The $3.5 billion ‘brake’ on the economy

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Auckland Light Rail plan questioned by National MP

The New Zealand Transport Agency (NZTA) has defended its plans for light rail in Auckland.

The new Government’s decision to scrap roading projects has led to $3.5 billion of state highway infrastructure going unbuilt, which might be a drag on economic growth. Thomas Coughlan reports.

New Zealanders are feeling the pain of billions of dollars in fuel taxes, but not reaping the benefits of better roads, and that could be putting the brakes on the economy. 

With National’s 10 “Roads of National Significance” effectively in a holding pattern, Treasury is concerned that NZTA is unable to spend all the money it taxes, which is dragging down economic growth.

Transport Minister Phil Twyford has shifted investment away from large state highway investment.
MONIQUE FORD/STUFFTransport Minister Phil Twyford has shifted investment away from large state highway investment.

The $2 billion the NZTA collects in fuel taxes is usually spent on building new roads.  

But the new Government’s decision to redirect money into road safety and public transport has meant $3.5 billion less will be spent on new state highways, according to documents released under the OIA. 

It’s also stalled its building programme for “12 to 18 months” while it comes to terms with the Government’s changes. 

The Government says its putting a bigger focus on walking and cycling now.
ROSS GIBLIN/STUFFThe Government says its putting a bigger focus on walking and cycling now.

​Infometrics economist Brad Olsen said the transport spending was a “brake on the economy”.

And Treasury agrees lower spending is concerning. 

It said industry was concerned about the 12 to 18-month stall in construction projects while the new Government was revising its transport priorities. 

There are 12 large roading projects which Treasury says are “market-ready”, but these have been effectively scrapped under the new Government’s pivot away from highway investment, although only two of the ten Roads of National Significance were fully funded before the election. 

Treasury is concerned that when the last of National’s projects wrap-up, there won’t be any new projects ready to replace them.

It said around $4.8 billion worth of “major projects” are due to be completed in the next two years, but there are only $1 billion worth of new projects getting ready to start. 

Economist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.
SUPPLIEDEconomist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.

That means there’s $3.8 billion worth of construction projects that aren’t ready to go when the current round finish. 

This means the workforce on those projects may leave the construction industry, or move offshore, possibly to Australia where the Government has announced a $100 billion transport infrastructure package. 

Olsen said this was particularly concerning, because when the new Government’s projects were finally at the stage they could be built, there might not be the workforce ready to build them.

“Noone will be ready for it,” he said. 

The NZTA’s accounts also show that it’s struggling to spend all the money it collects. While it’s managed to collect nearly $1.5 billion in fuel taxes this year, it has struggled to spend anything near what it planned to.

The Government's Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist's rendition of what light rail in Auckland could look like.
AUCKLAND TRANSPORTThe Government’s Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist’s rendition of what light rail in Auckland could look like.

Why this matters

New infrastructure investment acts as economic stimulus, as the money spent works its way through the economy and better infrastructure improves productivity.

But if the Government collects this money in taxes without spending it properly, it acts as a drag on the economy, slowing growth. 

New infrastructure also helps to absorb the impact of a growing population. This is something New Zealand has struggled to do for a decade.

Research by ANZ found that new infrastructure spending for each additional 1000 people New Zealand adds to its population fell from $142 million in 2011/12 to just $37m in 2016/17.

The Government has tried to respond to this by building an “infrastructure pipeline” which essentially lists the projects it wants to build so that they’re ready to go when needed. It’s also committed to spending $42 billion on infrastructure over the next five years. 

Transport Minister Phil Twyford said that the Government was planning to spend more on transport than the last Government.

Twyford says the Government is delivering a different mix of transport projects.
ALDEN WILLIAMS/STUFFTwyford says the Government is delivering a different mix of transport projects.

“Our Government is spending more than ever before on transport – around $4 billion a year,” Twyford said.

He said the new Government was delivering a “different mix of projects”.

“Because of our commitment to rebalance transport spending and invest more in safety, local roads, rail, public transport and walking and cycling, and demand more value for money, there are fewer new four lane expressways planned than was the case under the former government.

