Annual Review Debate — Transport

Thank you, Mr Chair, and I rise as the chairman of the hard-working Transport and Infrastructure Committee. I also acknowledge the Minister in the chair, Minister Wood, who recently scored nine out of 10 on a review of Ministers, and I’d like to think that’s something of a reflection of the collegiality and the hard work of the committee, and I acknowledge my committee members here in the Chamber today.

The entities we examined were Air New Zealand; Airways Corporation of New Zealand; Civil Aviation Authority of New Zealand; KiwiRail Holdings Ltd, who appeared with the New Zealand Railways Corporation; the Ministry of Transport; Waka Kotahi New Zealand Transport Agency; and Meridian Energy Ltd. Really, the story of our reviews this year was COVID, and I go to the first entity we examined, which was Air New Zealand, probably one of the entities that was most affected by COVID, although, bearing in mind this is a backward-looking review; that only went through part of the period in review—part of the period affected by COVID—but it was significant and certainly was showing up in the accounts of all the entities we examined.

I guess, even when the entity arrived, Greg Foran, the recently appointed chief executive, the thing he did point out was that they had reduced their executive team from nine to six members, again, reflecting that. I do note that on our committee we had the ex-CEO of Air New Zealand and I’m sure—I won’t speak for him but he was very pleased that he was on our side of the table, not sitting at the end being examined, given the state of the airline and given the effect of COVID on it. Of course, Air New Zealand’s operating expenses declined by 12 percent but that was reflected by a loss—instead of 2019-20, $4.8 billion, the revenue has reduced to $1.2 billion, a 59 percent decrease—and, of course, for the other entities we were then to examine, that was reflected right through. But just some of the effects on Air New Zealand, they, of course, required a $900 million standby loan facility, but they also received $113 million in wage subsidies. So again, Air New Zealand, as the first entity that we did examine, certainly set the scene. They had to reduce staff by 30 percent, which is approximately 4,000 people, at a cost of $140 million in redundancies.

Given the time restraints, I’ll go on. We also examined the Airways Corporation. Again, their income was similarly affected because they derive their income from the airline activity, as do the Civil Aviation Authority of New Zealand. The only thing with civil aviation, of course, is that some of their members, we did hear, were able to be transferred to take part in managed isolation. Moving through to the Ministry of Transport, one of the main things that came out of that was the effect on the supply chains, in particular, and we heard that the inter-agency supply chain group was brought together to address these issues. We also examined KiwiRail and KiwiRail Holdings and KiwiRail’s corporation, and I should, of course, mention at this stage the then chairman, Brian Corban, who’s now recently deceased, and we acknowledge his passing here in the House today.

Just in the time left to me, we did also examine Waka Kotahi and Meridian Energy, but I think, just for the Minister in the chair, I’d just like to leave him with a couple of questions, given what we did here. Could he elaborate, please: what Government measures did the Minister think made the difference in keeping our transport system up and running and our supply chains moving, given what I’ve spoken about and what we heard as a committee about the effect of COVID? Also, just perhaps he could talk about how the Government investment in the transport sector can aid our economic recovery? What evidence is there of such investment over the last year? I look forward to the Minister answering some of these queries.

Thank you, Mr Chair. I want to commence my questions to the Minister in respect of the New Zealand Upgrade Programme, which was announced during the annual review period in January last year, $12 billion – odd of which $6.8 billion, I think, was of transport and $5.8 billion of roading projects. There’s been some recent publicity that there is equivocation now on the degree of commitment to that, and this, I guess, is the opportunity for the Minister to clear that up. There is concern—and the Minister has acknowledged—the baseline estimates that informed that announcement may now need to be revised, and there was equivocation when the Minister was asked about what that meant for those projects and whether any of them would be delayed past the Government’s original time frame or cancelled altogether.

Now, the Prime Minister, when she joined the Minister of Transport in this announcement, was very clear that the upgrade was spades in the ground within a year. I accept that that’s not going to be possible for all of the projects—and, indeed, there are spades in the ground on some of them—but there are some really, really big projects that I think could be at risk, and I think it behoves the Minister to give the House and the committee sort of an articulation of where that risk might be, recognising that he can’t breach any budget constraints.

I thank the members for their questions and I’ll come to some responses to those in a moment. Just at the outset, can I thank the select committee for its work on the annual reviews this year, acknowledge officials who participated in that process as well, and, actually, most importantly, acknowledge the women and men who work across our transport agencies and have had an extremely tough year. I mean, everyone has, across this country, as we’ve dealt with COVID, but the impact and the disruption within our transport systems has been absolutely immense, and often it’s been very fast policy and operational work from people within transport that has ensured that critical supply chains, critical public transport, and other things within our transport system have kept functioning as we’ve dealt with the massive disruption of COVID-19.

You look at sectors like maritime and civil aviation, for example. Their revenue streams dropped off almost completely as a result of border shut downs. So Government and those agencies have had to work together very, very closely, and at all times there has been total professionalism from the people involved in the sector, both public and private, to make sure that we keep New Zealand moving, and it’s appropriate to acknowledge that.

The other acknowledgment I’ll make before touching on these questions is just to echo the chair of the select committee, Greg O’Connor, in his comments about Brian Corban, our chair of KiwiRail, who unfortunately died within the week, who has a long record of service and had, I think, done an incredible job of overseeing that State-owned enterprise and its transformation to a resilient and reliable provider of rail over the last three years.

Mr O’Connor asked a couple of questions, the first related to the point I just made around our supply chain. He asked about some of the measures that the Government has undertaken to ensure that our supply chain does keep moving and has kept moving over this challenging period. Probably the key measure that I’d identify there has been the work that we’ve done in aviation. The International Air Freight Capacity scheme, now called the Maintaining International Air Connectivity scheme, has been absolutely central to it. I’ll acknowledge the previous Minister, the Hon Phil Twyford, who worked with the sector through the Ministry of Transport to get this scheme up and going last year. Investment of over $300 million, recognising that 80 percent to 90 percent of New Zealand’s airfreight usually goes in the belly hold beneath passengers—Mr Luxon’s aware of these dynamics—and that capacity dropped off when the international air passenger market was killed off in about March of last year. So there needed to be some intervention immediately to make sure that critical imports and exports did continue to flow.

We’ve recently announced a renewal of that scheme, an updating of its objectives, to make sure that it’s appropriate, and that has, I think, been a really critical part of ensuring that those supply chains continue to go—particularly things like pharmaceuticals, time-critical exports of seafood, fresh produce, for example, that you can’t put on ships, that has been getting in and out of our country and has been maintaining a very, very high level of our aviation imports and exports.

