Source: New Zealand Government
Introduction
Good morning, and thank you for the warm welcome. I would like to acknowledge Matt Freeman and his team for hosting today’s event.
It’s a real privilege to join you at New Zealand’s largest roading conference. The work you do underpins our economy and the daily lives of millions of New Zealanders.
This Government is committed to providing better travel choices that reduce congestion, and support a transport system that helps people and freight get where they need to go.
I’m looking forward to talking to you today about some of the Government’s key priorities for transport, including what we’ve learnt, where we’re heading, and how we’ll work with you to get there.
Economic Context – green shoots
Let me start with the economic context.
There can be no doubt that we live in difficult economic times. This government came to office with New Zealand in the midst of a prolonged cost of living crisis, with high inflation, high interest rates, and after years of profligate debt-fuelled government spending.
Beginning to right-this-ship isn’t easy, and it was never going to happen straight away. Kiwis are rightfully impatient. But we have made good progress that we are proud of.
We have had a raft of positive economic indicators in the last few weeks, which does suggest the economy may be starting to turn a corner.
Data out last week confirmed we have had four months in a row of growth in our manufacturing sector.
Building consents are up 27 percent compared with the same month last year and we consented the highest level of homes in more than two years.
Last month data showed that exports rose by almost $1 billion to $5.8 billion in the September quarter – a 19 percent increase on last year.
Tourism continues to rebound, with numbers out last week showing overseas visitor arrivals increased by nearly 200,000 in the year to September, compared with the previous year.
And here’s something particularly relevant to this audience: seasonally adjusted ready-mixed concrete numbers out last week had their second strongest quarter of growth post-Covid in September.
Business confidence in October surged to its highest since February, which is nice to see after a year of international uncertainty.
Times are still tough; there is no doubting that. But green shoots are starting to show.
This hasn’t happened by accident. It is the result of a government focused on the fundamentals in our economy: getting spending and debt under control, deregulation, and attacking the drivers and obstacles to economic growth.
International ratings agencies remain confident in New Zealand’s economic track under this Government, as well.
Morningstar DBRS, the fourth-largest credit rating agency in the world, recently gave New Zealand a triple A rating – the highest possible. New Zealand also has a triple A rating from Moody’s and has an AA+ rating from both S&P Global and Fitch Ratings.
This is all to say: our plan is working.
We are making the tough choices for the right reasons, and the opportunities ahead are coming sharply into focus.
Hungry for growth
Which brings me to some of those difficult choices.
For too long, New Zealand’s productivity and economy have been weak. Some brush this reality off, as if it is immovable or even inevitable. They speak as if our culture is inherently unproductive. As if we are destined to live in a low-growth economy forever.
This attitude has infected successive governments, who have brushed off this challenge, too.
Well, we aren’t. Low productivity, and a weak economy, is a choice.
We are choosing the other path.
We are choosing the path of growth.
But not just growth for growths sake. When some hear ‘economic growth’ they think about numbers on a page, up 1%, down 1%, flat, negative, etc.
Economic growth doesn’t mean the suits in the CBD get to buy another car or investment property.
No.
Economic growth – real economic growth – means that the young couple, desperately saving for their first house, gets there quicker.
The grandparents on superannuation have more money in their back pocket to visit their grandchildren.
The farmer can employ that extra pair of hands they’ve always talked about.
The shop owner can buy the empty store next door, so they can grow the business.
The new parent can get their newborn a doctor’s appointment faster, and cheaper.
And the teacher, nurse, doctor, firefighter, and cop can earn what they deserve.
When we talk about economic growth, that is what we are talking about.
Higher incomes, more job opportunities, better public services, improved infrastructure, and a lower cost of living.
This is what we are hungry for.
That is why we are focused on economic growth.
We must tackle the fundamental challenges holding back New Zealand’s future.
Fixing the fundamentals
Which is why we have a raft of reforms underway to change our economy for the better.
None are more substantial or important than reforming our planning system. Everyone knows that the RMA has failed – none more than those of you in this room – so I won’t dwell on that. But for 30 years, we have let reams of unnecessary red tape hold back almost everything anyone wants to do in New Zealand.
Years have been wasted and millions spent in consenting something as simple as a supermarket or a road, or a wind farm.
People are being forced to go back to the drawing board over and over again because some greenies can’t accept that we need roads to survive.
In a matter of weeks, I will announce our new replacement planning system.
It will cut the need for a huge proportion of consents entirely. It will be highly standardised, so if you are building a culvert for the 40th time, we don’t need to reinvent the wheel.
It will be proportionate to the real risk of development, rather than focusing on managing every single effect something has just for the sake of it.
It will unshackle our economy, and will mean that those that build things, like you, can spend more time and money on pavers and pipes, rather than process and paperwork.
