WEBVTT - How does the Government plan to tackle infrastructure? 0:00:04.120 --> 0:00:06.240 Hello and Welton to on the tiles the New Zealand 0:00:06.280 --> 0:00:09.880 Heralds Politics podcast. I'm your host, the Deputy Political editor 0:00:09.960 --> 0:00:14.520 of The New Zealand Herold Thomas Codlin. Today we've got 0:00:14.520 --> 0:00:18.520 Ollie Lewis from Business Test, the infrastructure of Business Test 0:00:18.640 --> 0:00:23.280 on the show to talk about the Building Nations Infrastructure 0:00:23.280 --> 0:00:25.880 Conference and Altum this week, which is New Zealand's big 0:00:26.040 --> 0:00:29.800 infrastructure conference. Everyone goes along all the infrastructures post people 0:00:30.120 --> 0:00:33.000 literally the opposition and people from the sector head along 0:00:33.040 --> 0:00:35.640 to have a chat about all things infrastructure. Ollie, thank 0:00:35.640 --> 0:00:36.360 you for joining us. 0:00:36.479 --> 0:00:38.159 Cuda. Thomas, thank you very much for having me on 0:00:38.159 --> 0:00:38.480 the show. 0:00:38.880 --> 0:00:39.760 Did you have a good time? 0:00:40.440 --> 0:00:42.880 I did have a very good time. I caught about 0:00:42.880 --> 0:00:45.839 a day and a half of it. By the end 0:00:45.880 --> 0:00:48.400 of All About Lunch show yesterday, I thought that I 0:00:48.400 --> 0:00:50.600 had probably heard about enough about inftructures to ask me 0:00:50.640 --> 0:00:52.080 for the next kind of six months. But it was 0:00:52.159 --> 0:00:55.200 an illuminating and varying conference. He had people like Francis 0:00:55.960 --> 0:00:58.800 for Kiyama there, which is really highlight for me. And 0:00:58.840 --> 0:01:01.720 then the Mayor of Auckland, Wayne Brown, delivered a very 0:01:01.720 --> 0:01:07.960 cantankerous and quite amusing speech yesterday were not like him, 0:01:08.440 --> 0:01:10.800 which led to a lot of joking from MCJ. Tams saying, 0:01:10.800 --> 0:01:13.720 you know, tell us what you really feel about these issues. 0:01:13.760 --> 0:01:17.440 He essentially told like the nine hundred assembled attendees who 0:01:17.480 --> 0:01:21.080 are kind of engineers and such professionals, that he didn't 0:01:21.080 --> 0:01:23.280 really like their work. In many cases it was a 0:01:23.400 --> 0:01:27.120 very kind of confrontational approach from the mayre, but you know, 0:01:27.319 --> 0:01:29.039 laying down a bit of a challenge to the sector 0:01:29.080 --> 0:01:32.640 to do things cheaper and faster, right color. 0:01:32.760 --> 0:01:35.319 I mean, I suppose Francis Foam a bit of a 0:01:35.400 --> 0:01:39.639 left field you know, well known for the the article 0:01:39.680 --> 0:01:42.039 on foreign policy, I think, and then the lad of 0:01:42.040 --> 0:01:47.560 the book the End of History and uh this uh 0:01:48.120 --> 0:01:52.200 kind of top something, theasis on what the end of 0:01:52.240 --> 0:01:55.640 the Cold War, I guess meant for you know, the world. 0:01:57.280 --> 0:01:58.400 Why was he there? What was. 0:02:00.480 --> 0:02:03.240 It's a very good question, I actually think. I asked 0:02:03.320 --> 0:02:06.160 Nick Leggett, wo's the CEO of Abstruction of Zealand a 0:02:06.160 --> 0:02:08.320 while back, how they had managed to get Francis for 0:02:08.400 --> 0:02:11.000 Kiama to speak and why? And I think that he 0:02:11.040 --> 0:02:14.200 told me that both he and a policy advisor at 0:02:14.200 --> 0:02:17.800 the Abstruction Zealand, Martine Marini had been listening to the 0:02:17.800 --> 0:02:21.080 same podcast, which I think was probably one you're familiar with, 0:02:21.120 --> 0:02:22.320 The Rest is Politics. 0:02:22.639 --> 0:02:23.679 I'm a very good podcast. 0:02:23.840 --> 0:02:24.560 Yes, yes, the. 0:02:24.560 --> 0:02:27.760 Rest is everything. Now the resis history, you know politics. 