Mr O’Connor also asked, more generally, about the kind of measures that we can be putting in place to aid the economic recovery. This is critical. This goes a little bit to Mr Woodhouse’s question as well. While the New Zealand Upgrade Programme (NZUP) was announced before COVID-19 reared its ugly head, transport and the infrastructure spend more generally does have a really important part to play in the economic recovery. So we currently have around about 800 people working on NZUP programmes around the country at the moment. Those are good jobs, which are providing income to families and communities, supporting economic activity in regions that might have had job losses because of the impact of the pandemic, and we’ll continue to make those investments as we go along. I can think of individual projects—for example, like the Third Main in Auckland, employing around about 200 people on a critical project that will improve rail in Auckland—but we’re also stimulating the economy, keeping people in work.

Mr Woodhouse moved on to ask more specifically about the New Zealand Upgrade Programme, and he is correct in identifying that we are working through a baselining exercise as a part of the programme. I think that’s very appropriate. This is a very significant programme. It’s a $6.8 billion package of investments, and I think it is very important as we move through some of them—and some of the individual projects within that are extremely large; we’re talking many hundreds of millions of dollars in some cases—as we begin to get a clearer understanding of the issues, the scope, the geotechnical work, all of those sorts of things, that we just reassure ourselves that we’re managing the costs, that there’s clear understanding between the delivery agencies and the Government about the fundamental scope of what we are trying to achieve.

So that’s a process that we’re working through now. I think it’s a robust process. I think it’s a prudent process for us to work through, but I do note—and this is very, very important—that that hasn’t stymied the progress of the programme overall. We currently have 13 of those projects under way. There will be further announcements coming out pretty soon that will add to that list as well.

💬 Hon Michael Woodhouse: When?

The member will just have to wait but I can assure him it won’t be too far to wait—but 13 projects already under way. So there is a significant amount of work—

💬 Hon Michael Woodhouse: And they were the easy ones.

—employing 800 people at the moment. I just do make the point to the members who are asking those questions that we do have a recent example of a project in Transmission Gully where we’ve had to, sort of, tidy things up at the back-end because the initial work on the scoping, the geotech, making sure that budgets were aligned to the job that we were actually delivering wasn’t done at the front-end. I think it’s much better that we work through that process clearly now, and then we can give absolute clarity about the timings of those projects. But I remain very confined that we have excellent delivery. And we will be delivering on all of those core works that were identified in the programme.

Tēnā koe, Mr Chair. Thank you very much, Minister, for your speech, and I just want to acknowledge the other members of the Transport and Infrastructure Committee.

I just wanted to raise a couple of things that came up at the annual review. Firstly, climate change and how it’s absolutely imperative that we make significant reductions in carbon emissions from transport over the next decade. That will mean a very, very different approach to infrastructure investment than what we had been planning in the past. Secondly, cost overruns on State highway projects. We discussed at the select committee how about 17 State highway projects had resulted in $1.1 billion of additional funding needing to go towards those projects. Those were all projects that were commenced under the last National Government. The consequence of those cost overruns in the State highways programme has been that there’s been a reduction in the funding available for sustainable transport options like active transport in our cities, public transport investment, and rail. And so that brings me, Minister, to this graph which was produced by the Infrastructure Commission. Maybe you’ve seen the briefing to the incoming Minister. I’ll just hold it above the captions so that people can see it at home.

What this shows is Waka Kotahi New Zealand Transport Agency’s forward capital commitments going back as far as 2015, going out to 2028. The red line is existing commitments for road. The vast majority of that will be within the new State highways or State highway improvements activity class. Then you see, from 2019, there was a big increase from the New Zealand upgrade. So, over time, there was no actual reduction in the committed funding for State highways. Unlike what the National Party was saying at the time, it was still very considerable. And now we’ve added on a few more billion for State highways. There’s a tiny green line here, a little sliver, and a tiny blue line, which indicates capital forward committed funding for rail.

Now, what concerns me about this graph is that about 90 percent of the funding has been committed, and it’s huge sums of money already, irrespective of any cost overruns that might happen in the future for State highways. And while I know people at home might be thinking, “Well, we have to use cars to get around, so we need improvements to our State highways.”, unfortunately, these few projects are extremely expensive. They don’t do anything to help most people get from home to work or wherever else they need to go. And the opportunity cost of these projects is we’re not significantly investing in public transport and rapid transit in rail to help people get around our towns and cities and around our country without having to rely on a car. So this seems to directly contradict all the evidence and advice that the Government’s been receiving.

I was at a transportation conference yesterday. Minister, you gave a great speech there. All the experts at that conference were saying that, to respond to climate change, we need to completely reverse investment in infrastructure to actually make it easier for people to get around without having to rely on a car. That means that 90 percent of the new CAPEX investment should be going into alternatives, not to really marginal improvements to State highways already in urban areas, where we know it will actually just result in more traffic and more car dependence.

So I’m interested to know, Minister, how are we going to change the pipeline to one that’s actually going to meet our requirements for a modern, efficient transportation system that reduces carbon emissions?

Thank you very much, Mr Chair—just a couple of very quick comments and a couple of questions. The first is in relation to the New Zealand Upgrade Programme. The Minister now says that it’s very prudent we sit back—it’s a very large project; $6.8 billion—and we need to do baselining, which is, just as an aside, a verb that I hope does not catch on. I forget the precise grammatical term, or the syntactical term—whatever it is when you turn a noun into a verb. The Public Service love it, but I hope it does not catch on. It’s like “learnings”—anyway!

So we’re doing some “baselining”. What I would like to know is why that was not done in the first place, and why the Minister did not heed the warnings of Treasury when putting together the New Zealand Upgrade Programme in the first place, because he was told by Treasury, and I’ve seen the official advice to him that said, “There is a danger of cost overruns and we are worried that too much is being packed into the programme.” Right at the very last minute, a single item, which is the Wellington rail upgrades, was added—right at the very last minute—which is, maybe, a $300 million programme, which took the package right up to the limit of $6.8 billion. And, actually, the Minister was told to allow some contingency inside the programme, and that was not done. So I want to know why that was not done. Because all of these problems were foreseeable. In fact, Treasury told him that these problems may come down the line, and it was totally foreseeable that here we are in May 2021 worried about cost overruns—first point.

Second point is in relation to the Melling and the Ōtaki to North Levin projects. Will the Minister commit to at least $258 million being spent on the Melling Interchange programme, and will he commit to the project starting in 2022, as was promised throughout the entirety of 2020? Third question: will he commit to at least $817 million being spent on the Ōtaki to North Levin four-laning, which is one of the most dangerous sections of State highway in New Zealand? His own data shows that 135 deaths and serious injuries will be prevented over five years from the four-laning of that road. Will he commit to that project starting, as intended, in 2025?

I’ll just respond to two quite different contributions from the members in the debate just there. The first was the Hon Julie Anne Genter, and I thank her for her ongoing consistency of advocacy around the importance of transitioning our transport system to be a carbon-neutral transport system. It is one of the biggest challenges that we face as we try and move towards a pathway of net zero by 2050. The facts that have been put in front of us by the independent climate commission are pretty stark. The transport sector produces 47 percent of New Zealand’s carbon dioxide emissions and, regrettably, the trajectory in transport over the last 30 years has pretty much been the worst of any sectors. Emissions have increased by around about 90 percent when other sectors have had small increases or small decreases over that sector. That speaks to us having to really look at this sector in a very, very different way, and to some extend it goes to the debate that’s been playing out in questions that I’ve been fielding today.