“Under our Government, there is a bigger infrastructure pipeline in place with more capital spending, it’s just a different mix of projects,” he said. 

But while the Government had promised more spending, it was having difficulty getting the money out the door.

Olsen said the problem isn’t so much the money that’s been promised, it’s the lack of projects that are ready to go.

National's Transport spokesperson Chris Bishop is concerned for the country's economy.
KAI SCHWOERER/GETTY IMAGESNational’s Transport spokesperson Chris Bishop is concerned for the country’s economy.

He said there needed to be more emphasis on getting projects “shovel-ready”.

“Where is the plan for now?” he said. 

The Government’s announced on Thursday that its Auckland light rail plan will not be considered by Cabinet until 2020, which means construction on the $6 billion project will be pushed out beyond the current Parliament. 

National’s Transport spokesperson Chris Bishop said that the slashing of the state highway budget was starting to have real effects on the economy.

“Important projects, many of them ready to go, have been pushed off to the never-never – all for a light rail project the start date for which has been delayed yet again,” he said. 

Port of Tauranga signs 30 year train agreement

Port of Tauranga Chief Executive, Mark Cairns, left, and Tainui Group Holdings Chief Executive, Chris Joblin, right.

Port of Tauranga and the TGH-subsidiary Port Ruakura LP today announced a long term partnership to support the development of the planned Ruakura Inland Port at Hamilton. 

The agreement allows Port of Tauranga’s cargo trains running between MetroPort Auckland and Tauranga to service Ruakura Inland Port, giving Waikato-based importers and exporters direct access to fast international shipping services calling at Tauranga.

Tauranga is the only port call for the biggest container ships visiting New Zealand.

Port of Tauranga chief executive Mark Cairns says the planned Ruakura Inland Port offers significant cargo handling capacity and scope to meet future needs.

The 480 hectare Ruakura estate has 192 hectares earmarked for logistics and industrial uses including the planned 30 hectare inland port. 

“The Ruakura development will provide a highly efficient rail hub in the Waikato by utilising our existing train services linking our MetroPort Auckland inland freight hub with Port of Tauranga, which is New Zealand’s international hub port and the main cargo gateway for the upper North Island,” he says. 

“It’s an excellent example of Port of Tauranga’s partnership approach to providing supply chain infrastructure beyond our Bay of Plenty hinterland.” 

Tainui Group Holdings Chief Executive Chris Joblin welcomed the long-term partnership on behalf of Port Ruakura LP. 

“This initial 30-year agreement with Port of Tauranga is a key step towards fulfilling our vision for Ruakura to unlock the golden triangle of Auckland, Hamilton and Tauranga for importers and exporters,” he says. 

“The agreement will see Port of Tauranga trains initially call at Ruakura four times daily and this is likely to grow. This service will underpin the significant supply chain savings we have been modelling with prospective customers and tenants of Ruakura,” he says.

The golden triangle already accounts for around half of all freight volumes in New Zealand and container volumes are forecast to grow 60 per cent in container volumes by 2042.

Port of Tauranga’s partner KiwiRail operates up to 86 trains per week between MetroPort Auckland and Tauranga, carrying up to 9000 TEUs (twenty-foot equivalent units).

The route currently has unused capacity and the additional service stop will improve utilisation and reduce the number of trucks on roads.

The agreement provides Port of Tauranga with priority rail slots at the Ruakura facility for an initial term of 30 years.

Port Ruakura LP will provide the necessary infrastructure, including a rail siding, hardstand and cargo storage areas. 

Development of the Ruakura Inland Port is scheduled to follow the completion of an adjacent Hamilton section of the Waikato Expressway currently expected to be late 2021. 

KiwiRail CEO Greg Miller says the Upper North Island is a key growth region for KiwiRail and New Zealand. 

“This is another example of the supply chain collaborating with KiwiRail to design and deliver rail infrastructure to better connect New Zealand.”

Contractors to blame for Wellington’s latest train disruption

The contractors currently involved with Wellington’s train network upgrade will temporarily be no longer be working on one aspect of the project after faulty installation of a mast caused trains to grind to a halt.

