Speech to Roading NZ Annual Conference

Good morning and thank you for the invitation to speak with you today.

I'm sorry I wasn't able to be with you last night for the presentation of the Roading Excellence awards.  My colleague David Bennett tells me it was a great event.

Congratulations to the Northern Gateway Toll Road for taking out the supreme award.

I'd like to begin by acknowledging your Chief Executive Chris Olsen and Chairman Cos Bryun, the Chair.

This organisation forms part of the backbone of infrastructure development in New Zealand, and I'm delighted you have asked me along today to give an update on the government's plans for infrastructure.

I'd also like to take a moment to acknowledge your international guest speakers:

• Eric Harm from the Illinois Department of Transportation


• Professor Martin Snaith from the University of Birmingham; and


• Dr John Oliver, Chief Scientist with the ARRB Group.

Building value

It gives me great pleasure to be speaking at a conference with a theme of "building value". 

Those two words summarise what this government is all about.

I know there are a number of key issues that your organisation has raised with me, and I will address those shortly, but I would like to start by offering an overview of government work in the transport portfolio and how that fits alongside our wider economic goals.

The new John Key National-led government was elected last November with a clear mandate.  A mandate to secure a brighter future for New Zealand.

And we have quickly set to work on that since then.  Whether it's working to improve our education outcomes, improving the safety and security of New Zealanders, or putting the building blocks in place for a stronger growing New Zealand economy, Ministers have all been determined to do the work to help secure that brighter future.

And nowhere have we hit the road more quickly than in land transport.  And that's because we know that quality transport infrastructure has the ability to enable greater productivity and faster economic growth. 

When I think of large projects like the Victoria Park tunnel in Auckland, or smaller projects like the Kopu Bridge in the Coromandel, I don't think of the joy of driving them, but the economic opportunities they will unleash for their communities.

And if you ever doubt that - think about what a certain box girder bridge did for the North Shore in Auckland over the last 50-odd years.

The government has identified investment in transport - and particularly in our state highway network - as critical to kick-starting our economy in the short term, and boosting productivity in the longer term.

The regional and national benefits of well-performing transport corridors has a flow-on effect that is key to making us a competitive country on the global stage.

So we're giving high priority to projects that reflect the country's transport realities while stimulating economic growth.

The first step was to revise the government policy statement on transport funding to be put economic growth at the fore and to better reflect the realities of how New Zealanders get around and how we transport our goods.

We have allocated around $10.7 billion over 10 years for investment in the state highway network, which we believe is an appropriate level given its importance.

We saw the tangible outcomes of his late last month with the release of the first three-year National Land Transport Plan.

This longer time-frame will enable investment with a longer-term view, giving the wider sector the confidence and ability to plan ahead.

I imagine it will come as a real plus to many here today.

Ultimately, it will mean less time planning and more time doing, so everyone involved can focus on achieving results.

And I can tell you we'll see some real results over the next three years.

The new NLTP outlines the highest and most sustained level of transport funding in New Zealand's history.

It delivers a programme of targeted investment in infrastructure and services that will benefit all New Zealanders by providing long-term benefits for both the transport network and the nation's social and economic development.

$3.075 billion over three years will go to New and Improved State highways which include the new Roads of National Significance - representing a 23 percent increase in funding compared to the previous three year period.

The remainder of State highway investment - $1.5 billion - will be invested in Maintenance, operation and renewal of State highways - an increase of 12 percent on the last three year period.

The NLTP has prioritised routes that need work to reduce congestion, improve journey time reliability and improve key freight and tourism routes.

In particular, priority had been given to advancing Roads of National Significance and the local roads critical to supporting them, as well as key freight and tourist routes.

The seven initial Roads of National Significance are centred on New Zealand's five largest population centres that have large traffic volumes, and are of national strategic importance for the economy. 

All need work to reduce congestion, improve safety and support economic growth.

These seven projects are focussed on:

• Increasing productivity


• Reducing journey time


• Enhancing safety

We're talking about the Tauranga Eastern Link, which will bring savings of 12 minutes in each direction.  That's per vehicle.

A saving of 24 minutes on a return journey for trucks will mean, in some cases, allowing an extra return journey to be made a day.

This time saving will mean significant productivity gains and allow the port to increase exports.

The new road will also bring significant safety gains on State highway 2 between Tauranga and Paengaroa, which is ranked second worst in the country per kilometre for fatal and serious injury crashes by the KiwiRap programme.

And we're talking about the Victoria Park bottleneck. 

More than 160,000 vehicles use this strip of road each day.  And at the moment they're crawling along at 20 kilometres an hour.

This is a project that may never have happened without a boost to state highway funding.

And then there's Waterview.  The completion of the Western Ring Route has been deemed necessary since the 1960s but successive governments have put it in the too hard basket.

The completion of the route is essential to the continued growth and economic development in the Auckland region.

It will also contribute to better links for business and freight between key industrial hubs in the cities of Manukau, Auckland, Waitakere and North Shore.

