The Muster- Terry Collins: Election Promises Underwhelm Around Roading

Terry Collins of the AA looks at electioneering around fuel taxes, and why the low number around the funding of South Island's roading infrastructure?

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Episode Transcript

Speaker 1 (00:07):
This is the muster on Hokonui. We're heading up north
now to catch up with Derry Collins. He's a spokesman
for the AA. A lot of things happening regarding roading infrastructure,
fuel and the likes as we get closer to the election. Terry,
welcome to the muster. Good to catch up once again.

Speaker 2 (00:21):
Thanks, Andy. Always a pleasure to be here.

Speaker 1 (00:25):
Right, so straight off the cuff, we're hearing about this
fuel excise tax. Electioneering's come into play, but the argument's
there that it shouldn't be.

Speaker 2 (00:34):
Yeah, exactly right. Look, we have something called the National
Transport Fund. It funds the maintenance of our road and
the AA always wants that, the number one pick of
where we spend our money. Let's just maintain what we've
got now. The second thing that we're always after is, hey,
let's not have this stop and go thing where we
announce that we're going to do some building projects, we
make a whole lot of plans to do them, we
spend money on developing and doing all the drawings and

(00:56):
then we don't go ahead with them, which costs us
a fortune and gets us nothing. And this is what
the risk around that fund is doing. The government announced
that it wouldn't be increasing the fuel excise duty on petrol. Currently,
that fund gets its revenue from a couple of places.
One's from fuel excise duty, one's from road user charges,
the other is crown loans, when the money is lent

(01:18):
by the crown, and the other is top-up by general taxation.
So what the government announced was they were going to
do a $ 0. 12 a litre increase on the 1st of January,
and they've now wiped that for about a year. And
they've got to turn it into a five-cent increase on
the 1st of June, 2028, followed by six months later,
another five cents, then wait a year and put some

(01:39):
more five cents on, and then slowly just add it
up so that fund gets the money that it needs.

Speaker 1 (01:48):
Are they aware of the pressures that people are facing
at the pump? Is it purely what this is about?

Speaker 2 (01:52):
Well, look, it's purely under-engineering. Labour went and announced that
they weren't going to do anything for three years and
put the excise up, which was absolutely fiscal stupidity. No,
it just kind of, I think to myself, well, we
got under debt hugely over COVID and now all you
want to do is spend money we haven't got. No,
exercise some fiscal restraint. The whole purpose around roading is

(02:14):
user pays. The users of the road contribute to the
maintenance and building of these roads and sometimes we need
a little bit of a top-up. What they've done is going, well,
times are tough. We've announced this thing. Now we're not
going to do it. One of the things they could
have done is just gone, hey, instead of 12 cents,
it's going to be 5 cents. Because what we've found

(02:34):
is small and frequent increases in anything are hardly noticeable.
In areas in New Zealand, in between areas, we see
price fluctuations on, say, a litre of 91, ranging from
about 20 to 50 cents, depending on what region. 5
cents gets lost in the background noise from the week-to-week fluctuations,
and most motorists wouldn't notice it. 12 cents, you kind

(02:56):
of do. And so if they'd even done that, the
hole that they've made, which would cause about a billion
dollars of taxation to top it up, would have been
much smaller. So it's just a silly idea.

Speaker 1 (03:08):
So just how underfunded is the New Zealand roading system then?

Speaker 2 (03:13):
If you look at all the charts, the other thing
I mentioned about how we get crown loans, so many
of the roads that were built in the past didn't
have the money, so we borrowed to build them. Well,
a chunk of that fund in the land transport fund
is now going off to paying those loans off. It's
like getting an income and your mortgage keeps going up
because you've got to pay for the house that you live,

(03:33):
kind of thing, the debt that you've already acquired. And
so then somebody just says you've got to take a
pay cut. No, it just squeezes everything up with that
remaining money you've got to spend on maintenance and building
new roads.

Speaker 1 (03:45):
Should toll roads become the norm in a lot of places?

Speaker 2 (03:47):
I don't know about the norm, but they may be
the only alternative we get. I mean, however, I look
at places like New South Wales where they've got, like,
billions of dollars owing for tolls, and it's just a
huge revenue flow for motorists into these private companies, and
I wouldn't want to see something like that. Our kind
of public-private partnership Partnerships haven't been the success that previous

(04:11):
governments have touted them to be. Maybe we just need
to do it because we need the money to build them.

Speaker 1 (04:19):
Well, likes of the Harbour Bridge, the arguments there, that
would be a prime example if you could get something
up and running in that way. Not a big amount,
but an amount nonetheless.

