Government Infrastructure Package

We are generally happy with the package of projects announced by the Government this morning.  In particular it is great to see that the Muldoon’s Corner improvement on the Rimutaka Hill Road is not only going to happen, but that work is going to begin so soon.  this is a much needed improvement to our regional road system.  This area of road is too narrow for two trucks to meet (going in opposite directions), and all large trucks are forced to cross the centre line.  this makes the road dangerous for all users.  The project has been on the regional roading agenda for several years but has consistently been prioritised down the list when it has come to decisions actually being taken.  Well done Minister Joyce.

Our statement is up on Scoop….

Toll Roads (2)

The original post on toll roads was written last Friday morning at a Starbucks in Geneva.  Unfortunately it failed to make beyond a draft saved on the WordPress system (I think my 30 minutes of free internet time might have expired just as I was hitting publish).  It might have helped the editorial writer on the editorial on Transmission Gully in today’s Dominion Post.

 

Putting this bad editorial to one side I have done more research on the A41 and talked to my counterparts here and in Annecy.  The motorway opened only on 23 December.  It cost SF1.1 billion (NZ$1.5 billion).  And it has been welcomed by the general public and business groups, and strongly opposed by environmental groups.  The environmental groups wanted the money spent on light rail (particularly a new link between Geneva and Annemasse) and on rail.  They opposed the road as they believe that collective travel solutions are better than those that favour the individual.  Isn’t it interesting how “green” groups the world over use the same talking points.

 

The Mayor of Annecy believes the new highway will transform his local economy, encouraging international high tech investment and launching Annecy as an international tourist destination in its own right (Annecy is known as the Venice of Savoy.  It has lovely canals, a lovely old city, it has a lovely lake and is surrounded by impressive mountains).   There are several parallels here with our situation in Wellington.

Bill English Speech To NZCCI Conference

I had expected there to be media reporting on yesterday’s speech by Dreputy Prime Minister Bill English to the New Zealand Chambers of Commerce annual conference in Rotorua, but I caan’t find any on line.  So here is my summary:

• The Government will proceed with plans to cut taxes again on 1 April and will pass necessary legisaltion before Christmas;
• Government spending is a hige issue.  The books look worse than expected and there are some huge liability issues – eg ACC where liabilities outweigh invested funds;  The focus of reviews will be on the effectiveness of Government spending not on slashing;  There will be no cutting of safety net services;
• There will be a general focus on productivity, including on productivity growth in the public sector;
• Local Government needs reform and Rodney Hide will be active in that space;
• There will be a review of regulation – to remove red tape and to improve the effectiveness of regulation.  RMA will be a priority – expect legislation in February – but the Building Act and the operation of the various acts around land transport and local Government will also be tidied up;
• Rodney Hide ios also Minister of Regulatory Reform and will work with Bill English on this;
• Infrastructure will be a priority.  There will be aa short term focus on those things that can be done quickly – the health, education and housing sectors will benefit short term and this will help soak up surplus labour and equipment from the construction sector.  Roading priorities will be part of a more long term strategy and will take longer to prepare but will benefit from the streamlining of regulation;  The Government plans to set up an infrastructure unit to coordinate activity in this space;
• Bill stressed that there is no silver bullet there to solve our economic problems, rather the Government needs to focus on doing something like 100 tasks better.  Bill stressed the importance of the business community signalling to Government its priorities for those talks that need to be done better. 

Overall there was remarkable consistency between Bill’s vision and the NZCCI policy prescription.  Now we have to focus on getting the vision delivered.

Kiwirail – An Example Of What Governments Should Not Do

During the election campaign I was invited to be part of the audience for a debate on IT and telecommunications policy run by TVNZ and Internet New Zealand.  I was also asked if I would mind asking a question.  I agreed.

During the debate there were several comments made by Minister Cunliffe about the purchase of Kiwirail as an example of the government’s commitment to infrastructure investment.  So when it came to my question I introduced it by noting that we would rather have seen the money that had been invested in Kiwirail invested in fibre roll out as this would be more likely to have an immediate impact on productivity performance.  My comment was not appreciated by David (who I know quite well as we used to work together).  At the time my understanding was that we had probably paid too much for the railways and that we had been left as the taxpayer with an enormous liability in terms of essential investment in the upgrade of track, engines and rolling stock for the railways.

It seems that things may be even worse than i had realised a few weeks ago.  The very useful publication Transport and Logistics (from the same crowd that write Trans Tasman and the Main Report) carries this article today

Kiwirail value tumbles.The value of KiwiRail has slumped $242m just three months after it was bought. The Crown’s accounts for the three months to September reveal the value of KiwiRail has been slashed $242m, more than a third, since the Govt bought the business for $690m. The “fair value” of KiwiRail is now $448m. Expect the book value to continue sliding until the economic climate improves. National could use the value drop to reassess any further investment in the rail network and operations.

This is very annoying.  There were far higher priorities for Government investment in infrastructure than Kiwirail.  It is looking as though this investment is going to be a permanent drag on Government at a time when funds are becoming increasingly scarce.