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Rail—Business and Economic Research Ltd Report

Tuesday 4 May 2010 Hansard source (external site)

Hughes10. Hon DARREN HUGHES (Labour) Link to this
to the Minister of Transport

What strengths does he see in the Berl Economics report Business Case for Building Rolling Stock in New Zealand, and what response, if any, does the Government intend to make to the report?

JoyceHon STEVEN JOYCE (Minister of Transport) Link to this

It is difficult to see strengths when the report is based on highly debatable assumptions. For example, the cost per electric unit has been compared as if the examples in the report are all the same, when quite obviously they are not. The report suggests that the newer Asian manufacturers are having trouble selling trains overseas, and then suggests that New Zealand, though, could somehow be a successful exporter. The economic benefits are calculated by suggesting that the trains will be built mostly by skilled train manufacturers who are currently unemployed, which is doubtful. It has also made no allowance for any commercial risk for the trains to be built in this country despite the fact that it has never been done before, which, frankly, is inexplicable.

HughesHon Darren Hughes Link to this

Why did he suggest yesterday that the new electric multiple units are high-tech and much more challenging to manufacture than conventional carriages when the Business and Economic Research Ltd model already has the engines, bogies, and electronics being sourced from overseas, which would leave 70 percent of the work to be done by our skilled Kiwi work force?

JoyceHon STEVEN JOYCE Link to this

Because these are highly specialised pieces of equipment. They are very high-end units, which have never been built in this country before. I note that a previous Government, which the member represented, also took that view, because it bought the trains for Wellington from Korea, rather than having them built—

HughesHon Darren Hughes Link to this

I raise a point of order, Mr Speaker.

SmithMr SPEAKER Link to this

I say specifically to the Government front-benchers that a point of order was clearly called. Members should cease interjecting.

HughesHon Darren Hughes Link to this

My question was free of any political comment or commentary. I asked the Minister specifically about the difficult or high-tech parts that he referred to. Those parts are being sourced from overseas, leaving the more elementary aspects of the manufacturing to be done here in New Zealand. I am not sure whether he heard the question or did not respond to that part of it. I particularly separated that part of the manufacturing so that I could get an answer on the point of the more basic aspect of the proposal that has been put forward.

JoyceHon STEVEN JOYCE Link to this

In response I was noting that together these are very high-spec pieces of equipment, and I was noting, by comparison, that it has not been done in this country before. That was the reason for noting another example, which, I think, is an entirely fair answer to the question.

SmithMr SPEAKER Link to this

On this occasion I cannot expect the Minister to give a particular answer. The Minister has basically disputed the member’s assertion when he asked the question—that some of the manufacture is fairly simple. The Minister argued that the manufacture is complex, and in disagreeing with the fundamental aspect of the member’s question, I believe he has answered it. He has not dodged it altogether at all.

CurranClare Curran Link to this

When the Minister told Close Up last night that building the new electric trains in New Zealand would be a step too far in terms of capability, was he aware that Hillside railway workshops in Dunedin are already building 17 AK class carriages for the Tranz Scenic service, and that the quality of those carriages is equal to anything from overseas; if not, why not?

JoyceHon STEVEN JOYCE Link to this

I absolutely am aware of what is being built in the workshops in Dunedin. They are doing a fantastic job of building carriages and refurbishing and rebuilding rolling stock. I point out to the member that it is quite a different exercise to build electric multiple units, which are engines and carriages in the same train, the last time I looked.

MallardHon Trevor Mallard Link to this

Has he ever visited either Woburn or Hillside workshops?

JoyceHon STEVEN JOYCE Link to this

No, I have not.

HughesHon Darren Hughes Link to this

Does the Minister agree with the comments of the Prime Minister to the working party on this project that “We are spending all this money. It would be good if as much of it as possible could come back to New Zealand.”; and if he does agree with the Prime Minister, can he not see that this plan increases the country’s GDP, increases revenue to the Crown through taxation, creates hundreds and hundreds of manufacturing jobs, all within the allocated budget for rail, and is exactly the kind of step change in economic activity that the Government should be supporting?

JoyceHon STEVEN JOYCE Link to this

I indicated in my answer to the primary question that I do not agree with the assumptions and, therefore, the result of the report, but I do agree with the Prime Minister that we absolutely should do as much as we possibly can in this country. It is very important to note that the decision is to be made by KiwiRail, which says that it is unlikely to do the work because it does not want to take the commercial risk. I do not think politicians should be placing themselves over the top of KiwiRail. Let us face it: the last time politicians in this country decided that they could make a decision on rail, they spent $1 billion for a $388-million asset.

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