Kuriger Barbara; Foster AndyANNUAL REVIEW DEBATEIn CommitteeDebate resumed.TransportCHAIRPERSON (Barbara Kuriger): Members the Minister of Transport is now available for one hour to respond to members' questions. I first call Andy Foster the chair of the Transport and Infrastructure Committee.ANDY FOSTER (Chairperson of the Transport and Infrastructure Committee): Thanks Madam Chair. Look I'm delighted to report back from the Transport and Infrastructure Committee on what I think was great work that we did in the annual review process. I just want to say thank you to all the team also the substitutes the officials and also the agencies who came in to speak to us. I think we learnt a lot and I think we've identified some real opportunities to make the boat New Zealand Inc." go faster and if we take some of those opportunities we will make a material difference to our collective wellbeing.So we had in the Infrastructure Commission Crown Infrastructure Partners the three mixed-ownership model power companies Transpower and the Electricity Authority and we also had KiwiRail which engendered quite a lot of interest—that's one of the organisations we chose to do an in-depth inquiry on. And we also had the in-depth inquiry on the New Zealand Transport Authority (NZTA) which was required of us. We also had the Ministry of Transport in. I think we asked a lot of good questions. I understand it's usual procedure for the Opposition to ask more questions than the Government but in fact everybody contributed significantly to asking good questions and I think we got a lot out of it.In the time available I can only highlight a few things. First of all the Infrastructure Commission is where we started off. I've got to say for me they are a breath of fresh air. We've all heard about our national infrastructure deficit but their message which is the crucial one is that we actually invest as much as the international benchmark. We're investing enough; what they're saying is we are not getting value out of it. They're saying we're investing about 5 to 6 percent of GDP in infrastructure but if we were to get what we need to get out of it with the way we do it currently we'd need to invest about 10 percent so about 4 percent of GDP essentially being wasted in our processes.What were their key messages? Well they said that the quantum investment is sufficient but the quality of that investment is poor and New Zealand ranks in the bottom 10 percent of high-income countries in terms of the amount of infrastructure we deliver per unit of capital invested. That is a really serious message but it's also a really serious and really exciting opportunity that we have to make some changes. So that's about not investing in dumb things. They said that our use of business cases is sporadic and so-called business cases are usually just dressing up support for a project we've already decided on even if it's not the best project that we could do. The commission encourage us to use best-practice business case approach saying we have a "New Zealand Inc." problem here.They also told us that our asset management is often very poor and that we under-invest particularly in maintenance—and that is right across the board in all assets. They said that roughly speaking we should be investing about 60 percent in maintenance 40 percent in new but we are investing probably about 30 percent in maintenance. So we're way under—and that is across the board. In many cases we've under-invested for decades. For example the rail network came up—we know that we've under-invested for decades. So there's a huge programme being done by KiwiRail to get us up to spec.NZTA told us we're investing about half what we should be in maintenance. So it's no wonder we've got a few potholes around the place. They also talked about the huge handbrakes that we have in terms of our processes. They particularly noted our consenting regime and the cost of working on the road. There are some real huge opportunities there that we as "New Zealand Inc." should be grasping to make sure that we gain those benefits. The cost of working on the road is going to be an ongoing focus for our select committee. In fact we've already done some more work in that area. We also discussed things like access to materials so for example quarries and landfills. The observation they made is that if we don't do that we are going to have to go further and further and further for aggregate further and further and further to dispose of stuff and that is costing more and also more carbon emissions.They also said that in planning for infrastructure it's obvious you need to know how many people you are planning for. One of the things which is absolute music to my ears—because I've been saying this for 40 years—is that we need a population strategy and we need an immigration strategy and we haven't had one of those worthy of the name for all of those 40-odd years. Personally I found the entirety of the session we had with the commission to be immensely exciting and full of opportunity for "New Zealand Inc." to do much much better.We also spent a lot of time with the energy companies and Transpower and they mapped out a road to decarbonisation. What I think we had confidence in particularly from the mixed-ownership model companies is that they have a pathway to actually deliver that which is not so apparent with