0:02:27.960 --> 0:02:30.239 So I think France is on there. And he happened 0:02:30.240 --> 0:02:34.720 to mention or discuss infrastructure, and he's been thinking a 0:02:34.760 --> 0:02:37.640 lot about it recently in terms of it being a 0:02:37.760 --> 0:02:43.560 challenge to liberal democracies like the United States also here obviously, 0:02:44.040 --> 0:02:46.400 and his main kind of position seemed to be that 0:02:47.200 --> 0:02:50.000 we have title sales and knots and these kind of 0:02:50.000 --> 0:02:54.480 more democratic kind of societies where everyone gets a say 0:02:54.639 --> 0:02:56.120 on whether or not a project proceeds. 0:02:57.400 --> 0:02:59.519 He referred to it as the vtocracy. 0:02:59.400 --> 0:03:01.440 And gave a very wishing example about California, which I 0:03:01.480 --> 0:03:04.800 didn't know about, where essentially any citizen can kind of 0:03:04.800 --> 0:03:07.040 take a suit or a case and do so anonymously 0:03:07.040 --> 0:03:09.800 if they want to challenge a project going ahead. So 0:03:09.840 --> 0:03:12.080 he referred to know the state having kind of forty 0:03:12.120 --> 0:03:15.600 million veto votes about to them suchually being built, and 0:03:15.639 --> 0:03:19.600 so not building things funnily enough is bad for economic 0:03:19.639 --> 0:03:22.480 growth and bad for societies. So he views that as 0:03:22.520 --> 0:03:25.800 a real challenge for Western countries like the US and 0:03:25.800 --> 0:03:26.320 New Zealand. 0:03:27.600 --> 0:03:30.320 That's quite an a kind of intervention really in the 0:03:30.400 --> 0:03:34.880 national debate around infrastructure, particularly as we sort of agonize 0:03:34.920 --> 0:03:39.160 over the extent to which something like the government's fast 0:03:39.160 --> 0:03:41.680 Trak bill as a good thing because it's sort of 0:03:41.720 --> 0:03:42.960 severely good tales. Right. 0:03:43.120 --> 0:03:44.160 Yeah, I was just gonna say, that's right. 0:03:44.560 --> 0:03:46.720 It's a very kind of prescient message from him, and 0:03:46.800 --> 0:03:49.000 it really does kind of tie into the debate that 0:03:49.000 --> 0:03:52.119 we're having around the fast Track and Asructional Minister christ 0:03:52.160 --> 0:03:54.400 Bishop made similar points that it was just too hard 0:03:54.480 --> 0:03:58.000 to get things built in New Zealand and as a consequence, 0:03:58.040 --> 0:04:01.080 we had this kind of looming and such a defficent 0:04:01.120 --> 0:04:05.000 that everyone likes to put massive dollar figures to. I mean, 0:04:05.000 --> 0:04:06.880 who knows if it's a hundred billion, two hundred billion 0:04:07.280 --> 0:04:09.400 I think was a ASP Bank referred to the trillion 0:04:09.440 --> 0:04:12.560 dollar figure, which gets a lot of derision from some economists, 0:04:12.640 --> 0:04:14.000 but there you go. 0:04:14.800 --> 0:04:17.240 Yeah, I feel like I've been doing infrastructure for a while, 0:04:17.279 --> 0:04:20.240 like you and every soft and someone like the Infrastructure 0:04:20.240 --> 0:04:22.200 Commission a couple of years ago was a two hundred 0:04:22.200 --> 0:04:27.040 and ten billion dollars of deficit, and then there was 0:04:27.040 --> 0:04:30.040 another two hundred billion dollars or something of of unmet 0:04:30.839 --> 0:04:32.600 of demand that was coming down. So I think we 0:04:32.680 --> 0:04:34.760 start from the board of two hundred billion dollars behind, 0:04:34.800 --> 0:04:37.440 and then there's something like two hundred billion dollars worth 0:04:37.440 --> 0:04:39.120 of stuff that we need to build for the demand 0:04:39.120 --> 0:04:42.920 forecast going forward. That's right, the trillion dollar figure. Then 0:04:42.960 --> 0:04:44.760 we had the three Waters figure of one hundred and 0:04:44.800 --> 0:04:48.760 eighty five billion. Do you know these these numbers are big? 0:04:49.080 --> 0:04:50.919 The mind boggles, Thomas, the mind boggles. 