Note: All transcripts are copyright to Front Page Ltd but may be used PROVIDED attribution is made to TVONE and Agenda
AGENDA
Presented by RAWDON CHRISTIE
RAWDON There's not much policy that differentiates National from Labour as we go up to the election, but if there is an area which National's trying to make its own it is surely infrastructure. With a proposal for a three billion fibre optic network and plans to build around six billion dollars worth of toll roads the party's proposing one of the biggest construction programmes we've seen since Bob Semple in the 1935 Labour government. Maurice Williamson is the party's infrastructure spokesman he's with me now. Good morning Maurice.
RAWDON Now your presentation at the National Party Conference had one direct message, build more roads. So how much are we going to be spending on roads?
MAURICE WILLIAMSON – National Transport & Communications
Well what's clear is there's a massive deficit in our roading network and everywhere around the country you look congestion is now taking a big chunk off the top of our economy and we need to get our expenditure on our roading network at least back to where the OECD average and frankly a little bit higher than that to address some of the backlog. So you're talking of about three or four hundred million dollars a year for at least a decade if not longer to cover that massive deficit that has occurred under both political parties, this is not aimed at any Labour or National, it's just a historic we have not been building enough roading network.
RAWDON And you've talking about how you want this to be just above – you were saying just above the average to the OECD so how are we gonna pay for that?
MAURICE Well there are several ways, first of all John Key's made a very clear announcement we're happy to increase our debt target, New Zealand currently doesn’t actually have a debt problem, the target was 20% of GDP he's advocating lifting it only 2 percentage points to 22, that’s a very I think frugal debt limit, so that public debt would be used, but we're the only country I know Rawdon that doesn’t use the private sector to fund infrastructure.
RAWDON Well let's just talk about the debt level first before we get into the private sector. The National Party has said we'll put borrowing at 2% over and above Labour's maximum borrowing level, they have said that’s the absolute maximum, is that also the finite for us or is that being frugal, are we going to see that go higher?
MAURICE No I think that’s the level that the National Party has decided to set, it's a frugal limit, I think it's sensible, it's well down on where we used to be historically, and remember there's good debt and bad debt, I think people at home understand this, if you borrow to buy a plasma screen or a trip overseas that’s really bad debt, but if you borrow to invest in a revenue returning or a growth asset that’s going to be of value, then you tell me the business out there that doesn’t do it. We currently only build roads from our current revenue for this year and interestingly as petrol prices have gone up the public actually think the petrol has gone up, but because it's cents per litre not cents per dollar the number of litres used is dropping and so the revenue is actually dropping.
RAWDON Okay so you're saying if we need more we're not gonna borrow more than that extra 2%?
MAURICE That’s the limit that their leader's announced but then that is not taking account of bringing in the private sector Rawdon.
RAWDON Okay let's talk about the private sector then. PPPs how would they work?
MAURICE Well they work in a multitude of different ways, sometimes they are a true partnership where the government tips in some money and the private sector come in with others, there are PFIs which are privately funded initiatives if you look at the Connect East Motorway that’s just opened in Melbourne or the M7 in Sydney or the M6 toll in Britain, with the Mio Bridge in the South of France. Those are all wealthy nations far wealthier than us and they’ve all said they couldn’t afford to build those big projects using public money, they’ve gone to the private sector they’ve had them funded, they’ve had them built, they're getting the use of them now and now they pay to use them.
RAWDON Okay let's talk about you’ve mentioned a couple of Australian projects there using private money, they haven’t worked in all these projects have they though?
MAURICE Some of the early ones had problems they’ve got very very much better at their discipline about allocating risks where they best fall and I don’t know any failures lately, but I bet you're going to mention the cross Sydney tunnel, or the cross Sydney tunnel in Sydney, but I always ask an audience why was that a failure, did ratepayers lose any money, no, did the taxpayers lose any money …
RAWDON It was a failure because…
MAURICE The private sector lost their shirt.
RAWDON ... it opened in 2005 with a target of 90,000 cars, not even 40,000 are using them and it's because people don’t want to pay the $3.50 toll so they are happy to sit in traffic elsewhere and not pay the toll.
MAURICE Okay but my point is, why is that a failure because it wasn’t the government or the public that lost any money, private sector investors built that tunnel, they lost their shirt, I would have thought people like the left would be really happy to see multi national big companies losing money, the tunnel hasn’t gone away it's still there it's actually now starting to grow its traffic numbers.
RAWDON It does highlight the point that people didn’t want to pay the toll, are we gonna be looking at tolls here?