KiwiRail says they take responsibility for the widespread disruption caused to Wellington train commuters today because of a fault to the overhead power lines in the Hutt Valley this morning. 

The outage was caused by a mast being installed incorrectly by contractors, which caused it to make contact with trains passing beneath it. 

KiwiRail Group chief operating officer Todd Moyle said what happened today is “unacceptable and we accept responsibility. The contractors involved will not be doing any more of that work until we have throughly investigated the cause of the incident, and ensured processes are in place to ensure it does not happen again.”

A $300 million improvment is  currently underway to improve the network to improve the reliability and capacity of the network which includes replacing the overhead power system, masts and wires that power the trains. 

Today’s train outage is the second for the city this month. 

Last month there were two outages. 

The 29 projects sharing multi-million-dollar grant for low emission transport ideas

The Warehouse, KiwiRail and Meridian Energy are among 29 organisations sharing a grant of $4.5 million from the Government for low emission transport projects. 

Energy and Resources Minister Megan Woods said it’s the largest round of funding delivered through the Government’s Low Emission’s Vehicles Contestable Fund so far. 

The grants will include $4.5 million from the Government, matched by $12 million from the private sector, the minister said on Thursday. 

“Smart investments like this are why under this Government the number of electric vehicles on our roads has nearly tripled. In October 2017, we had 5363 registered electric vehicles (EVs) compared to 15,453 now.”

The 29 projects granted funding range from increasing the number of availability of public charging stations to heavy electric truck trials. 

The Warehouse, for example, is getting a $257,287 grant to lease four electric trucks for daily home delivery function. The company plans to locate them in Auckland, Christchurch, Hawke’s Bay and Manawatu. 

Meridian Energy will get $150,000 to install up to 14 electric vehicle charging stations in businesses in Otago and Canterbury, to add to available charging infrastructure. 

KiwiRail – which was already given $1 billion in Budget 2019 – will get a $65,000 grant to install six electric vehicle chargers on three Interislander ferries to provide travellers with the ability to charge their electric cars and campervans. 

Kiwi Property Holdings will get $211,209 to install at least 43 charging stations at shopping malls including Sylvia Park and Lynn Mall in Auckland and The Base and Centre Place in Hamilton. 

ChargeNet NZ, which has built more than 100 charging stations across New Zealand, will receive three separate grants totalling $343,000, and will share a $318,500 grant with Orion NZ to connect South Island coasts to EVs. 

Green Party energy spokesperson Gareth Hughes said transport makes up 19 percent of New Zealand’s emissions, “so this work is critical if we are going to meaningfully act on climate change”.

“These grants are part of a broader work programme to bring emissions down in New Zealand by this Government and we welcome it.”

The full list of approved projects can be viewed here

The Government’s Low Emission’s Vehicles Contestable Fund has so far committed $20.9 million to 120 projects. That has been matched by $40.7 million in applicant funding. 

A further $3.1 million in Government funding is available under the current round. The next round opening in February 2020 will also include support for e-bike storage solutions. 

The Government proposed last month an incentive scheme offering discounts of up to $8000 for zero-emission, newly imported vehicles. But imported vehicles that emit heavy emissions would be stung with a fee up to $3000. 

National leader Simon Bridges said his petition against the proposed policy has reached 10,000 signatures in just over a week. 

Newshub.

Port of Tauranga partners with Waikato-Tainui owned Ruakura inland port

Tainui Holdings Group CEO Chris Joblin said the agreement with Port of Tauranga is a key step.
TOM LEE/STUFFTainui Holdings Group CEO Chris Joblin said the agreement with Port of Tauranga is a key step.

Developers of the Ruakura inland port in Hamilton have taken a big step forward by signing a 30-year partnership with the Port of Tauranga.

Port of Tauranga and the Tainui Group Holdings subsidiary, Port Ruakura LP, announced the agreement on Thursday.

Cargo shipped by a rail between Auckland and Tauranga will be handled at Ruakura and will meet the future needs of the company, Port of Tauranga chief executive Mark Cairns said.

