Genter Julie Anne: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeGenter Julie Anne: Estimates Debate — In Committee[Sitting date: 30 July 2013. Volume:692;Page:12058. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green):The National Government is missing an opportunity to invest in smarter transport options. I do not have time in this 5-minute speech to go over in detail all of the ways it is missing this opportunity so I am going to focus on just one area in which it is planning to massively increase debt for transport projects that cost more than their economic benefits. I am not sure that New Zealanders fully understand that when the Government says it is going to go into a public-private partnership—or a PPP—what it is really saying is that it is going to borrow money from the private sector which has a higher cost to capital and that we are going to be paying that back for 25 years at extra-high interest rates. So it is trying to hide its borrowing by calling it a public-private partnership and claiming that there are going to be some special magical innovation benefits from the private sector financing the loan.As soon as you start to examine this loan it becomes very clear that it is just an extra-expensive loan for some very foolish projects that should not be the priority in 2013. In 2013 we know based on 60 years of evidence that expanding new highway capacity does not reduce congestion; it makes it worse. We know that duplicating an existing road link with a more expensive road has diminishing marginal returns. It does not create any wider economic benefits. It is not the best way to reduce transport costs. It is not going to create many jobs relative to the jobs we could create by investing in more jobs-rich infrastructure.First off the block for a public-private partnership is Transmission Gully and we know from documents released from the Ministry of Transport and from the New Zealand Transport Agency that that is going to cost us $120 million a year for 25 years. We are not going to pay anything up front but we are going to be paying back for this project out of future national land transport funds for 25 years. This is a truly phenomenal cost. It basically triples the cost to the taxpayer of this piece of infrastructure. The most recent benefit-cost ratio of Transmission Gully puts it at about 0.35 or 0.4. That means that for every dollar we spend on it we are getting only 40c back. We are basically destroying 60c of worth for every dollar we spend on this and that does not even include the additional cost the extra $2.4 billion it is going to cost because we are going to the private sector for the loan.I can understand if some people are a little bit suspicious. I am a Green Party MP—maybe I just hate cars and roads and that is why I am making these numbers up. Actually University of Auckland associate professor of economics Matthew Ryan has written an entire article about the folly of financing Transmission Gully through a private loan so I think the reality is that the Green Party understands economics better than the National Government does. The Green Party understands that New Zealanders want smart green transport options. We have this amazing opportunity to spend less money and give people more choice. The National Government’s transport priorities—and it is prioritising a few big expensive roads that are going to have very very small benefits—do nothing to reduce the amount that New Zealand households and businesses have to spend on vehicles and fuel to run them.Earlier in the speech on Vote Finance I talked about our current account deficit which is about $10 billion this year and is going to be increasing to $17 billion. Well a big part of that is transport infrastructure because the Government is spending about $3 billion a year on transport and an extra $1 billion is coming from our rates through local government spending. So central and local government are spending $4 billion a year on transport. Households last year spent $11 billion on vehicles and fuel to run them—$8 billion on oil alone. That is a massive contribution to our current account deficit. The Government’s transport priorities do nothing to reduce households’ transport costs. If it deferred some of these projects and made urgent repairs to theexisting roads we could achieve the same benefits at lower costs and have billions to put into smart green transport options like improving our public transport and making walking and cycling safe. That takes cars off our existing roads. It is the smart green approach to transport that unfortunately this Government is ignoring.