MAURICE Yes we are, yes we are, you will look at tolls for certain of the – it will only be on new roading it won't be on any existing roading and it'll only be where that roading provides a solution. Rawdon the biggest barrier to tolls in New Zealand so far has been the public's view that half of my petrol tax is being stolen and going off to the consolidated fund, and we ran a strong campaign at the last election we had a red and blue billboard 'what's your petrol tax for'. Well the government has now agreed to that, the legislation has gone through and now every cent that a motorist pays at the pump that is both road user charges and petrol tax, goes to the Land Transport Fund and so now the public cannot say well we're already paying and you're stealing it and now if you do need some of this new infrastructure and this country needs a huge amount more, then I think most New Zealanders recognise that if it solves a particular transport congestion problem they face now they're actually happy to make a payment.
RAWDON So why didn’t that work in Australia, how come we're gonna pay tolls…?
MAURICE You see the one thing you mustn't do is just use the cross Sydney tunnel, that was done very badly and the estimates of numbers were really wrong and people lost some money, but have a look at the M7 toll, have a look at city link in Melbourne, have a look at the latest one that’s opened the Connect East from Mitchum down to Frankston, it's a phenomenally successful story.
RAWDON Give me an example of a toll here, give me an example of what it will cost for which road, because you will have thought this through.
MAURICE Yes we've thought it through and what you do is you have to work out what does it do to relieve your traffic problem, so if it takes you an hour to get to work in the morning and a new road could open up that only did it in 20 minutes you've gotta work out what is that 40 minutes worth to you.
RAWDON What have you worked it out to be?
MAURICE Well a 40 minute saving like that if you were charging a toll of 3-5 dollars, I don’t know anyone that wouldn’t pay 3-5 dollars because they’ve be paying it in their 40 minutes of car running.
RAWDON Five bucks twice a day – 50 bucks a ,week?
MAURICE Yes, think of what 40 minutes of sitting congested locked and stopped with your vehicle running is costing you, it's actually costing you more than that.
RAWDON It's difficult to convince people of that when they're having to pay the hard cash first.
MAURICE Yes and over time people will only gradually move to use toll roads, the free road will still be there so there's no grizzling or whinging if you want to say in the lock – there's a really good example in Britain and the Minister up there showed it to me, the M6 toll road which goes through the sort of midlands around Birmingham, there is also an M6 and you can go on the M6 and not pay or you can go on the M6 toll and pay and frankly if you're on the M6 you're locked blocked stopped and going nowhere, it takes about an hour and a quarter off the journey through the midlands, you would have to be mad not to pay that amount of toll but it's your choice.
RAWDON An area like that though in Britain has the population to almost guarantee that people will use it, do we have that here?
RAWDON Yes we do yes, I don’t think there'll be many toll projects, I mean I don’t think New Zealanders are gonna see 50 – 100 type, but I think you'll see four or five, quite large ones – SH20 Waterview, a second harbour crossing in Auckland. Look it's like about four billion to build a second harbour crossing, you'll never ever, no government is ever gonna be able to build that and not toll it, it has to be. So with Transmission Gully into Wellington, Waikato Expressway South, SH1 north of Auckland which has got massive traffic problems. Those are things that need to be built now, if you only build them from current revenue they won't even be done within the next ten years, New Zealanders will just come to a grinding standstill and already are, you’ve gotta get them done now and the question I ask everybody is why is it we're the only jurisdiction that doesn’t do this.
RAWDON Okay let's look beyond roading, where else do you see PPPs being the answer?
MAURICE Interestingly PPPs now in Australia and they're all state – Labour government's doing it, are looking to use PPPs across the board, they're building hospitals. I went and visited the KC Hospital in Victoria, now that isn't privatising the health system, the doctors and nurses that work in it are still state paid doctors and nurses, but the actual facilities management of the building, the building of it, the maintenance of it and so on is all done by the private sector and you know what the doctors and nurses who opposed it at the first all said it's fantastic. One doctor said to me if a light bulb ever went off in the theatre it could take days to get it replaced, now you press an 0800 button in the theatre and the contract means within an hour that light bulk has to be fixed.
RAWDON That’s great in the ideal world of a booming economy but Australia much like everywhere else is seeing a downturn in the economy and the pool of funds available for PPPs has shrunk, they're now finding themselves pretty stretched, what are your thoughts about that?