An artist's impression of the full Ruakura Inland Port development.
SUPPLIEDAn artist’s impression of the full Ruakura Inland Port development.

“The Ruakura development will provide a highly efficient rail hub in the Waikato by utilising our existing train services linking our MetroPort Auckland inland freight hub with Port of Tauranga.”

Port of Tauranga will have priority rail slots at the Ruakura facility with Port Ruakura LP providing the infrastructure including a rail siding, hardstand and cargo storage.

Waikato-based importers and exporters will have direct access to international shipping services at Tauranga.

The 480-hectare Ruakura estate has 192 hectares earmarked for logistics and industrial uses and the planned 30 hectare inland port.

Tainui Group Holdings chief executive Chris Joblin said the initial 30-year agreement is a key step toward unlocking the economic golden triangle of Auckland, Hamilton and Tauranga for importers and exporters.

“The agreement will see Port of Tauranga trains initially call at Ruakura four times daily and this is likely to grow,” Joblin said. “This service will underpin the significant supply chain savings we have been modelling with prospective customers and tenants of Ruakura.”

About half of all freight volumes in New Zealand occur in the golden triangle and container volumes are forecast to grow 60 per cent by 2042. Tauranga handles the biggest container ships to visit New Zealand. 

KiwiRail operates up to 86 trains per week between MetroPort Auckland and Tauranga, hauling up to 9000 twenty-foot equivalent units and the route has unused capacity.

KiwiRail CEO Greg Miller says the upper North Island is a key growth region for KiwiRail and the country.

“This is another example of the supply chain collaborating with KiwiRail to design and deliver rail infrastructure to better connect New Zealand,” Miller said.

Development of the Ruakura Inland Port is scheduled after the completion of the Hamilton section of the Waikato Expressway in 2021.

Stuff

NZTA doubles comms team after difficult years, while state highways face ‘significant funding pressure’

The Government’s embattled transport agency NZTA has been on a spin doctor hiring spree.

NZTA nearly doubled the number of staff employed in media and communications roles between 2017 and 2019. 

This coincided with a deeply tumultuous period in NZTA’s history where it was found to be negligent as a regulator, a scandal which eventually cost a motorist his life.

National’s Transport Spokesperson Chris Bishop said the agency should be focusing on building roads, rather than hiring communications staff. The NZTA’s most recent quarterly report said the state highway building programme faced “significant funding pressure”.

“People around the country will be frustrated that the transport agency was able to find more money for comms pros and spin doctors but they can’t find money for road upgrades,” Bishop said. 

NZTA’s spend-up was revealed in an answer to a written Parliamentary question submitted by Bishop.

NZTA has beefed up its communications team whilst transport projects have stalled.
ALEX BURTON/STUFFNZTA has beefed up its communications team whilst transport projects have stalled.

The Agency employed the equivalent of 37 full-time permanent staff and three staff on fixed term contracts in media communications, marketing, stakeholder engagement and public affairs roles, as of July 2019.

This is nearly double the rate employed in July 2017, when the Agency employed 17.5 permanent staff and 8.6 fixed-term employees. The precise number of staff may differ, as the figures were calculated as full-time equivalents, rather than an exact number of both full-time and part-time staff.

A spokesperson for NZTA said that most of the communications team were involved in “community engagement activities”.

“In recent years a number of communications and engagement staff who were previously based within project teams have been brought in-house to work as one team, in order to lift our capacity and capability in this area, with a strong focus on community and stakeholder engagement,” the spokesperson said. 

The team’s role was to engage with people who would provide input on transport decisions, NZTA said.

MP for Hutt South Chris Bishop,left, and Mayor Ray Wallace campaigning for the Melling interchange, a stalled NZTA project.
KEVIN STENTMP for Hutt South Chris Bishop,left, and Mayor Ray Wallace campaigning for the Melling interchange, a stalled NZTA project.

NZTA has faced intense scrutiny this week as the full cost of the regulatory compliance scandal was laid bare. 