0:04:52.120 --> 0:04:53.800 What do you think of? How did the the government 0:04:54.680 --> 0:04:58.039 announcers in the coalition agreements that it wanted to build 0:04:58.040 --> 0:05:03.520 a new infrastructure agency. We've already gotten Structural Commission, uh so, 0:05:03.520 --> 0:05:05.279 so there's this is going to be a new infrastructure 0:05:05.320 --> 0:05:09.880 agency built on top of Crown Infrastructure partners. They talked 0:05:09.920 --> 0:05:12.640 about this infrastructure pipeline. I mean, like you have been. 0:05:12.720 --> 0:05:17.359 I actually attended one of these in person. But you know, 0:05:17.680 --> 0:05:20.240 since the Infrastructure Commission was set up under the last government, 0:05:20.279 --> 0:05:23.120 we've been hearing a lot about this pipeline issue. Everyone 0:05:23.160 --> 0:05:27.560 complains about the pipeline. City Rail Link chief executive. Very 0:05:27.560 --> 0:05:29.520 good interview with Katie bredvort On Q and a a 0:05:29.600 --> 0:05:34.880 few weeks ago, City Rail Links chief executive outgoing complaining 0:05:34.920 --> 0:05:37.320 that you know, there isn't this pipeline. So they bring 0:05:37.360 --> 0:05:39.440 in all this expertise and then the expertise just leaves 0:05:39.480 --> 0:05:42.680 because there's nothing for them to do. I feel like 0:05:42.680 --> 0:05:44.880 we've been talking about that issue for so long now 0:05:44.960 --> 0:05:47.680 it's been it's not this isn't new. No one's been 0:05:47.720 --> 0:05:53.000 surprised by The Infrastructure Commission has been publishing lists of 0:05:53.040 --> 0:05:55.920 the of of projects, the rough cost and when when 0:05:55.960 --> 0:05:59.400 they're set to start construction, and you know what sage 0:05:59.400 --> 0:06:03.279 of planning human construction art. So we've been talking about 0:06:03.320 --> 0:06:05.640 the pipeline for a while. Now Chris Bishop comes along 0:06:05.680 --> 0:06:10.400 and and builds us uh tries to build a bit 0:06:10.400 --> 0:06:18.360 more on that existing publicly available pipelines with this announcement. 0:06:18.400 --> 0:06:21.240 How did how did it go down in the room? 0:06:21.520 --> 0:06:24.599 It was a secret The politician of the opposition clearly 0:06:24.640 --> 0:06:25.039 that not that. 0:06:26.600 --> 0:06:28.200 It was. It was well received. I think. 0:06:28.920 --> 0:06:30.760 I mean these this is a group of people who 0:06:30.800 --> 0:06:34.680 obviously kind of experts in their delivery and consenting and 0:06:34.720 --> 0:06:37.440 kind of planning of infrastructure, and so they like to 0:06:37.480 --> 0:06:39.920 hear politicians say that they're going to create a stable 0:06:39.920 --> 0:06:43.279 pipeline of projects. As you said, Sean Sweeney got a 0:06:43.279 --> 0:06:45.760 lot of kudos for that interview that he gave around 0:06:45.920 --> 0:06:50.000 his concerns that there wasn't this kind of ongoing pipeline 0:06:50.000 --> 0:06:52.560 of kind of tunneled projects in particular I think New Zealand. 0:06:53.160 --> 0:06:57.280 So yeah, the room definitely received Bishop's speech well, it 0:06:57.360 --> 0:07:02.120 was well received. It's as you say, though, it's the 0:07:02.160 --> 0:07:07.040 constant discussion and infrastructure. I like to joke about how 0:07:07.080 --> 0:07:09.200 many times the word pipeline will be kind of mentioned 0:07:09.320 --> 0:07:12.120 at these kind of conferences and place bets about will 0:07:12.200 --> 0:07:15.200 be fifty or one hundred or twohndred times, and it yeah, 0:07:15.320 --> 0:07:17.440 it dominates the thinking from a lot of people in 0:07:17.480 --> 0:07:20.000 the sector that there needs to be a stable kind 0:07:20.040 --> 0:07:23.400 of list of kind of forward projects that the governments 0:07:23.440 --> 0:07:25.960 are committed to funding, and that gives certainty obviously to 0:07:26.000 --> 0:07:28.400 the sector to scale up, equip and actually kind of 0:07:28.400 --> 0:07:32.119 deliver things. So it was definitely a well received speech 0:07:32.160 --> 0:07:34.960 from Bishop, and I think there were some there was 0:07:35.000 --> 0:07:37.320 a bit of positivity as well about the creation of 0:07:37.360 --> 0:07:41.280 this National Instructure Agency just as kind of retooling Crown 0:07:41.320 --> 0:07:44.040 of Search Partners and kind of beef it up the 0:07:44.080 --> 0:07:47.160 real kind of emphasis that the government seems to be 0:07:47.160 --> 0:07:49.040 placing on this is that it wants it to be 0:07:49.040 --> 0:07:51.600 a shop front, is how they've described it, so to 0:07:51.680 --> 0:07:56.080 kind of funnel outside capital, sovereign wealth fund capital and 0:07:56.560 --> 0:08:00.200 get those kind of PPP partners in to partner with 0:08:00.200 --> 0:08:02.520 the government to deliver these kind of roads and other 0:08:02.640 --> 0:08:04.520 bits of instructure that we that we need. 0:08:05.400 --> 0:08:06.600 So, yeah, it was a really interesting speech. 0:08:06.640 --> 0:08:10.440 Actually, one of the interesting as you say this is 0:08:10.760 --> 0:08:14.400 this big attempts on the part of the government sort 0:08:14.400 --> 0:08:18.120 of has this two track approach to kind of physical 0:08:18.160 --> 0:08:20.480 management and infrastructure. On the one hand, it wants to 0:08:20.520 --> 0:08:23.480 be a probe for the structure government, uh and and 0:08:23.480 --> 0:08:26.040 and to build a lot and to to get a 0:08:26.080 --> 0:08:29.920 lot of investment into this infrastructure. And on the other 0:08:29.960 --> 0:08:33.040 hand it is it is trying to position itself as 0:08:33.040 --> 0:08:36.800 a government of a physical restraint, low debt and and 0:08:36.800 --> 0:08:42.400 and reducing reducing, reducing levels of debt. So so it's 0:08:42.440 --> 0:08:45.360 emphasizing the role that private capital and having building and 0:08:45.400 --> 0:08:49.160 building a lot of this stuff. And so obviously that 0:08:49.200 --> 0:08:51.439 the ball is really in the in the court of 0:08:52.240 --> 0:08:55.959 private capital in terms of this is actually sustainable and 0:08:56.679 --> 0:08:59.920 can succeed when you look at them when the here. 0:09:00.120 --> 0:09:03.720 This year we published those estimates from from Wakotahi about 0:09:04.320 --> 0:09:06.800 what some of the brons the roads of national significance 0:09:06.840 --> 0:09:10.800 might cost tens of billions of dollars governments. When you 0:09:10.840 --> 0:09:13.720 tend to get private capital involved there, do you get 0:09:13.720 --> 0:09:16.760 the sense from the secret that, I mean, there is 0:09:16.800 --> 0:09:20.920 there enough appetite for all of what we want to do. 0:09:21.200 --> 0:09:22.720 Yeah, it's a very good question. 0:09:22.800 --> 0:09:27.520 So I caught up on the sidelines with some people 0:09:28.240 --> 0:09:30.880 from Plenary, which is an Australian kind of PEPP investor. 0:09:31.600 --> 0:09:35.080 They came over for the conference. They've expressed and been 0:09:35.200 --> 0:09:38.040 very public in their enthusiasm for New Zealand as a 0:09:38.040 --> 0:09:40.920 possible kind of market for them, and I think there 0:09:40.960 --> 0:09:42.480 was a remark made that it was kind of one 0:09:42.520 --> 0:09:45.320 of the busier building nations in some time, and there 0:09:45.320 --> 0:09:47.280 was quite a large Australian contingent, So I think there's 0:09:47.280 --> 0:09:51.640 definitely some There's definitely appetite from investors wanting to put 0:09:51.640 --> 0:09:54.760 money towards kind of insectual projects in New Zealand. 0:09:55.920 --> 0:09:58.160 There were some very interesting speakers. 0:09:58.160 --> 0:10:00.600 There was the head of transactions at Treasure I think 0:10:00.679 --> 0:10:02.679 same as Alistir Birchall made this kind of comment that 0:10:03.480 --> 0:10:05.640 the direction of travel that the government has signaled is 0:10:05.720 --> 0:10:08.000 kind of moving more towards this kind of user pays 0:10:08.080 --> 0:10:11.560 or beneficiary pays approach to instructure where the Crown is 0:10:11.600 --> 0:10:15.080 more kind of seen as a funder of last resort, 0:10:16.080 --> 0:10:17.920 where you know, perhaps the first kind of point of 0:10:17.920 --> 0:10:19.199 care would be to se whether or not there are 0:10:19.200 --> 0:10:23.840 private investors interested in delivering and building these projects. But 0:10:23.880 --> 0:10:26.040 as you say, on the other hand, these are very 0:10:26.040 --> 0:10:30.000 expensive projects. I think that Northern Expressway linking Fuga Day 0:10:30.080 --> 0:10:33.760 to Auckland, there's been some estimates for that one corridor 0:10:33.840 --> 0:10:37.680 kind of requiring about ten billion dollars in investment. The 0:10:37.679 --> 0:10:39.120 government has been very enthusiastic. 