I think what is enormously positive, in response to the member’s question, is that, from 1 July this year, we have a new Government policy statement on transport which is coming into play. Of course, this debate relates to the 2019-20 review, but, of course, that was developed during that period—and the member herself had a role in that—and it puts front and centre that one of the objectives of Government policy in transport is to focus on reducing our emissions. So here we have a policy framework in which Waka Kotahi will be explicitly tasked with developing up a transport network that takes heed of that particular direction from the Government. So I think that’s going to put us in a much better place than we have been in the past.

The member asked about cost overruns in the sector, particularly in relation to roading projects. This has been an ongoing feature of our transport system over a number of years. The member is correct in identifying a number of recent roading projects that we have experienced that with. Transmission Gully is one. The roads of national significance programme was originally costed at around about $10 billion, and it cost $12.5 billion. These projects have a long history of that. We are particularly experiencing that pressure now, as are other parts of the infrastructure sector. Some of it’s to do with increased costs to the sector because of the strong economic performance here in New Zealand but also, notably, in Australia, where often we’re competing for labour, materials, and that kind of thing. Some of it is additional costs around property acquisition, which is an important part of many of these projects. Obviously, that very significant lift that we’ve had in property costs—particularly in metro areas—in recent times has had an impact there as well, and that is something that we’re looking into.

But there is another part of it, and I go back to the member’s very striking and appropriately sized graph. Yes, there is a significant roading spend there. Part of that is on new State highway build. A part of it, I assume, is the maintenance spend, which is mixed in—

💬 Hon Julie Anne Genter: No, it’s just capital.

In fact, that’s just the new road. The same issue applies to the maintenance spend as well, and one of the things that we’re experiencing there is that, actually, a lot of the good things that successive Governments have been building in—higher environmental standards, better safety standards—as well as the additional costs that we’re experiencing mean that, effectively, every 100 metres that we’re looking to build or maintain is costing us more. I think it is a real question for us, as Government and for the agency, and there’s some work that we have planned there to be delving into that, because we need to manage the cost as well as we can.

The member noted on the graph that the relative rail investment there is small. Of course, we have recently produced the New Zealand Rail Plan, which, for the very, very first time, sets us on the path to having a 10-year, strategic view of what the kind of investment should be in rail to build a resilient and reliable network. So it’s my expectation that, across the National Land Transport Fund and across Crown funding, we will see appropriate levels of investment going into rail. There’s also the significant progress that has been made—I note the member would like to see more—in terms of a good uplift in terms of our walking and cycling infrastructure. Again, we’re experiencing cost pressures there and, effectively, getting less delivered for the money that we might have thought three years ago. So that’s an area that will be of continued focus.

I can assure the member that I continue to work very closely with Waka Kotahi to ensure that we do have our funding applied that is within the funding bands for different categories. That is a mechanism that we have in place. We don’t have a mechanism whereby the Minister or the Government of the day pinpoints a particular number. We identify a range in the Government policy statement, and I’m very clear in my guidance to Waka Kotahi that they need to work with that, and I convey my sense of ambition in terms of active modes in public transport for them to be meeting those as well.

Mr Bishop asked a range of questions around the New Zealand Upgrade Programme baselining process, and I do note that that baselining process itself does fall a little bit outside the annual review process that’s in question, but I do like to be open and engaging, so I’ll indulge him on this occasion. Again, I’d just comment that I think this is an appropriate—[Interruption] No, the baselining process has occurred in the first part of 2021; so it is outside the 2019-20 annual review period. I think that’s just important to note, but I’m answering the question anyway.

I think it is an appropriate process for us to work through the nature of these significant infrastructure projects—not just these ones, but any—which tends to be that the true costs aren’t fully understood until significant design work is done, until geotechnical work is fully understood, and until matters of scope are carefully worked through with the professionals that we bring in and with the local communities that we work with. It’s only once those matters have been worked through that we tend to get to really, really accurate figures around costs, and I don’t think that’s unique to the New Zealand Upgrade Programme as well. Again, I’ll point the member back to previous examples that we have had of these significant transport projects where we’ve had those kinds of cost escalations; so I think a good baselining exercise helps us to get there.

In terms of how we intend to move forward with that programme, again, I repeat my comment that the Government remains committed to really good transport outcomes for the communities that we have identified within the programme. We’ve a lot of work that’s under way. There will be further announcements in the very near future, but I think it is appropriate and prudent that we work through the baselining exercise with the agencies so that, when we’ve done that, we can give absolute certainty to the communities that I know the member does want to see good transport outcomes for.

I do note that he was somewhat critical in his comments that those improvements to the Wellington rail network were included in the programme. I mean that, to me, was really important. It was about trying to have a more balanced portfolio of investments—

💬 Chris Bishop: I agree.

Well, the member didn’t seem to be agreeing in his questioning. So we’re moving forward with that as well.

I think what the member does also need to be aware of is that in the estimates that the Government received at the beginning, they were priced at P50; so they’re reasonable estimates of cost that we were given as Government to inform that decision making. P50, for members who aren’t so familiar, means that, on average, we could expect the costs to fall above or below a little bit about 50 percent of the time. That was a reasonable basis for the decision making that occurred there, but the baselining is what we now do to get a really clear appreciation of the costs.

Thank you, Mr Chair—thank you for giving me this call this afternoon—and thank you, Minister, for coming to the Chamber today to answer some of the questions about this really, really important portfolio. We agree that there is a need for better public transport in New Zealand. Our road network is at capacity, or beyond capacity, in many towns and cities and in those vital connections between regions.

Now, this road network, which is managed by the transport agency Waka Kotahi, is already at capacity in Auckland. There are new suburbs in the north, the west, and the south of the city, which, unfortunately, despite having existing public transport services, like buses, are limited by two-lane road connections to new subdivisions built on land zoned for medium density and high density, and, yet, there are no new roading connections to these areas in the north, the north-west, the west, and the south of Auckland. Tradies, freight, and workers commuting from home to work, dropping the kids to school, are already suffering terrible delays—sometimes an hour. An hour and 20 minutes, it took me to travel from West Auckland to Papakura on Friday afternoon, alone. What this tells us is that, despite the need for housing and our acknowledgment that we need to grow up as well as out, there is no current capacity for growth.

I’ll give you an example. A few years ago, when I was a civil engineer managing projects in Auckland, we could have banked on four to five round trips a day between the CBD and the quarries and other suppliers that we relied on for building materials, to get to our project sites. Most recently, my colleagues in the industry tell me they’re banking on three loads a day, and sometimes only achieving two. So that is resulting in a huge loss of productivity to the manufacturing and the construction sector—and that’s above and beyond the congestion experienced by workers and families getting their kids to and from school and to and from places of work. It is definitely a priority to expand the existing transport network. That is why I would ask the Minister to consider delivering better public transport now—delivering free-flowing networks now.

