Tēnā Kotou Katoa.
Thank you so much for having me along to speak today.
Can I begin by acknowledging John Rae, the President, and Stephen Selwood, the chief executive of the Council for Infrastructure Development.
I have known Stephen for a number of years, from when we were both in different roles. He is a smart and strong advocate, and I know in this role is passionate about built environments that serve people’s needs.
And, of course, can I acknowledge Her Worship Lianne Dalziel, the Mayor, and Councillors, as well as Labour’s Housing and Transport spokesperson Phil Twyford.
I welcome the opportunity to speak at today’s conference because NZCID is uniquely focussed on what I think is the most important goal of infrastructure development: nation building.
The title of your conference today reflects that nicely.
As I reflect on the history of this great country of ours, I find that the past leaders I admire most are those who have done the work of nation building.
Those who had the vision and foresight to undertake the big projects that were needed to set New Zealand up for a better future.
Governments like Julius Vogel’s, who built New Zealand’s first railway network and brought disparate parts of our country together.
Or like Richard Seddon who built the first of what we know today as state housing.
Or Michael Joseph Savage who invested in major public works programmes to revive the economy during the dark days of the great depression.
We see that in the marvel of our hydro power schemes, some of the most amazing civil engineering in the world. They were designed more than eighty years ago, and it is that construction that allows us to make the world-leading claim today that 80 percent of our energy comes from renewable sources.
Those governments didn’t just tackle the issues of the day.
They also had one eye on the horizon - making big changes to secure a better life for the next generation.
I intend to lead a Government that follows that legacy.
Today I want to talk about the future of infrastructure in New Zealand.
Specifically, I want to discuss the need to use our infrastructure spend to stimulate investment in the productive economy and provide a long term boost to our global competitiveness.
2. Boosting Our Productive Economy.
I entered politics because of my belief that so much of the security that New Zealanders once took for granted is slipping away.
Some of our most basic aspirations, like owning a home, getting a good job, starting a business and working hard to see it succeed, are becoming harder and harder to achieve.
We’ve seen this in stark relief this year with slowing growth, collapsing dairy prices, and home ownership rates hitting record lows.
Our exports are going backwards as a percentage of GDP.
Our economy has been too reliant on debt and commodity prices for too long.
Far too much money is going into speculation instead of productive investment.
We have to have an economy that’s about more than just selling houses in one city back and forth and hoping the dairy price goes up.
Our balance of payments has been in deficit for over forty years.
Our economy is simply not delivering the growth in productivity and exports we need to see.
But, as I get around the country, I see the extraordinary commitment, talent and innovation in businesses in New Zealand.
What businesses tell me they need is a government that works as a partner, providing the conditions, investment and practical support to flourish
I have been very clear that we will be tightly focussed on what best supports new wealth creation in New Zealand.
One of the major levers that the government can use to boost the economy is our infrastructure spend.
Infrastructure is vital to our economy because it is an enabler of the wider economy and civil society.
At 9 billion dollars a year, the government contribution to our public infrastructure is vital to the efficient and competitive operation of the economy – not just getting people to work, but by facilitating business to develop and deliver goods and services in New Zealand and to our export markets.
As a country we must direct more investment into supporting growth. This is essential to grow a more competitive and productive economy in the years to come.
This will help us move beyond an economy too focused on land speculation, and towards one where we create more value, grow our exports and create higher paid jobs for our people.
3. Infrastructure in New Zealand
For much of the late 1980s and 1990s, New Zealand suffered from a significant lack of investment in vital infrastructure.
When Rob Muldoon left office, he left behind government debt of 60% of GDP, a massive and increasing government deficit, and the legacy of the “Think Big” projects, which had soured public opinion on major infrastructure projects.
The mix of a public sceptical about major projects, and Governments worried about paying down high levels of debt and reducing deficits, led to years of under investment in infrastructure.
There was a failure to invest in roading and transmission and power networks. Even the newly privatised telecommunications and rail companies failed to invest in their infrastructure for many years.
That meant by the early 2000s, we faced a serious infrastructure gap.
With outdated roading networks, electricity systems that couldn’t keep up with demand,and a freight system that wasn’t fit for purpose, run down schools and hospitals, our economy was being held back by a lack of modern infrastructure.
The Clark Labour Government ran large budget surpluses and reduced gross government debt from 38 to 18% of GDP and net debt to zero.
This also enabled that government to massively increase investment in all of these areas of infrastructure.
With your help, New Zealand made enormous progress in turning our infrastructure deficit around.
However, while over the last decade our government capital expenditure infrastructure spend as a percentage of GDP has been amongst the highest in the developed world, there is more to be done to encourage more industrial capex, in order to lift our productivity and exports.
That’s why Labour will focus our infrastructure spend on maximising the productivity of our economy, helping our businesses to grow, export and create jobs.
The nature and distribution of our population growth as well as the challenge of economic development mean our infrastructure challenges are changing.
We may be at a time when we, as a country, need to make a bold commitment to infrastructure investment.