Speaker 2 (04:27):
Well, that's what we did in the 50s when we
built it. We built the bridge, we put a toll
on it, we paid it off, we kept collecting the
toll and then we stopped it. Nothing wrong with that, no.
If people are prepared to do it and the expense
of going the alternative, our only policy at the AA
is if you're going to have a toll, you've got
to have another road that people can have a choice about.
So you either decide to use the expressway that's going

(04:48):
to speed up, you pay a bit of a toll,
or you're going to take the longer way and not
pay a toll. But as long as you've got an alternative,
we accept that there is a place for tolls.

Speaker 1 (04:57):
Terry, the South Island's only got an allocation of 12%
funding regarding their network roading system. Why is this so
disproportionate compared to the North?

Speaker 2 (05:08):
I think what they're doing is spending a lot, except
for a couple of major areas. Obviously, we know around
Christchurch there's been a lot of changes around going on
down the Wollaston area and the development down there. Also,
Lake Districts, Queenstown, obviously with the demand for population increase,
tourism and other things in the roading down there, is
getting probably the bulk of that money. The rest of
it is just on maintenance. We've got a lot of

(05:29):
remote roads that were built. They're not actually economically viable,
but they're absolutely necessary for the social cohesion and the
other factors that we need in this country. And so
we need them, but they're often very costly to maintain.
So I think what's happening down there is most of
those roads that aren't, I'll call it uneconomic, but just

(05:50):
for easy terms, that is maintaining those. a bit of
spending on new roads and around those areas I mentioned,
and then most of it because of the population density
and the pressure going on around the growth of Auckland,
that triangle of Hamilton, you know, Auckland, a big chunk

(06:11):
of the roadings going up in there.

Speaker 1 (06:12):
Well, the arguments here in the Deep South of the
amount of GDP that's produced and the vehicles that are
on the road, we've got potholes here on State Highway
1 that are pretty much looking like meteors have hit them.

Speaker 2 (06:23):
Yeah. And look, you remember a year ago when the
government was talking about, hey, we've got to, well, three
years ago, we've got to get these potholes fixed. We
thoroughly agree that some of the roading needs to be done.
Which is why I'll mention again, your number one call
from the AA is that the first preference for all
roading is to fix what we've got. If you've got
a house, you've got a car, you do whatever, you
don't worry about getting it. You've got to fix it

(06:44):
to make sure it goes. Well, the same principle applies.
We just can't let the thing be unmaintained, get worse,
and just cause damage and delays and other things. So
if we've first got the money, let's look after what
we've got before we decide building new things.

Speaker 1 (06:59):
Regarding the fuel situation, we caught up with you last
time and you said we'll have the fuel, it's just
a matter of having to pay a little bit more.
I looked at a highlight before on my socials and
Gatsby was saying it was $ 1. 10 cheaper for a litre
of diesel than what it is two years later. Is
this just going to be the norm for the next 6, 12,
18 months?

Speaker 2 (07:19):
Yeah, look, we've got all that uncertainty. They've been attacking
each other over Iran, again, the US and the kind
of the combatants that basically shut the Strait of Hormuz down.
There's very little traffic going through it. But what we've
found with all our previous geopolitical interruptions like this, people
come up with a plan B. No, they reroute. There's
more pipelines being built. They're trying to minimize the impact

(07:41):
that the Strait of Hormuz will have in the future.
Things are just adjusting. At the same time, Ukrainians are
determinedly attacking Russian oil infrastructure to try and remove that
from the global market. and their customers were the primary, sorry,
China and India, and they'll go looking elsewhere to get
their fuel. So look, supply is tight. That means that

(08:01):
it'll be a bit more expensive for a while because
it's that law of supply and demand. But will we
run out of it? No. We're a rich enough country
to afford to pay what we have to pay, so
we'll always get it.

Speaker 1 (08:13):
Was it more or less just an overreaction of what
we've seen three or four months ago then?

Speaker 2 (08:18):
Well, it's not an overreaction, but what it is, refiners
were fighting hard. It's still a cracking spread. We still
know today it was $ 92 US a barrel. Now that's
below the $ 100 mark, but it's the refining margins that
have been going up and the shipping margins. That kind
of pressure that's been going on, that's been keeping the
price up. We're just basically at the mercy of those

(08:41):
external factors. We have very little control over it. Those
four factors, the price of oil, the price of shipping
and the price of refining. Our only little benefit over
the last month or so is that our interest rates, sorry,
our exchange rate has improved. So that's helped soften the
blow a little bit.

Speaker 1 (08:59):
Good on you, Terry. Always appreciate your time on the muster.

Speaker 2 (09:02):
OK, thanks, Andy. You have a good day.

Speaker 1 (09:05):
Terry Collins, spokesperson for the AA regarding the fuel situation
and the issue around the roads as well. Certainly some
startling figures coming out around that. Shane Gherkin's up next
with PGG Rights and Livestock. Why on earth did someone
pay over 500 bucks for some lambs yesterday?