I can’t wait to get the Bills into Parliament and get them into law next year.
Road Funding
Speaking of roads, we aren’t just changing the way we build roads. We’re changing the way we fund them, too.
Yesterday Parliament passed the first reading of legislation to create a fairer, simpler, and more modern transport funding system – one that is fit for the next generation of road building.
At the heart of this reform is fairness. Every road user should contribute in proportion to their use of the network. That’s why the Bill makes important changes to both the Road User Charges system and the tolling framework.
On tolling, we are giving ourselves the flexibility to deliver the big projects New Zealand needs, sooner.
Tolling is a key tool for bringing forward investment, and the Bill introduces a number of changes.
Enabling corridor tolling will allow tolling on parts of an existing road where users clearly benefit from a new project in the same corridor.
The Bill gives us new tools to manage diversion from toll roads, including restricting heavy vehicles from unsuitable alternative routes like they do overseas, and allowing toll revenue to help maintain those alternative routes when councils can’t.
We are also introducing annual CPI adjustments to make tolling fairer and more predictable, as well as shifting liability from the driver to the registered person to improve collection efficiency.
On Road User Charges, the changes we are making are equally transformative, and world leading.
The current system was designed in the 1970s and still relies on manual paperwork and stickers on windscreens. That’s not good enough in 2025.
The Bill will make critical changes to prepare the transport sector for our plans to transition the light vehicle fleet to RUC.
This is about building a funding system that supports growth, delivers fairness, and ensures we can keep building the roads New Zealand needs – faster and smarter.
Transport powering growth
In our mission for growth, transport and infrastructure is a critical component. Congestion is a growth and productivity-killer. Every minute stuck in traffic is a minute you are not able to use productively.
Better transport connections are the answer. We want to cut congestion and create a more productive and resilient transport network that drives economic growth.
Road use accounts for 98.6% of total kilometres travelled by people, and 77% of the total net freight tonne-kilometres are via road.
That’s why we are investing heavily in our roading network to make the critical connections between our towns, cities and ports more efficient.
Last year, we announced a record $32.9 billion investment in New Zealand’s transport network through the 2024-27 National Land Transport Programme.
It boosts funding by 35 percent compared to the previous three years, and reprioritises funding to ensure New Zealanders actually get what they need: better roads and public transport, and fewer potholes.
Creating a pipeline of growth
Which brings me to our largest, most ambitious project as a government: the Roads of National Significance programme.
We are determined to build a credible, genuine pipeline of transport infrastructure projects that will help transform New Zealand’s economy.
Whether it is freight or families, containers or cars, these roads will help supercharge New Zealand’s growth centres.
This programme is not new. The last time National was in Government, the first iteration of the RoNS programme prioritised and delivered seven major roading projects across New Zealand, which have transformed the way Kiwis travel and trade.
These seven original RONS like the Waikato Expressway, and the Tauranga Eastern Corridor, have significantly improved connectivity in New Zealand’s ‘Golden Triangle’ of growth – between Tauranga, Hamilton, and Auckland.
They have connected our major population centres, and businesses, with our major ports in this economically critical part of New Zealand.
And in the Lower North Island, improvements on the Wellington Northern Corridor – which includes Transmission Gully and the Kāpiti Expressway – have provided a more resilient route in and out of Wellington, more reliable journey times, secure freight connections, as well as improved safety for all who use the wider network.
Our 17 next-generation RONS will again see the building of safe and resilient strategic corridors that will offer the economic growth and productivity outcomes New Zealand needs.
And we are making good progress. Work is now underway to progress all 17 of the RONS, with three in construction.
Just last week I turned a sod on the Hawke’s Bay Expressway, one of the first new RONS to reach the main works stage.
Procurement is well advanced on stage 1 of the Northland Expressway.
NZTA has now completed and released investment cases for each of the RONS.
The fact that they have achieved this in just two years is remarkable and I take my hat off to them.
In the past some of these investment cases would have taken between 3 and 5 years.
NZTA has also recently committed $1.2 billion to acquire land and to progress consenting, design, route protection, site investigations, and some early works.
This is all about building up a credible, long-term pipeline of transport projects so that as funding becomes available, projects can proceed to construction.
The reality is we came to office with very little in the transport pipeline left to us by the previous government.
The focus was on safety barriers, doing some maintenance, building some shared paths… and that was about it.
So, we’re getting on with building a proper pipeline.
Challenges ahead
I do want to be upfront with you about the challenges we face in delivering these big new roading projects.
Let me make a few important points here.
The starting point is that the Roads of National Significance are very expensive projects.
For example, the cost of stage two and three of the Northland Expressway is expected to be up to $18 billion. Even a project like the Hope Bypass is expected to cost north of a billion dollars.