So, when it comes to the light rail system that was put up under the previous Government, debated at length, and is now being brought back for consideration, with another steering group set up to develop a business case, can I ask the Minister to explain: what is the problem that the Government is trying to solve with light rail in Auckland? Is there a stronger or better case that light rail is actually a better option than increasing road capacity to free up roads from congestion and deliver better public transport through express buses and wheels on roads?

I just wanted to ask the Minister some questions about the second harbour crossing, in particular. Obviously, back in February, his colleague Minister Parker talked about, you know, it was a problem, the second crossing, it had to be fixed, but not for tomorrow. And then, obviously, the Minister received advice at the end of last year saying that further structural strengthening of the bridge isn’t possible. So, I guess, the question is: what is the real state of that asset? How does he think about that? What is the pace and urgency around getting a second harbour crossing under? And, if there are restrictions going forward, what, fundamentally, would be the effects on our supply chain and how would we manage that going forward? So I’m just interested in your views around this.

I’ve got a couple of others on the second harbour crossing, if you’d sooner I’d do it all in one go for you? The second thing is really around—so the first thing is around, sort of, urgency, priority of the asset, and strategic conditions—the business case. I noted in the announcement that you made with Mayor Goff, around the $31 billion Auckland Transport Alignment Project (ATAP) investment, that there is money in there, but, essentially, I think it’s about $80 million, from memory, just for business case and a bit of land acquisition. I guess the question also is that, you know, the business case has been in development, when you look at those ATAP documents, for the last two years, and how much longer do you think it will take to complete the business case for that?

And, I guess, the third question I really wanted to ask around it was: I note, in that investment package that you announced with Mayor Goff, there still is, you know, the SkyPath project funded in there, I think, to the tune of $240 million sitting in ATAP. But it does make the comment, and we have had comments about its being beleaguered by technical problems and significant complex and engineering issues around that. So the question around SkyPath is: is it happening or not happening? And if it is happening, why is it so, when we’ve got a bridge that’s structurally challenged currently? Why would we persist with doing that?

So, really, questions around urgency, questions around the business case, and questions around SkyPath.

Thanks to both Mr Court and Mr Luxon for their questions. I do want to acknowledge Mr Court—I don’t think we’ve ever had an ACT member stand up in the House and say, “I want more public transport now.” So, Mr Court, I salute you, and I agree with you on that front.

Look, this is a really important point, because, going to those questions around urban growth, the only way that we stop Auckland and our other significant, growing metro areas from choking on their own growth is through investment in high-quality, rapid public transport that moves large numbers of people around those metro areas quickly and efficiently. We simply cannot do it just by building roads, and for the member, who’s an engineer, it’s a question of spatial efficiency in areas in which there are significant constraints on the land that we have to use. There’s no way you can build another motorway down the middle of the Auckland isthmus—even if that didn’t induce demand and make the problem worse, but imagine it didn’t. We need to move large numbers of people very efficiently, very reliably, and very frequently, and that is the benefit that investment in high-quality rapid transit, of the kind that we’re talking about in respect of light rail, delivers—potentially, 300 to 400 people per unit every 10 minutes.

If I can give the member a live example of the kind of difference that we’re talking about between the spatial efficiency of the private motor vehicle and public transport, I had the pleasure last week of pressing the start button on “Dame Whina Cooper”, the tunnel-boring machine that’s creating the central rail link through the middle of Auckland. Now, that project, when it is completed, will bring the equivalent of 16 lanes of motor vehicle traffic in and out of the central city every single day.

💬 Chris Bishop: Great project.

It is a great project, and I’m pleased that we have widespread agreement about that. But that just speaks to the massive efficiency benefits, the massive decongestion benefits, that we get out of serious investment in public transport. The truth is that over 50 years in Auckland and other metro areas, across a range of Governments, we haven’t put the investment into those modes that we should’ve, and that’s why we face the challenges that we face today. So, for our Government, those ongoing improvements will happen.

But I would say to the member that it is happening now. A couple of weeks ago, I was very pleased to open up the improvements to State Highway 20B, which is creating a dedicated transit corridor for buses to travel between the Puhinui interchange on the southern rail line and Auckland Airport—buses shuttling back and forth there, giving people a public transport option every 15 minutes or so. Next month, we’ll be opening up that Puhinui interchange, which will bring together bus and train services in that part of South Auckland, with further investment in the Auckland Transport Alignment Project (ATAP) going into extending it out towards Mr Luxon’s electorate out in Botany; we’re starting to do the futureproofing for that work. Over the course of the last year, we’ve opened at least one new station on the Northern Busway up at the Hibiscus Coast—that was late last year—to extend the benefits of the Northern Busway up to North Auckland.

So there is significant investment going into that public transport across Auckland. The Third Main line, a New Zealand upgrade project being delivered at this time—employing 200 people, as I said. The key benefit of that is that it will give us the capacity, it’ll free up that congested Southern Line, where, currently, commuter and freight trains are competing for this space. So that investment is going in now, and we’re starting to see the benefits flowing through. The good news I’ve got for Mr Court, and everyone, in fact, is when we put these investments in, people do use them: 50 percent of the journeys across the Auckland Harbour Bridge at peak are from people who use the Northern Busway, because it’s a public transport service that moves people efficiently, and we’re going to be building more of that under ATAP and in the years ahead.

Moving on to Mr Luxon’s questions, which primarily focused around the second harbour crossing and the state of the Auckland Harbour Bridge: look, the confidence that I want to give members—and it’s really, really important to say this, because I think that there was in some of the media and commentary a few months ago some statements made that might’ve caused people in Auckland concern and alarm—the Auckland Harbour Bridge, with appropriate maintenance, which we will always provide it with, is a very durable asset that has an almost limitless lifespan. So I just want to give people absolute assurance and confidence with that. There are few pieces of transport infrastructure in Auckland or New Zealand that are more strategic than that. I have made sure that I am well informed by Waka Kotahi about its current state, about its maintenance plans, and I’ve received that assurance from the agency. So we continue to put real focus on making sure that there’s an appropriate maintenance regime in place.

What we did hear from Waka Kotahi around the time of the annual review process is that the bridge has reached a point of its lifespan where it is difficult, effectively, to add additional weight to the structure. So we understand that, we work within that; we’re able to maintain the asset within those parameters. It does, as Mr Luxon gets into, raise questions then in terms of what the options are for us in terms of creating a great walking and cycling connection across the Waitematā. This is a real priority for our Government. We have got an investment of over $300 million within the New Zealand Upgrade Programme there. We want to see Aucklanders with the ability to safely walk or cycle across the harbour in the middle of the city. I think it will be massive in terms of the mode shift, giving people the opportunities to get on their bike or walk to commute to work. It’ll be a fantastic tourist asset as well. What I’ve just outlined does create challenges in the previous plans that have been put forward in terms of attaching a structure to the bridge. So what we are doing now is working through the options in terms of what that means, what the other alternatives are to make sure that we create that connection for Aucklanders. Again, that’s something that I hope to be able to speak to with a bit more specificity in the coming months.