MAURICE I don’t agree the pool of funds. The New Zealand Council for Infrastructure Development Conference the other day one of the best graphs put up was how much money was involved in PPPs in the world and for a very long time in the late 90s and into 2002 was about 10 billion US only world wide and it has now just gone through a catastrophic sort of shumpeters S curve and is now running at about 70 billion world wide and growing, and I would have thought even in some of the educational institutions, in Brisbane I went and looked at their South Bank TAFE that’s been completely built by AB & Ambro but will be a state polytechnic when it's finished in terms of the students and the teaching but all of the building and the facilities management – I mean I would have thought we could even look at doing that with things like at least getting the prison built, not running it privately but at least building the damn thing so you know that it was within cost.
RAWDON And Simon Power's mentioned that on Agenda, education as well?
MAURICE Yeah I would have thought so. I mean if state Labour governments in Australia are doing it with their polytechnics and with their hospitals and with their schools, I mean in Victoria there's a whole raft of schools now being built as PPPs, they're still state schools in terms of the teachers and the teaching and learning but the entire cost of maintaining the buildings and doing all the facilities management is now farmed off to someone who's much better – I don’t know very many Principals who are good at taking care of their buildings budget and doing the spouting and working with ….
RAWDON Oh I think there are probably quite a lot to be fair but – you’ve been talking very passionately about these Australian policy initiatives and talking very passionately about the Labour government which is driving these through, so where does that leave you politically?
MAURICE I think it just is a pragmatic view and look I'm not only saying Australia, if they were the only ones you might say well they’ve got it wrong. Have a look across the board, I mean in the South of France the French government paid me to go and have a look at stuff like the Mio Bridge and some of their roading network from Montpalier up to Clementfront, there's just a massive amount of private sector investment going in there, and when I said to the Minister well why isn't the French government doing this he said we just haven’t got the money. Now they're a way wealthier nation than us and they know they can't do it, so they get the private sector to build it now they get the use of it. A good example of this with your viewers is their personal home. How many people paid cash for their first house? They didn’t, they went to the debt markets, they got a mortgage, they’ve got the facility now, they used it for a long period of time and serviced that debt and that’s how people buy quite a lot of their capital investments now in New Zealand, even their own home and that’s how we should build our infrastructure.
RAWDON What happens if one of these public private partnerships or these private investment projects goes belly up, what happens then, surely the government has to give some reassurance as has happened in Australia and are we going, the taxpayer going to end up bailing a company out?
MAURICE No, that’s about how you allocate the risks and having them fall where they best lie. In some of the very early PPPs in Australia the private sector were much more cunning than the governments were and they put in place that if anything went wrong the government had to cover it, so in other words you were socialising all of the costs and making the society pay but you were privatising all the benefits, well if you look at them now and you look at how clever the governments have got at it and we would take as blueprints some of their more recent ones they basically say to the private sector you're putting some skin in the game you should get a realistic return, we'll cap it, we'll put some windfall profit clawback clauses to stop you making huge sums of money, but if you go belly up that’s your problem.
RAWDON Okay do you see yourself as a future infrastructure minister is that what you would create if …
MAURICE I wouldn’t have a clue, John Key probably won't even think about what cabinet he will set up until after he knows he's Prime Minister and I would have thought the last thing he'll focus on is that, I would just hope to be a minister in the new government and I may or may not be.
RAWDON And do you think that specifically having an Infrastructure Minister's a good idea?
MAURICE Yes because we've made the announcement that it isn't to do with a specific bureaucracy and a lot of thing – it's just a co-ordinating minister who then says to the various – cos infrastructure lies across energy, it lies across the transport sector, it lies across Broadband and telecommunications, some sort of a central co-ordinating minister who's now got a role maybe even a cabinet committee that says to these guys put up your work programmes look at what's required, now I'm gonna hold your feet to the fire to deliver it, Prime Minister's given me this and if you don’t deliver you won't be the minister in 12 months because we're gonna get the stuff done.
RAWDON What's your dream job, as a successful National Party at the election what would be your dream job?
MAURICE To be a Minister in the Cabinet doing stuff that I enjoy and I obviously enjoy this sort of stuff.
RAWDON So possibly this?
MAURICE Maybe yeah, I might get small grain and seeds or Women's Affairs, you never know.
RAWDON Now's a chance for the panel to have a few questions with Maurice Williamson. Start with you Brent probably continuing the subject of PPPs.
BRENT EDWARDS – Radio New Zealand
Yeah look Maurice with roads and the idea of public private partnerships, do you have a view of the proportion of new roads that would be built that way as against just straight government investment?
MAURICE Yeah the current government investment in new roading's around the one billion and we're talking of around about two or three hundred million dollars a year going into PPPs in addition to that. So you're probably talking of 20% of the new projects and relative to the rest of the roading network it's sort of less than 2 or 3% of the entire network would be PPPs, so it's not a massive percentage.