The law firm Meredeth Connell, which was hired to review the files of the sub-par WoF and license issuers at the heart of the scandal, was paid $7.2 million. 

Meanwhile NZTA has faced criticism that it has been unable to get crucial infrastructure projects built.

The incoming Government changed the agency’s focus away from large state-highways to local roads and public transport.

That led to some of the previous Government’s prestige roading projects being reassessed, meaning they’ll be unlikely to go ahead in their current form, if they go ahead at all.

But the new priorities have had a lagging effect on Transport spending, with NZTA seemingly unable to get its multi-billion dollar roading budget out the door. 

The agency has struggled to spend its quota for highway improvements, which have come $264.8 million under budget according to its latest quarterly report. This translates into many incomplete or delayed projects.SharePlayMuteCurrent Time0:00/Duration Time0:46Loaded: 0%Progress: 0% FullscreenSTUFFSpeed limits are too high on the majority of New Zealand roads, the NZ Transport Agency says.

The agency also says that multiple areas of the Transport budget face “significant funding pressure”. State highway projects, local road projects and public transport all face funding pressures. 

A spokesperson for Transport Minister Phil Twyford said the matter was operational and the Minister would not comment. 

Stuff

Pacifica Shipping to upgrade with larger vessel

Wednesday, 7 August 2019, 8:29 pm
Press Release: Swire Shipping

Increased tonnage to meet rising coastal and international transhipment demand

New Zealand – Pacifica Shipping today confirmed that it has acquired a larger 1700 teu vessel for deployment on its premium coastal shipping service in New Zealand. The MV Moana Chief – which is expected to commence operations formally in September 2019 – will meet growing domestic and international transhipping cargo demand. Pacifica was acquired by The China Navigation Company (CNCo) – parent of Swire Shipping – in 2014.

Swire has been a long-term and active participant in New Zealand’s maritime and transport industry. The first Swire vessel called to New Zealand some 130 years ago. Today, Swire Shipping and Swire Bulk currently operate multiple liner and bulk vessels per month, connecting New Zealand to Australia, Asia, North America, Papua New Guinea, Pacific Islands and the rest of the world. For more information, please visit https://www.swirecnco.com

Brodie Stevens, Country Manager, Swire New Zealand, said: “With the acquisition and an increase in tonnage from 1,100 to 1,700 teu, we strongly believe Pacifica will be in a good position to meet rising domestic cargo and transhipment demand. We want to expand the range of valuable domestic transport solutions currently already provided by Pacifica, and this will enable us to do so. Coastal shipping in New Zealand continues to play an important part in the country’s domestic economy. It is also highly complementary with road and rail networks.”

According to a report by Deloitte in 2016, 236 million tonnes of freight are moved within New Zealand annually. The size of container ships has been increasing. Coastal shipping will continue to play a role in reducing greenhouse gas emissions per container, and will also be a factor in New Zealand manufacturers’ decarbonisation of their supply chains.

Additionally, New Zealand’s domestic freight volumes are forecast to more than double by 2040, as stated in The National Freight Demand Study 2008, and confirmed again in the NFDS update, completed in 2014 – “Even with massive investment in land transport this increase could not be accommodated by road and rail alone. By growing coastal shipping, New Zealand can take a load off the other transport modes and contribute to a more efficient land transport network. By comparison, in Japan, a country with a similar geography, more than 30% of freight is carried by sea.”

Details of the acquisition are confidential.

Proposal to rid Ports of Auckland of cars to create public waterfront space

The “jewel” of Auckland’s waterfront real estate may soon be opened up for public use, as the council looks into a plan to rid the Ports of Auckland of the thousands of cars it stores.

Auckland Mayor Phil Goff and Ports of Auckland chief executive Tony Gibson are investigating a proposal to use barges to transport imported cars loaded off container ships at the ports to a location in South Auckland.

For decades, both Captain Cook and Bledisloe wharves have stored up to 300,000 cars annually, as a rotating fleet of new vehicles are temporarily left there for two or three days before trucks can freight them off to car yards.