the rest of the infrastructure providers—probably because it's at least a partially private model.Transpower's investment of course is subject to the Commerce Commission process. They actually said that there are some real challenges not only with the Commerce Commission saying "Yes That's OK. It's good discipline." but also in getting access to land. Transpower said that the ability to do that is relatively weak. Also again the consenting process is challenging.We also heard from the power generators that the cost of re-consenting—not of consenting but of re-consenting—is astronomically expensive. There is a place that we could look to do things faster quicker and there is I understand legislation that is being considered by Parliament that might assist in that that area if it were chosen. We also heard that the mixed-ownership model is working well and the companies told us that the market is good at sending commercial signals. We also heard that the assets are ageing and the majority of the grid is—CHAIRPERSON (Barbara Kuriger): Andy Foster.ANDY FOSTER: I know that my time's up; I'm just waiting for you to call me—CHAIRPERSON (Barbara Kuriger): No I'm just calling you again because the original five minutes is up.ANDY FOSTER: Oh! Excellent. So I can keep going a bit slower. Oh brilliant; I'll carry on.CHAIRPERSON (Barbara Kuriger): Well it's all time-bound so you're all in charge of your own time frames right?ANDY FOSTER: I'll rush a bit slower. Look thank you Madam Chair—so I could slow down just a little bit. Transpower told us that its assets are ageing. They said that most of the grid is 60-plus years old and that some of the assets are over 80 years old. They gave us a really good example of the value of investing in new technology. They talked about two substations that were caught in Cyclone Gabrielle: an older one failed; a newer one didn't. Of course what that did is it kept the lights on in that area and it meant that they didn't have to go around and put the lights back on again and do a serious amount of work there. They also discussed the importance of electricity system resilience to natural hazards human action and cyber-attacks. They also talked about the importance of building good relationships with the communities through which their transmission network flows. But they build those over time; they don't just build them when they need to get a consent to do something new—I thought that was a very important message.Look the last thing I'm going to say or talk about—which came across from a lot of the organisations whether it was in the electricity area whether it was in the infrastructure area whether it was in the roading area—is the importance of access to talent. What they said is that in many cases we have an ageing workforce that is working in these areas. The concern of course is that you lose that ageing workforce. If you don't have people trained to come in and do the work especially as we need to do more infrastructure work that is going to be a real problem. So that is not just an infrastructure issue; it is where there is an interface with the education system where there's an interface with the apprenticeship system. Again there's an opportunity and a challenge for us for "New Zealand Inc." to do some serious work to get our infrastructure if you like back on track.Hon Scott Simpson: Back on track.ANDY FOSTER: Yeah "back on track"; that's what I said. Look we've got some really good messages from all the organisations that we heard from. I think if you look at them carefully and thoughtfully there is a real opportunity to add significantly. We've talked a lot as a Government and we should be thinking a lot as a Parliament about how we become more productive. There is several percent on GDP that we have highlighted just there and if we keep focusing on those things we will make a material difference to our country going forward.If I might use just a fraction of the time that I've got left we did some further work on looking at working on the working on the road. Councils at the moment are saying "Hey we need more money." But if you said to them "I've been and talked to some of the council." they'll say "Traffic management is costing us 40 percent of the cost of some of the projects that we're undertaking."—40 percent. If you could knock that down to a reasonable say 10 percent imagine how much money that is leaving in their pockets to do more work or that they don't have to rate higher for.So when we're all saying we want more money more money more money for all sorts of things the first thing that we need to do is do things more efficiently. If we can do things more efficiently we can get better value for money we can leave more money in ratepayers' pockets more money in taxpayers' pockets and we can buy more social services more whatever services that we want to do. So there's a real opportunity there. That I think is the message which came through from the things that we heard as the Transport and Infrastructure Committee. I commend our report to the House.CHAIRPERSON (Barbara Kuriger): Thank you. I'm going to take a call from the honourable Minister Simeon Brown. Just to perhaps reiterate for the committee at this point it's a time-bound debate and each party will be responsible for timing themselves out. So check in with your whips in terms of how long time might be."