0:10:40.080 --> 0:10:41.080 It's broad. 0:10:42.200 --> 0:10:43.360 You kin of look like nothing. 0:10:44.640 --> 0:10:46.679 Well, that's a funny thing actually, Like Bishop likes to 0:10:46.720 --> 0:10:49.920 do this and talk about projects in terms of their 0:10:50.040 --> 0:10:52.000 kind of like number of transmission guns. 0:10:52.000 --> 0:10:54.560 I've heard this as well. Everything was quitified in terms 0:10:54.600 --> 0:10:57.000 of multiples of transmissions. I think you've even talked about 0:10:57.040 --> 0:11:01.160 it as emergency housing was like one transmission gully or 0:11:01.160 --> 0:11:03.960 something that every year or period of time. 0:11:04.040 --> 0:11:06.320 It's like the new gold standard for comparing the cost 0:11:06.320 --> 0:11:09.240 of projects New Zealand how many transmission galleies. So yeah, 0:11:09.240 --> 0:11:10.959 I think in this case the Northern Expressway would be 0:11:11.000 --> 0:11:14.360 about what five or six And so there was a 0:11:14.440 --> 0:11:17.200 very interesting kind of remark by Karen Mitchell, who is 0:11:17.440 --> 0:11:21.040 a partner at KPMG, and she has I think advised 0:11:21.120 --> 0:11:23.880 on like five of the last eight PPPs that we've 0:11:23.880 --> 0:11:26.320 ever done in New Zealand. She's an expert on the sector. 0:11:27.160 --> 0:11:31.360 She I think I read her comments as her wanting 0:11:31.400 --> 0:11:35.520 a lot more kind of informed discussion around the costs 0:11:35.559 --> 0:11:38.679 associated with some of these PPPs, because the point was that, 0:11:39.440 --> 0:11:42.000 and everyone raises this, the crown has a lower cost 0:11:42.000 --> 0:11:44.880 of borrowing than the private sector. Therefore it's cheaper to 0:11:45.080 --> 0:11:47.760 off its own balance sheet. But there are advantages with 0:11:47.840 --> 0:11:50.880 doing PPPs, namely kind of driving innovation and you kind 0:11:50.880 --> 0:11:53.560 of sign up to maintaining one bit of road for instance, 0:11:53.640 --> 0:11:55.520 for like ten twenty thirty years, which were not very 0:11:55.520 --> 0:11:56.599 good at doing so. 0:11:56.679 --> 0:11:57.400 Sermainly benefits. 0:11:57.440 --> 0:12:00.160 But what she was saying is that the benefits need 0:12:00.200 --> 0:12:04.319 to be you need to extract value from PPPs and 0:12:04.480 --> 0:12:06.560 try and get as much value as the difference between 0:12:06.600 --> 0:12:09.000 the crown boring costs and the private sector borrowing costs 0:12:09.080 --> 0:12:11.360 and where you can do that, it might make sense 0:12:11.400 --> 0:12:15.640 to do a PPP, but otherwise the case looks a 0:12:15.640 --> 0:12:18.320 bit more shaky for things like hospitals, for instance, or 0:12:19.120 --> 0:12:22.080 things where there's not a kind of clear revenue tool 0:12:22.120 --> 0:12:25.800 attached to them, like holding when it comes to roads. So, yeah, 0:12:25.800 --> 0:12:28.360 it was it was a very interesting discussion about the 0:12:28.360 --> 0:12:32.880 merits of PPPs, and the government certainly seems very keen 0:12:33.160 --> 0:12:35.439 to do a number of them. 0:12:35.720 --> 0:12:39.160 It is interesting that that remark you made the government 0:12:39.240 --> 0:12:43.080 being the funder of last Resorts sort of the key 0:12:43.080 --> 0:12:47.360 government's experiments with with with PDPs. Well, it did. It 0:12:47.400 --> 0:12:49.960 did feel, particularly in the road space that they were 0:12:52.200 --> 0:12:55.400 they were they were test cases for for for what 0:12:55.520 --> 0:12:58.560 this government might be looking to do, rather than