This week, Goff told the Weekend Herald a submission was being considered from New Zealand logistics company PTS Group to barge the cars stored at PoAL up the Tāmaki estuary south to PTS’ own Highbrook car depot.

“I think the really exciting idea is to barge the cars off the wharf and we know that can be done. We know there are sites they can be barged to,” Goff said.

“That requires some level of investment in various things, dredging and so on.

“But what it would do is it would enable us potentially to get the cars off the wharf on the day they arrive. So you’ve got a much faster throughput.”

A single barge would transport 250 cars from the wharf at a time, while the remainder could potentially be stored in a new five-storey parking building about to be completed on Bledisloe Wharf facing onto Quay St.

An electric barge with zero emissions is the desired option for Goff and PoAL, much like the first electric tug-boat purchased by the ports this week.

A single barge could make two trips between Highbrook and PoAL each day and, according to a PoAL estimate, remove 100 truck journeys away from the centre city.

Goff said a two-year timeframe to implement the barge proposal was realistic.

“If the study shows barging is a serious option and we should pursue it, we’d want to do that within the space of a couple of years. We’re not going to muck around on that,” he said.

Goff said PTS Group already took 80 per cent of the used cars from Auckland wharves to its Highbrook property and “obviously they could potentially do more”.

“If it were to be to Highbrook, that’s an area that’s in the south where most of the vehicle processing work takes place,” Goff said.

“It gets the trucks and the traffic off the city to Highbrook interchange, which is the most congested part of the motorway [SH1]. That’s one of the options that clearly the ports would be looking at.”

PTS could not be reached for comment.

Auckland Mayor Phil Goff says barging cars off the Ports of Auckland to free up space could be reality within two years. Photo / File
Auckland Mayor Phil Goff says barging cars off the Ports of Auckland to free up space could be reality within two years. Photo / File

Removing the cars from Captain Cook and Bledisloe wharves would have a number of independent benefits, Goff said.

For a start, it would enable Bledisloe Wharf to be converted to allow mega cruise ships to moor there.

That would prevent the need for two proposed mooring dolphin extensions to adjacent Queens Wharf at a ballooning cost of $16.9 million, and a contracting life span of 15 years.

“My preference in an ideal world would be to utilise Bledisloe because it involves no further intrusion into the harbour, as the Captain Cook wharf would need to be extended either with mooring buoys or the wharf itself being extended,” Goff said.

“So, if that were possible, that would resolve a long-term issue in terms of access of cruise ships.”

Imported cars lined up at the Ports of Auckland on the Captain Cook Wharf in front of Queens Wharf. Photo / Jason Oxenham
Imported cars lined up at the Ports of Auckland on the Captain Cook Wharf in front of Queens Wharf. Photo / Jason Oxenham

PoAL chief executive Tony Gibson said PoAl “welcomes this challenge from the Mayor” to speed up clearing cars off the wharves, despite already running “an extremely efficient car handling operation by world standards”.

“We have been looking at barging as an option, so we are pleased to have the mayor’s backing to take this investigation to the next stage,” Gibson said.

Ultimately, Goff envisions the proposal would then leave Captain Cook wharf free for potential public space.

Up to 300,000 imported cars are stored at the Ports of Auckland annually. Photo / Jason Oxenham
Up to 300,000 imported cars are stored at the Ports of Auckland annually. Photo / Jason Oxenham

“Captain Cook wharf obviously we would like to bring back into the public realm in some way,” Goff said.

“The critical thing for me on the port is to allow public access again to the water’s edge.

“For 100 years we’ve had the red fence [barring the ports along Quay St], we’ve had the industrial use of the port, that’s why ports were always created in the centre of the city.

“But over time you can see the port area becoming the jewel in the crown of the city. A range of things have been put up. Archimedia have put up an idea. Another group has talked about a waterfront stadium.

“Not all of those ideas will run but we need a process where we engage with Aucklanders and say, what do you most want to see happen on your wharf.”

An artist's impression of a proposed Auckland waterfront stadium on Bledisloe Wharf. Photo / Supplied
An artist’s impression of a proposed Auckland waterfront stadium on Bledisloe Wharf. Photo / Supplied