BRENT But you mentioned earlier the idea of the second harbour bridge, Transmission Gully, the highway north of Auckland, are those the sorts of projects that you see it working.
MAURICE They have to be biggies, the cost of bringing the private sector funders in, the cost of the infrastructure in terms of the tolling mechanisms the gantries and the electronics and so on, you literally can't do them on bits and pieces roads, and interesting every time I'm out around the country – in Wanganui one night I talked about bringing them in, they said well this doesn’t affect us and I said well actually it does cos if you can get those big projects off the books and funded separately from the private sector you leave a huge chunk of the Land Transport Fund available to go into the second and third tier projects which are just currently missing out, so it makes a big difference.
BRENT You also mentioned earlier about the view that there was less money now the government was picking up through the tax because people are obviously taking care with their driving with petrol prices where they are, are you taking that into account in terms of looking at new roads as to whether you'll need all the roads that you might be projecting?
MAURICE Yes, in fact everything that’s being looked at actually could even consider quite a downturn in volumes and still be needed, we're way over the vehicle per day that would trigger divided lane highways elsewhere on a number of our roads already. Frankly there has been a short term downturn because of petrol spiking and what will happen even if petrol stays up is alternative modes of power will become more viable and the individual motor vehicle both the commercial truck and the car will still be around, there is no way the Greens' view of the world we will get out of all that and just use public transport will ever occur long term, the private vehicle will still provide that flexibility that’s required.
RAWDON Mr Williamson do you support the idea of selling off state owned assets to pay for infrastructure?
MAURICE No we don’t, no we don’t, National does not believe in the sale of any assets, even one we were forced to buy that is the rail asset, we have said now we'll look after it own it and manage it and the policy is to sell no state assets.
RAWDON That’s National Party policy, your own personal thoughts are….
MAURICE My personal thoughts line up with the party okay if they didn’t I shouldn’t be around.
BRIAN FALLOW – New Zealand Herald
Just on transport last time I was up in Auckland it took me half an hour to get out of the CBD and what do you think about congestion charging or how else do you deal with problems like that?
MAURICE You will have to go to those things but you need to sequence what you do. The problems we've got in Auckland is we've got an arterial network that doesn’t join up. if when you're coming from the airport into the city and you come over SH20 Mangere Bridge and turn towards Mt Roskill you'll see a whole series of red brake lights ahead of you. Now people will argue well that’s cos we've got too much traffic, it's actually because the road stops about a kilometre up it just absolutely stops and you have to do the rat run to try and get into Downtown. Now if you complete all those arteries SH20, 16, 18 across from Onehunga across to Pakuranga, you finish SH20 joining to the Southern Motorway there's only a certain amount of those arteries you can actually do and then there's no more, and that will mean there will still be congestion growing from that point and then you do have to start putting some charging in place, but the public won't tolerate congestion charging if it isn't in conjunction with some good public transport alternatives cos they think it's just a tax then. If you just add the tax and all it does is tax you and there isn't an alternative in my part of the woods they’ve heard about this regional petrol tax out east, and people say well we're doing that to try and force you on to the trains and so on. Well people in the east they say well where's our trains, where's our dedicated bus lane like the North Shore's got, where's our public transport alternative but you're still making us pay the regional fuel tax.
BRIAN I just wanted to ask you about Broadband as well. I don’t understand, are you planning to set up some new enterprise that'll roll out a whole new network that will compete with Telecom's or do you plan some kind of partnership with Telecom, what's the structure here and how will it connect with what we've got now?
MAURICE I'm gonna be very careful about any detail because just like when Kevin Rudd and Stephen Conroy their Communications Minister proposed fibre to the node as an election thing they would not get hung up on detail cos that has to be worked out, but what we are proposing is an end result and that is fibre to the premises for about 75% of New Zealand homes including the schools and the businesses in the area, now it would be an open access network so it wouldn’t be owned by any one entity so if you came in with some investment if you wanted to be in investment say a pension fund and put some money into the entity or you were a technology company, might be that Vector wanted to put something in the North Shore and be a partner there, it might be City Link in Wellington, you wouldn’t have any rights other than the flat right of return on your investment over that but it would be an open access to any product supplier that wanted to put its product over that network.
BRIAN So when you say a flat rate of return you're really talking about debt aren’t you?
MAURICE Yeah if you looked at the average cost and we've done some numbers overseas and had a look, about two and a half thousand dollars a home to get a 9% return on that you'd get about $18 a month back, if you then said well you no longer have a copper loop phone cost that’s you're $40 a month for your phone you no longer have to pay toll calls cos they're all done over void, you could provide a phenomenally stunning products including a 100 megabit per second internet and triple play IPTV across the box through that fibre for almost no money but the competition would now occur in those people providing product, the TV providers, the internet providers, and so on.