a 0:12:58.640 --> 0:13:01.560 kind of full on this. This government seems to have 0:13:01.600 --> 0:13:04.040 taken those test cases and thought like, well, right, this 0:13:04.120 --> 0:13:08.880 is our we're going to We're going to fundamentally rethink 0:13:08.920 --> 0:13:12.240 the way that we fund most significant transport projects to 0:13:12.520 --> 0:13:17.120 to to to have a private capital is really the 0:13:17.400 --> 0:13:21.280 first cab off the rank, rather than you know, sort 0:13:21.280 --> 0:13:23.440 of alio portfolio next. 0:13:23.559 --> 0:13:26.440 Yeah, that's right, And like the point that I found 0:13:26.440 --> 0:13:30.199 really interesting was Karen Mitchell was asked by an audience 0:13:30.240 --> 0:13:33.320 member just sturing the Q and A about was there 0:13:33.320 --> 0:13:35.600 a trade off whereas you know, would it be a 0:13:35.600 --> 0:13:39.080 bad idea to rush into some short term PPPs that 0:13:39.160 --> 0:13:42.480 might look very good, but does that then kind of 0:13:42.480 --> 0:13:46.239 constrain future government's abilities to invest in their own priorities. 0:13:46.280 --> 0:13:47.840 And there's a good example with this, So like the 0:13:47.880 --> 0:13:50.120 two routing products that we currently have, which is PERO 0:13:50.160 --> 0:13:52.840 to walk with and Transmission Gully. I think it's about 0:13:52.840 --> 0:13:55.240 two dred and twenty six million dollars a year in 0:13:55.400 --> 0:13:59.280 availability and maintenance payments that come out of the NLTF 0:13:59.320 --> 0:14:02.520 to service those two roads alone. So Carrie Mitchell said, 0:14:02.559 --> 0:14:04.679 like some work had been done when the government was 0:14:04.679 --> 0:14:07.280 looking to get into those contracts around you know, how 0:14:07.320 --> 0:14:10.560 many kind of pepp arrangements was it feasible to enter 0:14:10.600 --> 0:14:13.720 into before the nl ETF gets kind of overly or 0:14:13.720 --> 0:14:16.400 too overly constrained. And so there was a suggestion that 0:14:16.440 --> 0:14:18.360 there is definitely a limit to how many you can 0:14:18.400 --> 0:14:21.240 actually feasibly do and that you really do need to 0:14:21.240 --> 0:14:23.920 seek the most high value projects to pursue as PPPs 0:14:24.640 --> 0:14:27.000 where you can kind of extract some revenue back from 0:14:27.040 --> 0:14:29.320 them because you still have to fund them. You just 0:14:29.360 --> 0:14:31.720 pay them back over you know, thirty years as opposed 0:14:31.720 --> 0:14:32.200 to upfront. 0:14:32.520 --> 0:14:34.640 Thanks Sali. We've going to quickly hit to a break 0:14:34.760 --> 0:14:39.520 and then we'll be right back with more on the tiles. 0:14:49.880 --> 0:14:51.880 Welcome back to on the Tiles. I'm talking to Olli Lewis, 0:14:51.960 --> 0:14:56.040 Business Desks Infrastructure editor, who was at the Building Nations 0:14:56.200 --> 0:15:00.120 Infrastructure Conferences week. We were just talking about p p 0:15:00.240 --> 0:15:03.440 p s and the pressure that they place on the 0:15:03.720 --> 0:15:06.600 road funding system. Really making the interesting point that that 0:15:06.720 --> 0:15:10.280 the you know, the the revenue or the the income 0:15:10.320 --> 0:15:16.760 that we have from from from the transport system, the 0:15:16.800 --> 0:15:18.520 revenue we have from the transport system might not be 0:15:18.560 --> 0:15:22.080 sufficient to pay for the the vast numbers of p 0:15:22.160 --> 0:15:25.120 pp so we have to sort of prioritize in a 0:15:25.240 --> 0:15:29.840 very interesting interesting point that the government is. The government 0:15:30.640 --> 0:15:34.040 also announced it, well I supposed re announced it and 0:15:34.080 --> 0:15:38.320 announced an acceleration of of some revenue work that was 0:15:38.320 --> 0:15:41.280 doing in the in the in the transport space. We've 0:15:41.320 --> 0:15:43.640 been talking about We've been talking about getting rid of 0:15:43.640 --> 0:15:47.640 fuel taxes for a long time now, but the government 