3. GARETH HUGHES (Green) Link to this
to the Minister of Finance
Will the Government in Budget 2010 continue to spend billions of dollars on the seven roads of national significance identified in the National Infrastructure Plan?
Hon STEVEN JOYCE (Associate Minister of Finance) Link to this
Yes. The Government is forecast to spend $11 billion over the next 10 years on State highway construction, which will include substantially progressing the seven roads of national significance. We are doing this to lift our national productivity and economic growth by easing prominent bottlenecks within and around our five largest metropolitan areas, and by linking our major sea ports and airports more effectively into the State highway system.
Can the Minister of Finance confirm that two of the motorways, Pūhoi to Wellsford and Transmission Gully, have benefit-cost ratios of less than 1, meaning that for each dollar spent they will not achieve even $1 in benefit?
The Minister can confirm that depending on which way the Transmission Gully road is measured, one can come up with a benefit-cost ratio of less than 1. The Minister can also confirm that when the road was announced it was pointed out that it would be constructed in a very challenging environment, and that if we wanted a high benefit-cost ratio on the Transmission Gully road, we would have to move the capital city somewhere else so that the road could be built much less expensively. In the case of Pūhoi to Wellsford, depending on the discount rate used, and taking into account the wider economic benefits, from memory the ratio ranges from 0.8 to 1.6.
Does he have any advice from Treasury to support his view that it is good economics to fund projects when the costs outweigh the benefits?
No, the Minister does not have any specific advice in that regard. Of course, there is a huge range of Treasury advice on a range of issues, but Treasury is certainly keen to see the Government focus on economic growth, and we are certainly doing so. Roading forms part of a plan that we have developed for some time now, and it seems to be bearing early fruit in terms of a reduction in unemployment numbers, and in comments from the Governor of the Reserve Bank that New Zealand is back on the road again.
Will he admit that recent OECD analysis referenced in his National Infrastructure Plan actually shows there was no positive relationship between motorways and economic growth in New Zealand?
No. The Minister of Transport has been through that report at some length and it does not actually say that, at all. He is happy to take the member through it if the member so desires.
Hon Darren Hughes Link to this
How does he plan to come up with the $600 million shortfall between the funds he has available to him as the Minister of Finance and the funds that are required to build the seven roads of national significance over the next 7 years?
No, the National Land Transport Programme projects $10.7 billion to substantially progress the roads of national significance over the next 10 years. It makes no prediction as to what will be completed within 7 years.
What is his response to all the evidence that spending on trains and buses creates twice as many jobs as spending on motorways, because motorway construction involves more land and machinery than people?
I think the member is referring, once again, to the OECD report. I am happy to take him through it at some point, because the points he is making are not reflected in the analysis of the appropriate approach for investment in New Zealand. The analysis reflects that we historically have had a very road-dominated transport system, which we are continuing to invest in.
I seek leave to table graphs from pages 62 and 63 of the OECD report on infrastructure investment, which show there is no correlation between motorways and economic growth in New Zealand, and a strong, positive link—
Mr SPEAKERCan he name any city in the world that has eliminated congestion and enhanced economic productivity by widening motorways and attracting more cars into crowded urban areas?
Yes, I can. There is one north of here called Auckland, which has made good progress with roading investment. With the combination of good roading investment and good public transport investment, I strongly predict that in the next 4 or 5 years we will have a much better transport outcome in Auckland.
Is it fiscally responsible when the Government is cutting funding across the board for it to be spending tens of billions of dollars on motorway projects that fail to deliver jobs, fail benefit-cost analysis, and fail to provide for our future?
The Minister would reject all of those assertions. I point out to the member something that he may not be aware of, and that is that we have a hypothecated roading revenue system in this country whereby road-user charges and petrol excise duty are reinvested into the roading system, largely to improve it. That system, of course, was signed off by the previous Government, of which his party was a member.
I seek leave to table a report from the US that demonstrates that economic spending on public transport—
It is entitled What we learned from the stimulus, and it is by three non-governmental organisations based in the US.