There were a couple of other questions from Mr Luxon in respect of the harbour crossing. We have got our money allocated in ATAP, as he pointed out. He asked about the business case process. So the indicative business case was released towards the end of last year. We’re working closely with Auckland Council and Auckland Transport around that as well. It is my expectation that—well, work is carrying on at the moment—there’ll be further development of that in the course of this year. The business case work identifies that, in the first instance, what we look to do is make interim improvements to the North Shore busway to increase capacity to support more people to get across the bridge quickly and efficiently, and that then, secondly, we look to build up the business case around a second crossing, which will be public transport focused. That, within ATAP, is scheduled as a project for the 2030s, and we think that is appropriate timing given the amount of work that needs to go into this and given our understanding about the flows of traffic and the way that we can manage the current asset.

Just very briefly, Mr Chair, I want to ask the Minister about his comments in relation to the baselining process, and in relation to the contingency. The information that I have received says that in the original $6.8 billion programme for the New Zealand upgrade, there was a $46 million only contingency—I’m referring to emails between the Ministry of Transport and Treasury here. I make it a $46 million contingency, and we’ve got $6.8 billion in total. On 14 January, there’s a “the Minister has just asked for additional Wellington rail infrastructure package”, so the contingency is “pretty much gone”. And on 23 January, bearing in mind that the package was announced five days later, the attached shows that a further $47 million worth of projects have been added to the Canterbury package by Minister Twyford’s office”. The contingency across the package is now just $47 million. Why did the Government allow just $47 million in a $6.8 billion programme, and why are we now expected to believe—why do we now think it’s reasonable for us to tolerate a baselining process when the Government should have done that when they put the package together in the first place?

The member simply speaks to the tensions and trade-offs that occur within any significant infrastructure package. I mean, the member, in his comments earlier, sort of went back and forth a bit in terms of the Wellington rail package, and he’s confirmed that in fact he is in favour of it. That is something that is being delivered as a result of the New Zealand upgrade package. You face choices, within a large package like this, between what you allocate between projects, between what you allocate between contingencies, based on the information that you have at the time.

As the member will be aware, while I’m responsible for it, I wasn’t the Minister at the time, so I’m unable to give a detailed account of those discussions and how they played out at the time. But I stand by the fact that as a result of that package, we’re delivering fantastic upgrades to the Wellington rail network, which is going to improve the commuter performance. I stand by the comment I made earlier that we remain committed to investment in all of those key routes to improve the transport outcomes for New Zealanders.

My question now is around ports, and particularly the Port of Auckland, because I think, irrespective of the global challenges we’re seeing on the supply chain side around the world, there’s no doubt that we’ve got pretty significant issues at the Port of Auckland, and we’re seeing it with respect to automation, projects not hitting capacity, and we’ve got serious safety issues there. We’ve got freight costs that are two to four times and now exporters/importers being hit with more uniform charges as they’re containering from Tauranga to Auckland. And we’ve obviously got ships anchored outside of ports, and that’s manifesting itself where businesses are actually importing goods that they need for manufacturing, and they’re having to carry a lot of inventory. Likewise, they hold a lot of finished stock inventory, and inventory is cash in a business, so it’s impacting on cash flows really very strongly. It’s also leading to the loss of some export customers for some businesses I’ve been talking to as well, and I’m sure the Minister has as well.

So, I guess, I have two questions. Can he tell us what’s happening with the Port of Auckland, and where it’s really going? And a broader question: what is the strategic view around ports and what programme of work does he have under way to think about a ports strategy across the country?

I thank Mr Luxon for those questions. New Zealand is experiencing some of the downstream effects of the economic dislocation created by COVID at the moment. Ports all around the world are experiencing significant disruption and delays. The most recent numbers I saw, which were, admittedly, about a month ago, showed that the index of port reliability in the Asia-Pacific region was at about 13 percent. In other words, vessels are arriving at port around the time we would expect them to about 13 percent of the time, and this has led to significant backlogs, shortages, and supply chain challenges all around the world, and we are obviously not immune to that. In fact, in some respects, we are more exposed to it than many other countries because of our geographical location.

So we’re having to work through that, and I do want to acknowledge here the work the Ministry of Transport have been doing. They’ve been playing a really critical role in trying to bring together ports and other players across the supply chain to make sure that information is being shared as much as possible, to make sure that we have as much alignment as possible, and to make sure that we look at the kind of mitigations that might be able to be put in place to smooth things over. We cannot fix that fundamental international problem in terms of choked-up international shipping lines, but we can try and make sure that people are working together as closely as possible here. That takes some work given that, at the moment, if you look across our supply chains, we have ports who are by statute required to act commercially and, in effect, be in competition with one another, and you have commercial relationships with other players in the supply chain. So it isn’t necessarily an extant overarching strategy that requires them to work together from a sort of “New Zealand Inc.” perspective around these things. But I think everyone’s been working with as much good faith as possible.

Some of things we’ve done, for example, have been to work really closely with KiwiRail to make sure that they lift their capacity as much as possible. They’ve recently upped further the service they’re providing to the Port of Tauranga, for example, to get more of those containers moved off the docks at the Port of Tauranga. This does bring to light the broader issues around the supply chain. So our policy, as expressed at the last election, which I intend to move forward with, is to be developing a proper freight strategy for our country. I think the challenges we’ve faced over the last year revealed that we need that. We need that particularly in the upper North Island, where there are a range of questions around ports and how the supply chain works together. But more broadly, we need to build up a supply chain that is more resilient than the one we have at the moment, and I’m confident that piece of work will help us to get there.

Point of order, Mr Chair. It was agreed this theme would finish at 3.50 p.m.

I was told 50 minutes, which is another five minutes. It’s up to the members of the committee. If you no longer want to speak, then just stop speaking.

Very briefly, to the Minister, thank you for describing the utopia of public transport opportunities, initiatives, and what’s been delivered in other parts of Auckland. The express busway to the North Shore—as an engineer, many years ago, I was involved in delivering one of those stations, so I understand how important it has become to the people of the North Shore, how they’ve come to grow to rely on it, but also that it is at capacity. Again, in South Auckland, the connection of Puhinui, from heavy rail to the airport, shows you what you can do when you take a flexible approach—with a limited amount of budget and having some limited targets, how much functionality and what a great level of service you can offer.