0:15:47.680 --> 0:15:50.760 seems to be quite keen to to really bring that about, 0:15:50.840 --> 0:15:54.440 moving the light vehicle fleet to road user charges as 0:15:54.480 --> 0:15:58.560 early as as early as potentially twenty twenty seven, and 0:15:58.600 --> 0:16:01.200 then and then looking at making it easier to begin 0:16:01.520 --> 0:16:05.680 tolling some some roads to to and and create value 0:16:05.680 --> 0:16:09.800 capture regimes to create revenue sources, presumably to make it 0:16:09.920 --> 0:16:13.000 make it easier for some of these PPP business cases 0:16:13.040 --> 0:16:16.240 to to stack up. Did you get the sense that 0:16:16.320 --> 0:16:19.160 I mean, is there what are the numbers sort of 0:16:19.560 --> 0:16:22.120 look like if you're if you're going if the government 0:16:22.160 --> 0:16:24.440 sort of goes out to market with with a coroller 0:16:24.440 --> 0:16:25.960 that it wants to develop into a p p P, 0:16:26.120 --> 0:16:28.800 they say, look, you know we can we can work 0:16:28.800 --> 0:16:32.440 out some value capture around this area. We can work 0:16:32.480 --> 0:16:37.400 out some tolling for this particular road. They seem keen 0:16:37.440 --> 0:16:39.680 to say, well, if if the business case of torolling 0:16:39.680 --> 0:16:42.640 stacks up, then we'll we'll really like tolling. Does that 0:16:42.680 --> 0:16:46.040 make that's Does that sweet and sweetened the deal for 0:16:46.080 --> 0:16:48.160 some of these some of these people, some of these 0:16:48.200 --> 0:16:50.960 providers looking to to do PPPs in New Zealand. 0:16:51.080 --> 0:16:54.080 Yeah, it certainly. It certainly helps the government in terms 0:16:54.080 --> 0:16:58.680 of funding the cost of the PPPs. So for minderstanding, 0:16:58.680 --> 0:17:01.960 there's a pretty clear prefer from peer partners not to 0:17:02.120 --> 0:17:06.119 tie their payments to tolling, so they prefer just a 0:17:06.160 --> 0:17:09.600 straight availability payment from the government. And the reason being 0:17:09.680 --> 0:17:12.560 is that they don't want to accept this kind of 0:17:12.560 --> 0:17:15.440 patronage risk because if you you know, for instance, told 0:17:15.480 --> 0:17:19.720 this ten billion dollar Northern Expressway corridor, you'd have to 0:17:19.760 --> 0:17:23.000 set a really kind of artificially high toll in order 0:17:23.040 --> 0:17:25.240 to kind of make a return on that and to 0:17:25.280 --> 0:17:28.040 kind of cover the costs of your capital, and so 0:17:28.119 --> 0:17:30.240 it wouldn't be used. It's like, it's unfeasible to toll 0:17:30.600 --> 0:17:34.200 those kind of very very high cost, relatively low patronage 0:17:34.520 --> 0:17:36.920 roads and kind of cover the costs of the investment. 0:17:37.640 --> 0:17:40.480 So it makes sense for the New Zealand government to 0:17:40.520 --> 0:17:43.679 be looking at how does it offset or try and 0:17:43.800 --> 0:17:46.880 get more revenue from a road that is constructed from 0:17:46.880 --> 0:17:50.240 the PPP model. But the private partner themselves wouldn't necessarily 0:17:50.240 --> 0:17:53.760 want any risk associated with the number of kind of 0:17:53.840 --> 0:17:55.440 vehicles that are willing to pay. 0:17:55.560 --> 0:17:58.320 Those kind of rules. So yeah, it's a very interesting area. 0:17:58.359 --> 0:18:00.639 Actually that the Inmstry Commission did some work suggesting that 0:18:00.720 --> 0:18:03.800 kind of you know, tolling was likely to kind of 0:18:03.840 --> 0:18:06.600 cover the long term costs of you know, less than 0:18:06.640 --> 0:18:10.440 a quarter of most new roads and the instances in 0:18:10.480 --> 0:18:12.400 which it would kind of cover those full costs over 0:18:12.400 --> 0:18:14.560 the you know, a set period. The Harbor Bridge is 0:18:14.560 --> 0:18:16.159 a good example that kind of covered its face with 0:18:16.240 --> 0:18:18.960 tolling over a period of time. As you have to 0:18:19.000 --> 0:18:22.000 have very significant time savings of like fifteen minutes or more, 0:18:22.640 --> 0:18:25.879 you've got to have very decent kind of traffic volumes 0:18:25.920 --> 0:18:28.639 of kind of forty thousand vehicles a day or plus, 0:18:28.840 --> 0:18:30.760 and for comparison's kind of like the busiest points of 0:18:30.760 --> 0:18:33.560 the christ Which motorway network. I think bro I'm s right. 