yes, when you when you think about that,
so first of your if, the if the if that's
what you're looking for. There can't be many on the
PPP or on the runs list many just off the
top of my head that would that would stack up
in terms of traffic volumes and low build costs. They
all seem quite expensive and and and I mean they
(19:32):
don't seem incredibly low traffic volumes, but none of them
would seem to be a high traffic volumes or to
have high trap of volumes to the extent that they
would they would give what a day? Did you say?
Speaker 3 (19:46):
Yes, that's right? That so Peinlic's are a good example. Like
that's the seven kilometer highway Lincoln kind of set how
one north of Auckland to the Fung Peninsula that that
has very substantial time saving.
Speaker 2 (19:58):
I think it's about fifteen minutes.
Speaker 3 (20:01):
It's been talked about as a toll road project since
the early two thousands. It's always been kind of thought
of as something would only happen if it was told
the last government accepted a proposal from NDITTA to toll
the road. And I've been quite obsessed with this example
because I see it as a bit of a bowe
weather in terms of the government's kind of political appetite
(20:22):
to follow through and it's tolling rhetoric. So while the
last government agreed to toll PenLink, this government has yet
to make any formal decisions around it, despite saying in
the GPS that it would accept all recommendations from NDTA
to toll new roads. INDITA definitely wants to toll Peenlic.
They're very keen to do that, and they say that
(20:43):
if you don't do that, the operating and the maintenance
costs that would be covered by tolling needs to kind
of come from the that increasingly broken in LTF kind
of pool of money that we have to pay for transport.
So yeah, I just find it really interesting that the
Transporte mister sim Brown has yet kind of make that call.
He just says that there's the reason he hasn't is
(21:03):
because there's a delays with the project and that ENTITA
currently is a very inefficient kind of system for collecting
tolls where I think he said, like thirty two percent
of costs of the kind of revenue you receive from
tolling as used just to operate the tolling system. And
so he wants to see that improved to make it
(21:23):
more kind of efficient to roll out tolling more broadly
and more widely.
Speaker 1 (21:27):
I heard apparently as we get more, as we get
more toll roads, that the administration cost can be shared
between the toll roads, so as a proportion of the
total tolling system, the admin cost would would reduce. That
is that your understanding as well?
Speaker 3 (21:40):
That certainly makes sense, and I think NDTA has got
a bit of a program of work underway to look
at that having kind of a more efficient kind of
back office tolling function that could be you know, implemented
across different roads.
Speaker 1 (21:52):
Certainly an interesting as you say that, that is an
interesting belt. Whether it's a government that's kind of self
consciously positioned itself as pro tolling to an extent that
I haven't I can't remember, I told her, I mean,
all charges are unpopular. So governments in the past have
been you know, historically really well lukewarm to anti tolling
(22:16):
is the first one I can remember that it's been
self consciously pro tolling, and as you say, brother, they
have the opportunity to about that they are on the
fence on.
Speaker 3 (22:27):
Yeah, I find it really bizarrely because there's political cover
and that obviously the last government, Labor government up to
two toll PenLink. And I made the point when I
attued to me and Brand about this recently that surely
the local residents would want clarity sooner rather than later,
regardless of not of whether there's any delayed with the
road opening. But yeah, as you said, it's not popular.
I think when ZTA consulted on PenLink it was like
(22:49):
sixty percent opposition I think for local residence or more.
We're going to see later this year the Transform Minister's
announced it's going to be ant consultation on three additional
kind of North Island toll road proposals. One of them
is Awtucky to North have live in. So it makes
a lot of sense as a way of kind of
(23:12):
funding your kind of cost of doing the road and
the maintenance and operating cost of running them, but people
don't really like them. It's if you ask someone would
you rather a free road or would you rather pay
three dollars to travel on the road. It's pretty hard
to build a case with that. And so I think
the transformentis has been very clear that he wants to
(23:32):
kind of make sure that any kind of toll road
has very demonstral benefits for the traveling public. They have
to see a return and a reason that they are
getting charged money to use it.
Speaker 1 (23:55):
I just kind of shop with them with these changes
to the revenue system, so moving to moving to moving
like light vehicles away from fuel fuel excise duty to rucks,
and and I suppose I just just covered off the
tolling tolling stuff. I mean there are obviously this is
(24:15):
as you said before, the review system is broken. Is
struggling with with with with with the amount of revenue
that that that the system is generating at the moment.
But you know, no silver bullet in terms of moving
millions of vehicles to road user charges for some concerns
that that that the WA which is you know, struggling
(24:37):
struggling to which has struggled to roll out this national
ticketing solution for for for people who use public transport.