So it must be salt in the wounds for the people of the west of Auckland and the north-west, who still rely on roads last upgraded in the 1980s—from Westgate in Auckland to Kūmeu, Huapai, Helensville, where hundreds of thousands of people are scheduled to build homes and live—and already sitting in heavily congested roads on weekdays and even weekends, where freight moving between industrial areas, commercial areas, and other parts of the country is held up for 20, 30, 40 additional minutes at peak time. There’s also severe constraints on freight movement and people movement during the day. So my question to the Minister is—firstly, thank you for what your Government, Auckland Transport, and previous Governments have delivered to Auckland. But the missing part is, what is going to be delivered for the people of the west and the north-west of Auckland, who feel short-changed? Thank you.

The member is correct in identifying the north-west as a significant growth area. Ministers, across portfolios, are working together closely to make sure that we’re aligning our urban development, housing, transport strategy, and investments in the coming years to meet the change the member identifies, which, really, is a failure of planning over a good 20 years or so now. I can give the member some comfort: there is significant roading investment which is planned around Waimauku and Brigham Creek, which is currently working its way through the consenting process. But the long-term story has to be getting high quality public transport up to that part of the world. There is work that’s under way there now to get interim busway improvements up to Westgate. That work is rolling out as part of our COVID response funding, and we’ll make progress on that by next year. I want to see us looking as hard as we can to get progress as quickly as we can to be extending high-quality public transport outcomes up to the communities in Kūmeu. That’s something I’ve been asking questions of Auckland Transport and Waka Kotahi.

Social Development and Employment

We now come to the debate on social services and employment, and I welcome the Hon Carmel Sepuloni to the chair. This will be led off by the chair of the Social Services and Community Committee.

Thank you, Mr Chair. It’s my pleasure as the chair of the Social Services and Community Committee to commence the debate for this portion of the annual review 2019/20. The Social Services and Community Committee covers a large range of areas: social development; social housing; income support; women, children, young people; the disability sector; seniors; Pacific peoples; ethnic communities; art, culture, and heritage; sports and recreation; broadcasting; and the voluntary sector. Our consideration was grouped into sectors, and reports we’ve written combine most sectors. We invited and had participation by a large number of Ministers, creating a thorough review process. I want to thank the Ministers for their participation in the review process. Select committee scrutiny is a foundation of our democracy and the accountability of the executive. I also thank the Office of the Auditor-General; officials from the many ministries; our Parliamentary Service staff for organising these logistics and their report writing; and, finally, to all the members who make up our select committee, and those members who sub on also.

This debate will cover the subject of social development and employment with the Minister, the Hon Carmel Sepuloni. As part of Budget 2019, we heard that the Government invested $1.3 billion into the Ministry of Social Development (MSD) over four years, having built on the $5.5 billion Families Package. There are approximately 8,000 staff at the MSD, who, in a typical year, provide direct support to between 1 million to 1.5 million New Zealanders and their families. There are approximately 180 offices across New Zealand. We heard main benefits are now indexed to average wage growth, abatement settings were changed, and section 192 of the Social Security Act was repealed.

The Minister told us about the investment into front-line staff and their strong focus on moving people into employment. The ministry spoke about the expansion of work for the staff, due to COVID-19 hardship, to support businesses and workers. Support included rolling out the wage subsidy to protect 1.7 million jobs or incomes; the increased income support package of $2.8 billion, including a $25 increase in base benefits; double winter warmth payment and broadened eligibility for in-work tax credits; removal of stand-down periods; funding in-home childcare for essential workers; an increase in special needs grants; and $27 million for community social services to respond to COVID-19.

We asked about feedback from employers and about investigations regarding wage subsidies. We heard about changes implemented as a result of this feedback. COVID-19 impacts on employment were a focus, but we were also interested in jobseeker support—actual and projected numbers, plus exits; Flexi-wage, including delays to the extension of this programme; He Poutama Rangitahi, He Poutama Taitamariki, support for work, Mana in Mahi programmes—and those numbers were canvassed.

Support for victims and perpetrators of family and sexual violence and the appropriation for community support services—we heard and asked about the Minister’s Whānau Resilience programme. We sought an update on progress on the recommendation of the Welfare Expert Advisory Group. The Auditor-General was satisfied that the information audited fairly represented the ministry’s activities. However, a non-standard audit report was issued due to the effect of COVID-19. The overall assessment remains unchanged and good. Thank you, Mr Chair, we look forward to hearing from the Minister.

[Uses sign language] Good afternoon. It’s New Zealand Sign Language Week. Can I just start by saying that I won’t speak for long because I do respect the fact that many people in the Chamber will have questions. But I do just want to start with a few opening remarks, and that is that there was significant investment at Budget 2019, 2020, where we invested in some really important things. We indexed benefits to wages, we changed the abatement settings, and we also removed section 192 of the Social Security Act so that sole parents who were unable to name the other parent of the child would not be penalised any further. Those are significant changes in themselves, but, on top of that, we all know that last year we were hit by COVID. My opening statement is just to recognise the work of the Ministry of Social Development (MSD) over the course of that year. The programme that we had in front of us before COVID hit was already immense, but the MSD staff showed their agility and their ability to be able to respond effectively to New Zealanders during a crisis, and for that I am very proud. I’ll stop there and I’ll take questions from the Chamber.

Thank you, Mr Chair. I’ve got a series of questions and I want to start, first of all, with benefit statistics and numbers, but, actually, recognising that for every one of these numbers there is a person, a family, who are struggling to get by, and if they want to be in work and aren’t, it is particularly challenging for them.

So if we look at the time in question, compared back to 2017, we’ve seen job seeker numbers increasing steadily each year, now peaking at just under 200,000. One of the questions to the Minister is: why is she saying that if the unemployment rate is the same as it was four years ago, at 4.7 percent, are there 75,000 more people on job seeker benefit? That is my first question.

The second question is probably the one that concerns me more, though, the fact that there are, again, compared to September 2017, 50,000 more people on job seeker who have been there for more than 12 months. So I want to know why that is. I want to know what has been done by the Ministry of Social Development to mitigate the harm from long-term welfare dependency. As I say, that’s 50,000—it’s a big number—but, actually, for every one of those numbers, there is an individual or a family that is doing it tough.

I’ve got a series of questions on hardship, so I’ll start there.

I’ll start with the benefit numbers and, also, the unemployment rate. I think it is important to note that the unemployment rate that we currently have is 4.7 percent, but when we were first hit with COVID, Treasury was forecasting that we would experience an 8 percent unemployment rate, and some economists outside of Treasury were predicting up to 10 percent. I think that it is an amazing achievement for us, as a country, that we have managed to keep our unemployment rate as low as it is, despite being hit with a pandemic.

With regards to actual benefit numbers, at its worst, in terms of forecasts for what the benefit numbers would be, we were initially told we could experience benefit numbers of 490,000 New Zealanders. That, as you can imagine, scared all of us, and, I think, was something that was quite frightening for the whole country. We haven’t got there. At the peak so far, we, I think, in January, reached about 390,000. And now, the most recent stats that I’ve seen had us at about 360,000. Now, does that mean that we are in any way relaxed about the fact that we still have New Zealanders on benefit? No, not at all.