Based on current estimates, delivering the RoNS programme in full over the next 20 years would cost $56 billion. Funding this entirely from petrol tax and road user charges, would require a one-off 70% increase. Equivalent to a 49 cent per litre increase in petrol tax.
To be clear, this 49 cent per litre increase, would only allow the RONS to be delivered. It would not provide any funding for other major transport projects such as the Second Waitematā Harbour Crossing, or the North West Busway.
So how do we pay for them all?
Well, let me make a few points.
First, the National Land Transport Fund is already massively subscribed.
Our transport system is supposed to be user pays. In other words, road users pay petrol tax and road user charges and the money goes out the other end on maintenance, upgrades and new projects.
But in recent years, Crown funding has been tipped in more and more, which comes from general taxation – in other words, all taxpayers.
The 2018-21 National Land Transport Programme outlined expenditure of $17 billion over 3 years, and was largely funded by road users, who contributed $13 billion.
Fast forward to the 2024-27 NLTP, and the total investment has nearly doubled at $32.9 billion, but road users are still contributing roughly the same amount, $14.3 billion.
The increased investment has come primarily from Crown funding, with around $12.8 billion of direct Crown funding provided over 2024-27.
The second point flows from the first.
Capital contributions from general taxation have to compete with every other important priority the government has to fund.
Every dollar of extra Crown capital we put into roading is a dollar that can’t go into health, or education, or defence, or any of the other calls on capital the Crown has.
Of course, all of these areas have significant deficits and similar funding challenges.
I am an advocate for Crown capital helping to fund roads because of all the economic benefits I’ve talked about.
I’m just making the point that there are difficult trade-offs.
One option is to lift petrol tax and RUC.
Petrol tax has not risen since 2020 and has not kept up with inflation. In 2023, we campaigned on not increasing petrol tax in our first term. This was the right thing to do when there was a cost of living crisis, but we have to be honest about those consequences. It has deferred the issue until later.
Petrol tax is due to go up by 12c per litre in 2027, by six cents on 1 January 2028, and 4 cents in each year after that.
There is obviously a limit to what Kiwis will accept both economically and politically.
As I’ve said, to deliver all of the RONS petrol tax and RUC would have to rise by 70% or 49c per litre. This would be on top of the planned increases we’ve set out for 2027 onwards.
Fourth, on PPPs.
PPPs are not a magic money tree. They are a procurement tool, that’s all.
They are essentially the Government taking out an extra mortgage to build a road sooner. So yes, they help in terms of procurement and driving efficiency, but the projects still have to be paid for.
Fifth, on tolls.
If I had a dollar every time someone said to me “just chuck a toll on, it will pay for the road in no time”, I would almost have enough money to pay for one of these RONS.
Tolls are useful but they don’t fully fund roads. Not even close. New Zealand just doesn’t have the traffic volumes. They are critical tools in helping fill in the funding stack, and provide important ongoing revenue for maintenance costs. But they are not going to pay for these roads by themselves.
The same is true for infrastructure levies to make sure beneficiaries pay for benefits from public expenditure.
We’re changing the IFF Act to allow IFF levies to be used for state highway construction and public transport projects, but they provide extra revenue on the margins, that’s all.
Sixth, and finally, we also have other priorities in the land transport space.
We have critical public transport projects to fund, as well as the second harbour crossing in Auckland – which will be the most expensive infrastructure project ever built in New Zealand.
So where does all this leave us?
The government is committed to the Roads of National Significance but delivering them all tomorrow is not realistic.
Nor, by the way, is it an option for the construction sector.
What we need is a credible, long-term pipeline of transport projects with a variety of funding options and in a logical sequence.
I’ve been calling this a Major Transport Projects Pipeline, or MTPP.
It includes the RONS but also major public transport projects we need to advance as well.
That’s what we are committed to, as well as demonstrating a realistic funding track, synced to what the market can actually sustain.
We’re working hard on that now and will have more to say soon.
All international evidence shows that when you have a clear pipeline, when the sector knows what’s coming next, and then what’s coming after that, when you acquire land early: that’s when you start to get the magic out of your construction sector.
Things get cheaper. They go faster. Benefits are delivered earlier.
And of course, when all of that happens, passengers and freight get to where they need to go faster, safer, and cheaper as well.
This is going to be hard. Hard choices lie ahead. Not everyone is going to get what they want, exactly when they want it.
Some roads won’t be starting for many years.
This is not going to be easy. But it will be worth it.
Delivering a long-term, full transport pipeline will be truly transformational for this country.
Our economy will be better off for it, and ultimately, so will New Zealanders.
Thank you for your time, and thank you for your work building New Zealand.