You know, that's that difficulty enough with that, I mean
to say nothing of of creating the system whereby millions
and millions of of of light vehicle drivers will will
(24:58):
will need to buy road user charges. I mean it
feels it feels like there's a reason why there's a
reason why governments have been so keen to well, I
have been so tensative to move in this direction because
it seems like a sort of no overpay waiting to happen.
Speaker 3 (25:16):
Yeah, it's a good reference there. I mean, it's very
complicated about it, and so I was. I think the
most new bit of information around this revenue action plan
that the Transport Minister announced yesterday was the date.
Speaker 2 (25:29):
So as you say like it's.
Speaker 3 (25:31):
Been in the works for a long time, I think
under the last government there was a review initiated of
the Land Transport even news system because both parties except
that the kind of current system is fundamentally broken. I
think of the twenty two billion in spending in this GPS,
only about thirteen point eight billion of that comes from
FED and Rock. So it's no longer the kind of
(25:53):
user or cost recovery system that was meant to be.
We're continuously plugging the gaps with kind of Crown loans
and grants, and as the instuct Commission sees that as
actually that very scarce crown capital could be applied to
other priority areas like health or education. So you start
to kind of see that direct kind of competition for
(26:14):
scarce resources getting sucked up into the transport system, which
is meant to be user pays yea with moviehead and
moving all of the fleet from I'm not sure if
it was from twenty seven or by twenty twenty seven.
It was a slight ambiguity around the way it was phrased,
but I mean to me, that seems an incredibly ambitious target.
(26:35):
If it's to transition the fleet by twenty seven, even
if it's from twenty twenty seven, it's a huge administrative
kind of exercise to do that, and it's going to
be a logistical kind of I don't want to say nightmare,
because I think it's a good direction of travel. It's
not a night mirror situation by any means, but it's
going to be incredibly difficult for the government in the
(26:56):
ZTA to achieve those kind of time frames and to
get public buy in for it as well.
Speaker 1 (27:00):
Yeah, it would be very it would be. I mean
for millions of people who aren't used to fill going
online and buying a rock and then you know, what
do you so do you as you say, you know,
one can't imagine that the entire one can't imagine on
one July twenty twenty seven that that that you just
(27:21):
flick a switch and it's all gone. I would imagine
a transition period of some kind, and so what do
you what do you do? You fill up and then
you claim and exam you know, do you claim it back?
Speaker 3 (27:30):
Yeah, that's right, because I think you wrote about this.
It was a good piece, by the way, referring to
the increase or the planned increase in kind of fuel
excess texts from twenty twenty seven. Obviously, this government attacked
the previous government and it's GPS for wanting to put
up few exercise charges to kind of cover that, you know,
increasingly large gap between revenue and expenditure. They're now saying
(27:54):
that actually we do, we do very much want to
use existing kind of funding tools to kind of increase.
Speaker 2 (28:00):
Revenue.
Speaker 3 (28:00):
And so one of those was increasing fuel taxes from
twenty twenty seven I think twelve CENTI letter. So yeah,
it's going to be a very tricky balance. I think
to kind of price ruck at a good enough level
and then to have that kind of certainty of revenue
in as you transition the system whilst you've got some
very expensive bills to maintain.
Speaker 2 (28:20):
So it's going to be a very inting balancing act.
Speaker 1 (28:22):
And what if you're what if you're a car someone
who's you know, paying for ruck, you've sort of got it.
I mean, these households don't actually don't really have the
time or the energy to sort of be buying ruck
and then claiming back fuel excise that they have paid,
you know, especially if it goes up by twelve cents
a letter, that's that would be you'd be giving up
(28:44):
to close to ninety cents. I think by the if
it was twelve CENTI leader, there would be just under
ninety cents. I think that's a lot of that's a
lot of money to have to be out of pocket
buy until you enclaim it back. Of that sort of system.
If that's what a transitional system looks like, I don't know,
if it's just it just seems to be, you know,
(29:04):
that's I'm not sure that many people will be will
be there grateful one. But as you say, maybe that
maybe they'll do something around pricing rock competitively, I suppose
you get into a situation where where that doesn't really
help you in terms of the long term sustainability of
the land transport fund.
Speaker 3 (29:21):
Yeah, and I mean there are technology providers like e
road who offer technology solutions to make the payment of
ruck a lot easier. I imagine that any transition to
this new system will have to have a technology component.
I think the Transportenis was pretty clear that the existing
system where you kind of log in or go in,
(29:42):
where do you go.