We will need to do this if we are to have balanced development across the country and if we are to ready ourselves for rapid technological changes.
It is because our infrastructure needs today and in the foreseeable future are fairly obvious that I was surprised to see the government’s announcement this morning of a 50 year infrastructure plan. It is, in fact, no such thing. What has been promised is a plan to develop a plan – with no timeframe attached. New Zealand needs better than this.
4. Labour: Investment in infrastructure to grow the productive economy
4.1 Regional Development
Turning to regional development, we need to make sure every region in our country has a growing economy with good jobs and opportunities for people to get ahead.
The reality today is that many regions in New Zealand are being left out and left behind.
This has been compounded by the drop in dairy farm incomes. But the reality is there has been a hollowing out of many regions for some time and a slow bleed of the population to Auckland.
Just last week we heard from retailers in Taranaki saying their turnover was drying up as farmers tighten their belts and spend less.
Respected international finance agency Moody’s recently warned of a “two speed” economy, with our regions trailing far behind our main centres.
Since 2011, 70% of all new jobs created in New Zealand have been in either Auckland or Christchurch.
It doesn’t help regional economies when the Government cuts support for local infrastructure and services.
For example, Northland, Waikato, Gisborne, Hawkes Bay, Taranaki, Manawatu, Whanganui, West Coast/Tasman and Otago all have less funding from NZTA for local roads than they did in 2008.
Funding for regional roads has been diverted into Roads of National Significance.
We see huge opportunity in investing in new regional infrastructure.
The infrastructure in many regions is underutilised, meaning new investment can focus on infrastructure that will generate real gains for our economy.
Under Labour, the government would take a leading role in working with local authorities to identify and support major regional economic development projects.
Part of our approach will be to ensure regional investments in infrastructure are aimed at also attracting private investment, in particular in local businesses.
We’d make faster completion of rural broadband networks a priority, to connect rural New Zealand with the rest of the world.
Our proposal is for a $200 million dollar regional investment fund, providing capital for multiple projects in the 10 to 20 million dollar range.
One example of the way this could be used is the potentially transformative Opotiki Harbour Redevelopment.
I have said before that this project is a no-brainer that could generate over 300 jobs in aquaculture and support services in a region that desperately needs those sorts of jobs.
With Government taking a leading role, projects like this one become possible in ways they might never have been otherwise.
These new projects won’t just give a short term boost and create jobs, they will make a long term benefit to the productive economy.
They’ll help businesses in the regions to become more productive and more competitive.
They’ll help our exporters do more on the world stage.
They’ll help ensure that economic opportunity is a reality for every New Zealander no matter where in the country they live.
4.2 Our Largest Cities
As well as boosting the regions, better infrastructure spending can also help us unlock the productive economic potential of our largest cities.
Let’s start with Auckland.
Auckland should be one of the great cities of the Asia-Pacific region.
But as we all know, the housing crisis and the gridlock on the roads are a handbrake on its growth.
If people cannot afford to live close enough to get to the jobs, or the commutes are too long to reach the jobs, that drags down labour productivity.
According to the OECD, Auckland’s congestion problems cost the city 1.25 billion dollars a year.
That’s why Labour would immediately fund the City Rail Link, and get construction started as soon as possible.
It will double the number of trains that can run on the network, and allow trains to run as frequently as every five minutes throughout the network.
The current Government’s foot dragging on this project is, frankly, baffling.
Our vision for a better Auckland doesn’t end with the CRL however,
In the longer term, Labour will also support giving priority status to rapid transit busways in the North West and South East, electrification of the rail to Pukekohe, rail to the airport, and ensuring the next harbour crossing includes rail to the North Shore.
All this has to be paid for of course. Labour will work with Auckland Council and agree a 30 year transport plan, and then back it with funding both from central government and local sources that Aucklanders can choose.
It is possible we may have to think beyond the boarders of Auckland City to address Auckland’s future needs. We may have to think now about better transport links between Auckland and Hamilton and Auckland and Whangarei.
Tackling Auckland’s transport problems once and for all will go a long way towards helping it compete on the world stage.
But to truly unlock Auckland’s potential, and to set the city up for the next twenty, thirty, forty years of growth, we need to fix the housing crisis, too.
Anyone who reads a newspaper knows Auckland’s housing market is out of control.
The housing shortage is getting worse by 5000 homes a year with the Productivity Commission projecting the shortfall to rise from 32,000 now to 60,000 in 2020.
Meanwhile, the average house in Auckland made more than the average worker in the last 12 months, and the average house price in Auckland is forecast to reach one million dollars within the year.
Nationwide, our home ownership level is at the lowest rate since the 1950s. The Kiwi dream of homeownership is slipping away.
This isn’t just a human tragedy; it does real damage to our economy as well.
Home ownership is a hugely positive force in our economy. It’s how most people save for retirement. And having a home to borrow against is how many people launch their own business.
Your own home is much more than a roof over your head. It’s a launch pad to a better future.
Labour will get serious about tackling the housing crisis and addressing the critical shortage of affordable supply.