BRIAN So the intention is to compete with the incumbent?
MAURICE Well no the intention is to have a sort of – a utility just like your water, your sewerage, your gas piping, and a better example is your roading network, right now today out on the roads the big trucking companies, the taxi companies, the courier companies are all out there on that open access government owned network competing for customers and product and supply, but they don’t need to own the conduit.
BRIAN You're proposing to spend a billion and a half dollars of taxpayers' money and that can only be justified surely if you think there's been some market failure, what's the evidence of that?
MAURICE Oh I think there's clearly been a market failure, I think the market failure is defined by the fact that we're way down in the OECD, when the digital strategy was released in May 2005 the government said we'd be in the top half by 2007, well 2007 came and we hardly moved and frankly there is now only two sets of people that would get involved in this big investment, there's the set of Telecom and they have very very weak incentives to invest in this because they’ve got phenomenal revenues from their legacy based copper loops and they’ll hold on to that as long as they can and if I was a board member of Telecom I'd be fighting like stink to hang on to that, and then there's the set of all not Telecom, and I've talked to private sector investors who said to me we wouldn’t have a bar of the risk because when it was done before you'll remember when Saturn tried to roll out in the Hutt Valley, Telecom came in and undercut them pricing street by street and the Commerce Commission said that was acceptable, so you just blow the business case cos Telecom can take you out.
BRIAN You mention Saturn, I'm on Saturn's network but no more of it was built after they left and that’s great as a consumer, you get cable TV and get fast Broadband, but what does it do for national productivity, why is fibre to the home supposed to be good for the economy as well?
MAURICE Well a lot of this is to do with products and services that are only just starting to roll out, there are some phenomenal healthcare services, there are devices I saw in the States which are a little flat panel with a USB plug, you can lay your wrist across it and over high speed Broadband it can do about 14 key points of diagnosis in terms of blood pressure, skin qualities, textures, you know heart beats for blood pressure and so on. Now we deliver healthcare in a very old fashioned industrial way here, you drive long distances into town, you sit in a doctor's waiting room for an hour before you get seen, that is a huge drain on any productivity, the same in education the same in telepresence. In Auckland we're talking about our roading issue, well one of the problems in Auckland is tens of thousands of people get up every morning come into the central concrete jungle, shuffle paper all day and then go home, what Broadband will actually enable you to do to participate in that very paper shuffling documentation collaborative work, even video conferencing with your boss, but you'll be able to do that from where you're located.
RAWDON Let me talk to you about that – it could take people off the road which means your tolls are gonna go down, your collection rate's gonna go down, we're getting a lot of feedback on road tolls at the moment. Your average punter's now got your petrol taxes, your road taxes, your tolls are maybe 50 bucks a week to get to and from work, that’s two and a half grand a year, the ARC might be putting taxes on to help with the electrification of your local rail network, how viable is it to charge people for tolls?
MAURICE Well all I can tell you is that if you look at any comparable jurisdiction it has worked.
RAWDON All comparable jurisdictions have much higher populations.
MAURICE No no there are a number of toll road projects in various countries where quite small populations have still contributed to make it work, something like the Kopu Bridge for example could easily be a toll bridge, you could give a dispensation to those who live just nearby it because their complaint was that every day they went into town they'd have to pay a toll, so you'd give them a zero rated car, but I can tell you now…
RAWDON But I'm talking about possibly where people can take an alternative route, I mean the Kopu Bridge is a nice easy captured market effectively isn't it?
MAURICE Maybe, I mean I would have thought there were other good examples around where people will pay if it's going to – the surveys that AA did said two things that were the barrier to tolls, one was while the government was stealing half the petrol tax, well that’s gone and done, and the other one was unless it poses a solution to a particular problem I face, if it's just a tax, just another form of revenue to the government then I'm not doing it, but if it takes a big chunk of my travel time. Look the Mio Bridge in France was great to see, it takes about an hour and a quarter off the north south trip from up to Clementfront across the ... Central, 98% of all commercial vehicles now use the bridge rather than the old road, they can still use the old road but what they're paying in a toll is way less than the hour and a quarter going down into the valley and then working your way back up and just fuel alone, let alone the driver's time, and I said what's wrong with the other 2% and the minister says oh they have girlfriends down in Mio.
RAWDON I'm gonna have to wrap that up there, Maurice Williamson thank you very much for coming in.