Speaker 2 (29:43):
To buy a rock and person?
Speaker 1 (29:46):
I have no idea.
Speaker 3 (29:49):
So probably know that, but yeah, he mentioned that it
was very clunky.
Speaker 2 (29:53):
It's very kind of.
Speaker 3 (29:55):
Old fashioned system that was kind of revolutionary when it
was in Tuose in the sixties, but were now in
the twenty twenties. So there will definitely have to be
some kind of back end tech to support this transition.
Speaker 1 (30:05):
Road just for listeners, this list is like a GPS
style system that models is how far you're driven and
what you are.
Speaker 2 (30:10):
Yeah, that's right.
Speaker 3 (30:11):
So they provide into listed company, they provide technology solution
for largely for trucking fleets and so that's kind of
like an in vehicle kind of transponder uses GPS technology
to kind of calculate, you know, your distance traveled and
then automatically kind of purchased ruck for you.
Speaker 2 (30:30):
It's very clever.
Speaker 3 (30:30):
Actually using satellite tech means that you don't pay ruck
for traveling on private roads for instance like Forest Street
and States, et cetera. You only pay for the use
of public roads.
Speaker 1 (30:40):
Something that infrastructure builders actually use this because when when
they're driving on roads they have not yet been built,
they shouldn't be paying for you know, it's you're not
using a piece of publicly fundel infrastructure which hasn't actually
when it hasn't actually been built yet.
Speaker 3 (30:54):
Yeah, So a very nerdy and interesting kind of area
the use of this like GPS kind of style charging,
and like I think Singapore is a really good example.
They have now enabled with their electric road Pricing two
point zero system, there's kind of transponders and receivers in
every single car. I think it's mandated now, but even
they have not yet moved to a GPS tracking style
(31:15):
of charging because there's I think there's a lot of
kind of reservations from the public around privacy concerns and.
Speaker 1 (31:22):
National opposition, where Judith Collins was very hot on the
privacy issue and she was leader.
Speaker 3 (31:27):
Yeah, that's right, because I mean some people who are
perhaps more kind of anti government or anti authority wouldn't
want the government to kind of have any kind of
detailed records of their movements, et cetera. So it's going
to be a very interesting kind of like logistical and
privacy minefield to kind of to transition to this new
system and then to actually have it getting enough revenue
(31:48):
to fund out increasingly kind of perilously broken transport funding system.
Speaker 1 (31:54):
As you can imagine the years we've had with the
controversy over the vaccination rolled out there and how that went.
Any government mandating tracking in people's cars is probably going
to be quite cautious about the way that it does,
given the pushback something is sort of benign as vaccination,
(32:16):
as vaccinations generated.
Speaker 2 (32:17):
Yeah, that's that's right.
Speaker 3 (32:18):
And I think obviously, like the first iteration of this
wouldn't be kind of GPS tracking. It'd be kind of
as the existing rock system does. You just kind of
pay for a pre determined amount of kilometers and then
your odomesa or you're kind of is checked or kind
of made sure that you are paying for what you
you are. But there's something kind of set of reforms
(32:40):
that the Transmit Minister is kind of pushing ahead with
at pace, and it's going to be very interesting to
watch how it plays out, given that we've got some
very big bills coming up each of us in transport.
Speaker 1 (32:49):
And because well hopefully there's enough money to pay them. Ali,
thank you so much for joining us and none the
titles this week. I hope you hope you had a
good time at the conference, and you're off traveling soon,
so I hope you very much enjoy your travels.
Speaker 3 (33:03):
I thank you so much as for a real pleasure
to be here. It's been fun chatting in Strucure with you.
Speaker 1 (33:08):
It's always fun chatting. Infrastructure that was on the tiles
for another week. I have a quick correction to make
about something that was on the tiles a couple of
weeks ago. I was talking about the Green Party constitution
and the way that the constitutional changes of a couple
of years ago relatively disempowered some of the networks and
(33:29):
empowered the lived experience networks. Actually they have not literally,
they the changes empowered their lived experience networks, but they
did not literally disempower the non lived experience networks. They
only relatively changed in the level of power. I'm very
grateful to Eagle led Green Party listeners who pointed that out.
(33:53):
They guard their party constitution jealously and fair enough. Everyone
should care about this sort of stuff, So thank you
very much of it. And that was on the tiles
for another week. Thank you to Ollie Lewis the infrastructure,
we different businesses for joining us, and we'll be beating
next week. Look for more on the task. Thanks again
for listening. Ethan Sills as always as our producer
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