Locke Keith: Supplementary Estimates — Imprest Supply Debate 
Locke Keith: Supplementary Estimates — Imprest Supply Debate 
[Volume:640;Page:10175] 
KEITH LOCKE (Green) 
: 
 On behalf of the Green Party I wish to address the Vote Transport section of the supplementary estimates. If members look at that section they will see two very big figures there. One in relation to the State highway construction programme is $60 million. The note says this is “To ensure that the State Highway Construction Programme can be delivered in the event that the input cost escalation …”. Then there is another item for ALPURT B2—that is the Albany to Puhoi northern motorway extension—which is a figure of $65 million. Taken together that is $125 million in the supplementary estimates under Vote Transport which is a very large amount. 
There was some controversy back in March over the way extra money was being poured in beyond that budgeted when Jeanette Fitzsimons our co-leader in a question to Michael Cullen as Minister of Finance raised some information that she had obtained under the Official Information Act about the advice given to the Minister relating to supplementary expenditure for State highway construction. She asked whether the Minister agreed with officials’ advice to the Cabinet economic development committee that “Singling out the activity class of State Highway construction for Crown guarantee would signal a preference for funding State highways over all other forms of transport.” and that “This may be perceived as being inconsistent with … the LTMA [Land Transport Management Act 2003] or integration of the transport sector”. I think that was very relevant and we can see the problem being reflected in the supplementary estimates. 
Under the Land Transport Management Act 2003 Land Transport New Zealand has a very sophisticated and deliberate funding allocation process. It is actually outlined in a document I received in my office today a fact sheet dated June 2007 on the National Land Transport Programme. That body which is delegated under the Act to determine these things goes through what it describes as a six-stage process for the formulation of funding options which have to come from all sectors of land transport—not just road building but also public transport walking cycling etc. Under the Act the programme is supposed to be balanced. 
The stages are firstly the formulation. Secondly there is the assessment where the proposals are assessed by approved organisations in terms of the requirement of the Act and all of that is looked at. The third stage is that Land Transport New Zealand uses the profiles to assist prioritisation. Stage four is the programming. stage five is the approval of funding activities and stage six is the monitoring and review. So everything is worked out and authority is delegated to Land Transport New Zealand. 
But clearly what has happened is that over the past year in the year 2006-07 covered by the supplementary estimates Cabinet has intervened in that process and has not taken account of the officials’ advice that was quoted by Jeanette Fitzsimons in her question to Michael Cullen on 20 March. Michael Cullen effectively said the Government was just guaranteeing all the top-ups to make sure the roads were built. I think there are problems with that. 
One is when that is done to only one activity class as it has been and not to public transport. If we leave aside the operational dimension of public transport which obviously fluctuates according to demand in terms of infrastructural funding public transport does not get that preferential treatment and the officials’ advice was right. 
The other thing is how Government spending can be made really cost-effective for the taxpayer if there is a provision that if the cost of building a particular highway goes up—be it ALPURT B2 or State Highway 20 or whatever—then the money will be forthcoming. An extra $65 million will just be chucked in as happened with ALPURT B2 over that financial year. It is not very good discipline. If the contractors know there is a cost-plus approach they will put their tenders up to meet what is available particularly when we know that the contracting system is quite stretched at the moment in terms of all these roading projects. The contractors can benefit by many millions of dollars more—at the taxpayers’ expense—if we have such a funding system. 
It is true that in the Budget the Government has put some serious money into public transport. The Greens of course have been very keen on seeing extra money put into rail although it must be said that the $500 million put into electrifying Auckland suburban rail even though it is very good is in the form of an infrastructure bond. Sure it is Government guaranteed but it does not immediately come out of the Budget; the provision is that the interest on that infrastructure loan will come out of a petrol tax. That is how it is working. The Greens have supported that as have all the Auckland local bodies as enabling electrification to go ahead. But it is a more conservative approach than the Government just throwing in $125 million as is recorded in the supplementary estimates for State highway construction. 
The Government has admitted that it has gone against the proposal of funding Land Transport New Zealand which then works out in a balanced way what is funded. It actually says in the note in the supplementary estimates on the ALPURT B2 funding: “Contribution to support the construction of the Albany to Puhoi Northern Motorway Extension … Reason for Change: As per funding profile agreed by Cabinet.” That indicates that Cabinet itself has said there is some political pressure from the roading lobby for this road to go ahead and to make sure it goes ahead at a certain pace it will throw money in that direction even though it is not incorporated in the land transport budget. 
In the answer to Jeanette Fitzsimons back in March Michael Cullen said it was like superannuation in that it was demand driven. Well it is true that superannuation is demand driven and that we do not know the number of older people etc. so there has to be a bit of flexibility there and the situation changes year by year. But when we are talking about motorway construction we cannot draw the parallel that it is demand driven. We have these different projects: public transport infrastructural projects and road infrastructural projects. Whether money is allocated is not demand driven. That is where the parallel with superannuation is not right in that the funding process through Land Transport New Zealand is a contestable system and a balance has to be reached. It is I think quite wrong for Cabinet to intervene in that way and it is quite contrary to the concept of carbon neutrality that the Government is aiming at. 
If one is going to spend extra money above and beyond the Budget surely that money should go into public transport infrastructure if we are serious about getting New Zealand’s greenhouse gas emissions down because a lot of those emissions come from cars and trucks on roads. So if we put the extra money into roads we are not dealing with that problem; in fact we are encouraging people to stay in their cars rather than allowing for the availability of more public transport that can take people out of their cars. Or if we put more money into rail then we have more goods travelling long distances by rail as opposed to trucks. Surely that would be very beneficial. So I think we should seriously note the problem in the supplementary estimates with so much money being diverted by Cabinet down this track. 
The other problem is that the earlier funding for State highways was actually done before Land Transport New Zealand had published its programme and that is undercutting that body. Thank you.