Transport modelling shows that the Waterview Connection (in a ‘two-lane each way' configuration) would deliver time savings of around 18 minutes for morning peak vehicle trips between west and south Auckland. This would be a time saving of about 20 percent.

The project would also lead to time savings of around five minutes for trips along State Highway One, with traffic switching from this route to the Western Ring Route. Trips on the local road network around Waterview would also benefit from improvements to travel time and reliability.

In total, savings in travel time and traffic congestion for the basic untolled configuration would amount to $3.3 billion of the total $3.5 billion (in 2015 terms) in transport benefits expected from the project over 30 years. The total value of time savings across the network would be lower if the route was tolled.  

And we're doing it in a way that's affordable - without borrowing.

Over the next three years - the time span of this NLTP - we will see significant progress on the majority of these vital routes.

Within three years:

• Victoria Park - project complete.


• Western Ring Route - construction started on the first stage of Waterview and the Lincoln Rd interchange.


• Waikato Expressway - work on the Te Rapa bypass underway this year, and construction on Rangiriri, Cambridge and Ngurawhaia sections within 3 years.


• Tauranga Eastern Motorway - construction started on the Tauranga Eastern Link (if tolling is approved)


• Christchurch Southern Motorway - construction underway.

And we expect to see all seven nearing completion within 10 years.

The Roads of National Significance will be complemented by improvements to key arterial roads and urban public transport networks.

Earlier this year, we announced a $500 million national stimulus package, of which $142 million State highway improvements has already begun to roll out.

Construction on the Kōpū Bridge replacement has started, one year ahead of the original schedule, as has preliminary work on the Rimutaka Hill Corner Easing - 30 months ahead of schedule.

In addition, the Matahorua Gorge Realignment and the Hawke's Bay Expressway Southern Extension are due to start construction in October 2009, and construction on the Christchurch Southern Motorway Extension is due to start March 2010. 

Good progress is also being made on the small and medium sized activities (that is, projects costing less than $4.5 million), which generally focus on State highway safety improvements and pavement renewals. To date, 83 small and medium sized projects have been funded, and the NZ Transport Agency is continuing to identify activities to progress over 2009/10.

The majority of suppliers and subcontractors for these projects for all of this work are expected to be regionally based, using a regional workforce and material, providing an immediate boost to regional economies. I'm sure that's good news for a lot of you here.

Local roads

Funding for local roads is critical for maximising access to markets and areas of employment.

Maintenance, operations and renewals of local roads will receive $1.4 billion over the next three years - a 19 percent increase over the previous three years. This investment will focus on network safety, resilience and security.  Funding for new and improved local road infrastructure has been set at a realistic level $480 million over the next three years.

So there's a lot going on already and there's a lot more in the pipe.

I know anecdotal feedback from many of your members indicates that this work has helped to keep people in jobs during this tough economic time. This was part of the intention of the decision and I'm delighted to hear it has had a positive effect for your industry.

Roading New Zealand issues

I would now like to briefly address some of the key issues that you have raised with the government, and update you on where they are at.

You've raised the issue of training and qualifications.

As I see it, the government's first job is to provide certainty of work - and we're doing that, so that companies have the confidence to invest in training.

One of the big challenges we face is around consenting - there are a lot of projects that have been on the planning books for a long time.  We're working as fast as we can to address that to provide further certainty going forward.

I would encourage you to work with Infratain and the Ministry of Transport to see if there's anything further the government can do in this area.

Your organisation has expressed concern about ongoing TEC funding. 

Secondly, I know your organisation advocates the use of the "Early Contractor Involvement" model to speed up the delivery of projects.

I have looked at models both here, with NZTA, and through OZ Roads in Australia.

The selection of a delivery model by the NZTA depends on the assessment of each project's specific characteristics and the range of possible delivery models.

As roading projects become larger and more complex it is becoming clear that early contractor input into the initial design and development phases of a project can be beneficial. For example, in 2007 the Centennial Highway Safety Improvements were successfully delivered using this delivery model. 

In that project there were very complex construction and traffic management issues to be solved.  Involvement of the contractor early in the project lifecycle allowed efficient and cost effective constructability solutions to be used.

And lastly, there is the issue of collaborative procurement to improve value for money on projects and speed up delivery.

The NZTA has undertaken a comprehensive review of procurement policy and procedures for physical works, professional services and public transport. The objectives of the review were to maximise the contribution of procurement to obtaining value for money, encourage competitive and efficient supplier markets, and help to develop sound relationships with suppliers in order to achieve fair prices and sustainable supply markets.

A new procurement manual was released in July. Developed following extensive engagement with a broad range of stakeholders, it has included a review of international best practice approaches to procurement.

So it's really a matter of horses for courses on each project.

Conclusion

Finally, I would like to take this opportunity to thank you for the way you have quickly responded to the challenges placed in front of you.

I look forward to continuing to work with you as we move forward.

I also want to acknowledge the industry for its innovation and excellence - you are doing more than just getting the job done, you're thinking beyond the square to build value into projects, and I commend that initiative.

I'm happy to take any questions you may have.