We’ll launch the most aggressive government-backed home building programme in decades.
We’ll work hand in hand with the private sector to build thousands of new affordable homes which will be sold to first home buyers.
And here’s where it gets really exciting.
This house building programme will allow us to bring the kind of scale that we usually see in major infrastructure projects, and the same kind of cooperation between public and private sectors, too.
For many years, the cottage industry nature of our home building has been too small to deliver economies of scale.
45% of houses are built by builders who only build one house per year. They have very little ability to take advantage of economies of scale.
That adds huge costs to the price of homes.
And it’s something the Government can address by playing an enabling role in mass home building, putting up the capital, then on-selling them and putting the returns into more homes.
NZCID has written before about the power Government has to drive investment like this when we act at scale. In your best practice report this year, you said:
“Scale achieves transformation of economic and social systems around investment. It acts as a magnet for global skills and capital and drives integrated and collaborative decision making”
That’s the kind of change we can drive in how New Zealand builds its homes.
Ten years of guaranteed supply will mean firms that have been squeaking by in a boom and bust industry will finally have the confidence to grow and take better advantage of scale and new, modern, cost effective techniques such as offsite manufacturing.
Taken together, these changes will help Auckland close the supply gap and stop the skyrocketing prices that are locking people out of the market.
Ending the housing crisis, fixing the transport problems.
Those changes – heavily reliant on infrastructure investment – will make Auckland a stronger city, better equipped to compete with places like Sydney and Singapore in attracting investment and promoting growth.
There’s also more we need to do here in Christchurch to ensure we are growing the productive economy for the future as well as helping the city recover from the earthquakes.
For example, traffic congestion on the western and northern corridors into the city has increased by 40% since the earthquakes.
That’s because the population dynamics of the city have changed in ways we never could have predicted before the earthquakes.
Just as in Auckland, transport problems are a handbrake on growth.
That’s why Labour will invest in a new integrated transport network, including major new light rail infrastructure.
That’s how we ensure that not only do we solve the congestion problems we also provide a blueprint for the growth of the city over the next 100 years.
As well as building for the future, it’s also absolutely vital we get the rebuild of Christchurch right.
Like most Kiwis I was appalled to hear that foundation work on homes rebuilt under EQC’s watch have been found to be substandard.
It’s even worse that EQC had signed off on shoddy work.
We cannot afford a repeat of the leaky homes crisis.
The worst thing is the Government was warned about this.
Experts like Adrian Cowie raised these concerns with the Government last year.
Our Labour MPs raised it in person and on the public record with the Minister.
Nothing was done.
And now we see Cantabrians, many of whom have already had their homes badly damaged by the earthquakes, are worried they will have to shift out again while remedial work on the repairs is carried out.
For those families, it must feel like groundhog day.
Labour is calling for an independent inquiry to get to the bottom of how it is that shoddy work was able to be done and getting it signed off by EQC.
When the Government embarks on major projects like the residential rebuild, New Zealanders need to have confidence the job will be done right.
4.3 The Transport Supply Chain
The other major aspect of our infrastructure approach will be a rigorous focus on upgrading the supply chain our exporters use to get their goods to market and move freight around the country.
To be a smarter trading nation, we need to do everything we can to lower the barriers between the farm gate or the factory door and the customer.
We’re currently seeing some exciting developments in freight and logistics led by the private sector. Big market players working together to optimise freight, and get better value from assets like the ports, road and rail. There is also investment in ports and freight hubs.
Government has skin in the game with road and rail, and the Government I lead will work with industry to make sure there is a NZ Inc discussion about how together we can get the best out of the transport network – road, rail, freight hubs, ports, and coastal shipping, to make sure we move freight in the most efficient and sustainable way.
We’ve seen the benefits of this kind of approach in collaboration between Kiwirail and Fonterra for direct rail from the Te Rapa milk plant in the Waikato to the Port of Tauranga.
The last Labour Government demonstrated this approach through what was then TranzRail working with Fonterra to build a hub and spoke rail system to move dairy product by rail from the dairy factories of the Waikato to the Crawford St plan in Te Rapa, and then by rail out to the Port of Tauranga.
It took thousands of truck movements off the road, and gave Fonterra a faster and more efficient route to get their product to market.
In summary, Labour stands for smarter infrastructure investments, leading to better economic outcomes. We’ll build a better network too and help Kiwi businesses compete on the world stage.
We need to be getting the best value for money for every dollar of public money we spend.
We need to be making the big changes now to build a better nation for tomorrow.
A real shift in our economic performance means a shift in how we use our infrastructure.
It means ending the transport mess that is keeping Auckland and Christchurch stuck in gridlock.
It means fixing the housing crisis that locks people out of the dream of home ownership.
It means revitalising our regional economies.
It means a Government willing to lead and work with the private sector to deliver the projects New Zealand needs to get ahead.
That’s what Labour will deliver.
That’s the approach to infrastructure I’ll lead as Prime Minister
I look forward to working alongside you all to make that happen and to build a better nation together.