But I do want to reflect back and say that one of the things that I came across when I was made the Minister for Social Development and Employment was that, actually, what we had seen over the course of a period of years was the decline in front-line work-focused case management. So much of the front-line focus had shifted towards hardship—this is prior to us getting into Government—and the levels of staffing had not increased, which meant that there was a decline in focus on work focus for the clients that were coming to the Ministry for Social Development (MSD). So one of the measures that we did put in place in 2019 was an increase in front-line work-focused case managers. We saw that begin to pay off immediately. We announced that. That came into place almost straight away. In July 2019, we started to see an increase in exits off benefit into employment, and that has continued. It is not just MSD, but I will acknowledge the staff that have been working at the front line. In the last quarter we’ve actually seen the most number of exits off benefit into employment than what we have seen since 1996, when electronic records started to be kept—so, again, a pretty amazing achievement, given that we are still in the midst of a global pandemic.

The member asked how I reconcile a 4.7 percent unemployment rate with 360,000 people on benefit. And, as she rightly pointed out, that is more than what were on benefit in 2017—much of it due to, as I’ve already said, the pandemic. We do need to keep in mind that the unemployment rate is measured by the household labour force survey, and benefit numbers are benefit numbers—they are an indication of who are on benefit. So sometimes they do seem out of sync. The thing that I take great heart in is that we saw a reduction in the unemployment rate through the household labour force survey, down to 4.7 percent, as well as seeing, over the same period, a reduction in the number of people that were on benefit. We always say and continue to think that there is definitely more to do in this space, but I do recognise that, you know, we are actually doing a relatively good job in supporting people into employment, alongside supporting a large number of New Zealanders into upskilling and training opportunities, into workforces where there is meaningful and sustainable employment, and where, actually, they have the potential to earn relatively good money compared to, perhaps, some of the work that they might have been doing prior to getting the upskilling and training that we have on offer now.

Kia ora, Madam Chair. It’s a privilege to stand here today to put some questions for the Minister on issues around our welfare system and particularly the interface that our homeless community faces with Work and Income. For the majority of the period that we’re reviewing, I was not a member of Parliament. I was actually at the phone lines working with our homeless community and people on the benefit, helping them access their entitlements at Work and Income.

One of the policies that I’m seeking some comment and answers on is the decision to charge our people in emergency housing 25 percent of their weekly income. I have been really concerned about the decision on this, seeing as I agree with the Ministry of Social Development’s advice around some of the disadvantages of this policy, which risks creating significant hardship on people, and the fact that no evidence has been able to be provided on the fact that not charging 25 percent of people’s income may actually incentivise our homeless community to stay in emergency housing. I don’t believe anyone wants to be in a motel, wants to be in emergency housing, and the people who do have to be in emergency housing, they don’t do it because they want to or they don’t do it because it’s an easy option. They do it because they don’t have access to a home to live in.

So my question is around the decision, and particularly around evidence that the Minister had when making this decision that people were actually staying in emergency housing because it was free of cost, and whether the Minister considers that this system of charging 25 percent of people’s income, who stay in emergency accommodation, ultimately results in a sort of weird, vicious cycle where people are having to go back to Work and Income to get a hardship grant due to this policy.

This sort of hardship could be just avoided by supporting people on the housing waiting list, by supporting them to find alternative accommodation, if that’s what they need, without creating the hardship that this policy has created. I’m interested in the evidence and the rationale behind the decision made by the Minister that this was creating a perverse incentive for people to stay in a motel when the people who are there didn’t cause the housing crisis.

Thank you to the member for the question, and I acknowledge the work that that member was doing prior to becoming a member of Parliament. We did make the announcement about the co-payment for people that are in emergency accommodation, I think, quite early on last year. I think the intention was actually to bring it into force around mid-year, but because of COVID and the fact that we had quite a lot as an agency going on, that was delayed until November.

That decision came about from conversations mostly with community housing providers, as well as insights from Ministry of Social Development (MSD) staff who were working at the front line with housing, but mostly from the community housing providers themselves, who told us that they were seeing a reluctance in some situations for people to move from emergency housing into transitional or into public housing.

Recognising that with transitional housing and public housing, there was an expectation that people will pay 25 percent of their income towards the accommodation that they are in, then we thought, with those insights that were given to us and the fact that that is the expectation for transitional and for public housing, that for fairness, for consistency, and in light of what we were told, it made sense to introduce the co-payment.

Twenty-five percent, I recognise, for people that are on low incomes, is still money out of their weekly income, and I recognise there are some still that need to access hardship payments in some instances for a number of reasons. Sometimes it’s because of debt. It’s a range of different reasons. MSD is still able to provide hardship payments in those situations and still does. So I understand that that member doesn’t support the decision that we made as a Government, but, as Minister, I stand by that decision and there is no intention to change that policy decision.

Thank you, Madam Chair. I want to go back to one of the questions I asked previously that I didn’t get an answer to, and that was the 50,000 additional people on job seeker who have been there for more than 12 months. As we know, the evidence tell us that the longer you’re out of work the harder it is to reconnect. So I do want an answer on that.

I’m also interested in why the Minister thinks, with the number that exited into work this quarter, that’s good news when 50 percent more than that—so 46,000 instead of 32,000—actually were new benefit grants. So it’s actually not going in the right direction.

In terms of comments that she made around the work-focused case management, I’d like to know from the Minister how much time is being spent by front-line staff on managing hardship requests versus active employment support; how many employment engagements each job seeker is now receiving; and, with initiatives like the shovel-ready jobs, where the Government has a focus on creating jobs—they come in at about $220,000 per job—what the Minister believes is the best value for money spending on employment initiatives, and why?

I think there were about six questions in there, so, if the member can forgive me if I didn’t capture all of them, I will attempt to answer them and then, if I’ve missed anything, she’s absolutely able to stand and re-ask the question.

People on benefit for more than 12 months: I guess, again, reflecting on the past year—and it has been over a year now since we were first hit with the pandemic—we have been in a period where the labour market has been tighter than what we would have anticipated, although I think that the size to date, in terms of vacancies that are being advertised for jobs, is very heartening. I think, at Seek, they’ve had a 22 percent increase last month, and TradeMe was a 50 percent increase—or it could be the other way round. But, regardless, it shows that there is business confidence and that businesses are actually doing much better than anticipated. I will reflect back and just say that I think the wage subsidy had a lot to do with that, given that it supported around 1.8 million jobs and meant that so many businesses were able to continue with that support. So many New Zealanders were able to continue to get paid despite the fact that they couldn’t work, and didn’t end up coming back on benefit. So I think the pandemic may have a role to play given that the labour market over the course of the last year hasn’t necessarily been as strong as what we would have hoped pre-pandemic.