0:18:34.920 --> 0:18:36.760 And you also have to have relatively kind of low 0:18:36.880 --> 0:18:40.159 build costs, which is quite difficult in New Zealand with 0:18:40.280 --> 0:18:42.359 some of the roads that we've seen. I know that 0:18:42.400 --> 0:18:45.280 you've covered a lot of this Thomas with things like 0:18:45.320 --> 0:18:47.960 all Tucky to north of Leven. We've seen big blowouts there. 0:18:49.160 --> 0:18:53.160 PenLink was a recent kind of cautionary tail and that 0:18:53.240 --> 0:18:55.320 the delivery time has slipped out to twenty twenty eight. 0:18:55.320 --> 0:18:57.439 It was meant to be twenty twenty six, and so 0:18:57.440 --> 0:19:00.239 we seem to have like a hard time to ring 0:19:00.359 --> 0:19:04.200 roads for you know, relatively affordable prices in New Zealand 0:19:04.280 --> 0:19:08.760 got for a challenging geography, and it makes it harder 0:19:08.800 --> 0:19:10.600 to kind of recoup those costs from tolling. 0:19:10.960 --> 0:19:12.680 Right and so yes, when you when you think about that, 0:19:12.840 --> 0:19:16.080 so first of your if, the if the if that's 0:19:16.119 --> 0:19:18.879 what you're looking for. There can't be many on the 0:19:18.920 --> 0:19:22.159 PPP or on the runs list many just off the 0:19:22.200 --> 0:19:25.159 top of my head that would that would stack up 0:19:25.160 --> 0:19:27.840 in terms of traffic volumes and low build costs. They 0:19:27.880 --> 0:19:32.840 all seem quite expensive and and and I mean they 0:19:32.880 --> 0:19:37.159 don't seem incredibly low traffic volumes, but none of them 0:19:37.160 --> 0:19:40.760 would seem to be a high traffic volumes or to 0:19:40.800 --> 0:19:42.600 have high trap of volumes to the extent that they 0:19:42.640 --> 0:19:46.680 would they would give what a day? Did you say? 0:19:46.840 --> 0:19:50.639 Yes, that's right? That so Peinlic's are a good example. Like 0:19:50.680 --> 0:19:53.959 that's the seven kilometer highway Lincoln kind of set how 0:19:54.040 --> 0:19:57.560 one north of Auckland to the Fung Peninsula that that 0:19:57.600 --> 0:19:58.840 has very substantial time saving. 0:19:58.880 --> 0:20:00.520 I think it's about fifteen minutes. 0:20:01.720 --> 0:20:04.320 It's been talked about as a toll road project since 0:20:04.400 --> 0:20:07.000 the early two thousands. It's always been kind of thought 0:20:07.000 --> 0:20:09.159 of as something would only happen if it was told 0:20:09.720 --> 0:20:13.600 the last government accepted a proposal from NDITTA to toll 0:20:13.680 --> 0:20:17.640 the road. And I've been quite obsessed with this example 0:20:17.640 --> 0:20:19.000 because I see it as a bit of a bowe 0:20:19.359 --> 0:20:22.720 weather in terms of the government's kind of political appetite 0:20:22.920 --> 0:20:26.440 to follow through and it's tolling rhetoric. So while the 0:20:26.520 --> 0:20:30.000 last government agreed to toll PenLink, this government has yet 0:20:30.080 --> 0:20:34.240 to make any formal decisions around it, despite saying in 0:20:34.280 --> 0:20:37.320 the GPS that it would accept all recommendations from NDTA 0:20:37.400 --> 0:20:40.720 to toll new roads. INDITA definitely wants to toll Peenlic. 0:20:40.760 --> 0:20:42.960 They're very keen to do that, and they say that 0:20:43.280 --> 0:20:45.960 if you don't do that, the operating and the maintenance 0:20:45.960 --> 0:20:49.240 costs that would be covered by tolling needs to kind 0:20:49.240 --> 0:20:53.280 of come from the that increasingly broken in LTF kind 0:20:53.320 --> 0:20:55.800 of pool of money that we have to pay for transport. 0:20:56.960 --> 0:20:58.280 So yeah, I just find it really interesting that the 0:20:58.320 --> 0:21:00.960