Also, in terms of shovel-ready projects, I will say that there is no doubt that they have had a role to play with respect to the number of jobs that are available to New Zealanders. We’ve seen a large number of New Zealanders pivot away from areas where there was a reduction in employment opportunities—whether that be tourism, retail, hospitality—towards other industries, particularly in construction. And I think, just looking at the Apprenticeship Boost scheme that we started, already 21,000 apprentice accounts have been created, which stands us in good stead moving forward in an area where we had workforce shortages prior to COVID, and in an area, actually, that, when we were going through the global financial crisis, there was a lack of investment. Hence why we ended up with the workforce shortages that we did. We are focused on trying to support New Zealanders into sustainable employment, and so, when we talk about New Zealanders who find themselves on benefit, it is about supporting them into employment but also supporting them into upskilling and training if that is the better option for them and they do need to pivot into areas where there are more jobs available. So I don’t resile from the fact that that’s a good idea, and, actually, I think that’s paying off.

The member also mentioned numbers around those who have come off benefit and gone into work versus those that have gone on benefit. We need to keep in mind that I’m only talking about the numbers of New Zealanders who have gone off benefit into employment. A large number of New Zealanders actually exit benefit for other reasons, whether it’s that their relationship status changes or some other life context changes for them where they no longer need a benefit or are no longer eligible for a benefit. So, on top of the 30,000-plus exits that we saw in the last quarter, there were also thousands of New Zealanders who would have exited benefit for other reasons. So we need to keep that in mind.

To just respond to the point that the member is trying to make, though, which is that she’s trying to say that the number of people exiting benefit is less than those that have come on, well, that doesn’t ring true when you look at the overall numbers, which were, in January, 390,000 and now sit at 360,000. So we have seen an actual reduction of New Zealanders on benefit, and the majority of those have exited off benefit because of employment.

Thank you, Madam Chair. I want to come back to the question I asked about value for money on employment initiatives, and I want to know if the Minister thinks that $220,000 for a shovel-ready job is good value for money; and, if not, what is?

I also want to know, around employment initiatives—Government initiatives—and taxpayer spending, how many jobs will be created, have been created; and, if not, why not?

The premise of the member’s question around $220,000 for a shovel-ready job I would question. So I don’t quite know how to respond to that, given that I’m not quite sure where that figure comes from.

With regards to the employment initiatives that we have in place, the vast majority of what the Ministry of Social Development (MSD) does is they create the supports. We put the supports in place so that we can support New Zealanders into employment. Alongside that, we form the industry partnerships with different sectors to ensure that where there is an opportunity for job creation, those industries and sectors are supported by MSD’s products and also, then, workforce—because of the clients we have that want to go into work—to be able to fill the positions when those opportunities are created.

So MSD is not necessarily about creating the jobs. They are about working with people so that they are work-ready, so they have the skills, so they get access to the training, and so they get access in some instances to things like licences, whether that be a licence so they can get to work, a forklift licence so they can drive a forklift, or a truck licence, in some instances. So it’s about supporting people to be work-ready, to take up the positions that are there. It’s not about MSD creating the jobs.

Kia ora, Madam Chair. So I just want to ask a follow-up question to my one on emergency housing and the evidence—or, I guess, anecdotal commentary by transitional housing providers—to justify charging our people who are homeless. I just wanted to ask what feedback was given by transitional housing providers in the context of the fact that Work and Income already puts obligations on our people who are homeless to—each time they want to roll over emergency housing, they have to provide evidence that they’re looking for alternative accommodation, and people in emergency housing don’t have any sort of rights or tenure in general. It’s a very precarious place. So, you know, I would even say that calling it “emergency housing” is not fully accurate, seeing as people don’t have security. So this idea that we’re bringing emergency housing in line with transitional housing by adding a cost makes no sense when the conditions are so different. The Ministry of Social Development in the annual review acknowledge that they don’t proactively verify the suitability of emergency housing; only when a beneficiary has sort of said that there’s concerns, maybe they’ll go back and check. So I guess I’m interested in the evidence provided by transitional housing providers that this policy is justified and is not simply putting our homeless people into more hardship.

I think it’s very fair to say that no one in this House wants to see anyone in emergency accommodation. The fact that we don’t have the secure, stable housing for New Zealanders that we need at the moment is a reality, given that there’s been an under-investment in housing for generations. So we are in the unenviable position of needing to put people into emergency accommodation, and, perhaps, rather than calling it “emergency housing”, we should just call it “emergency accommodation”. So I take that point from the member.

As I said, these were conversations that were held. It was feedback from the community sector. They themselves were seeing that at some points it was hard to move people from emergency accommodation into transitional public because of this step up from having to pay nothing to then having to pay 25 percent. So it was about being able to support people to move through into more stable accommodation, but also consistency. There is work under way in the emergency housing space that the Minister of homelessness is also involved in. You know, the reality for front-line Ministry of Social Development staff is that it’s not always easy to access emergency housing options, but recognising that where we come across emergency accommodation—sorry, options that are not fit for purpose or deemed by the clients to be unsafe, then we should stop using them. I’ve made that very clear and we’ve actually moved in that direction, and, also, we’ll move in that direction in other parts of the country.

What I will say about Rotorua is that they are different to many parts of the country in that they have many options with regards to motel accommodation, so that shift can occur. In other places, they don’t necessarily have emergency accommodation options or they only have limited emergency accommodation options. So do we need to continue to look at how we can do this better? Yes, but the ideal is that we get to the point where we actually have enough stable and secure housing for New Zealanders, which is why, as a Government, we have committed to building 18,400 new places within four years, and we’re on track to deliver on that.

Thank you, Madam Chair. I want to pick up where the Minister in the chair, Carmel Sepuloni, just left off, with her 18,000 houses in four years’ time, and just look at some of the numbers in terms of the 350,000 households at the end of June last year—it’ll be a lot more than that who were being supported by the accommodation supplement—now the 23,000, on the social housing register. Before we talk about those in the worst circumstances, the 8,500 in motels, of which 4,000 are children—that’s clearly a gap. I want to know, given that emergency housing special needs grants—the eligibility was extended from seven days, because the original intention was that they were used for severe cases for up to seven days. That’s been extended to three weeks. How many people are now staying beyond the three weeks they are eligible for? The longest, when I asked at the annual review, was two years. I want to know what it is now, and I want to know how many properties, how many motels, the Ministry of Social Development (MSD) have stopped using because they are substandard, and what steps MSD is taking so that more families and more children are being prevented from the harm they are exposed to each and every day they stay in these places.

There were a lot of questions in there from that member, and I know that we’re running out of time, but I will do my best. With regards to those that are in emergency accommodation, the support that is in place, we did move to actually instigate a few different roles so that we can support people better that are in emergency accommodation, navigators being one. Many of the people that are in emergency accommodation need support to access a range of services. It may be out of the scope of what MSD is able to provide, whether that be mental health support, whether that be family violence support, whether that be some other type of health support. So the navigator positions that we instigated and funded are our honest attempt to be able to provide the wraparound support that people need.

With regards to the length of time that people are in emergency accommodation, the majority of people are out within six months. We did extend the grant from one week to three weeks, and that was due to the fact that it was putting undue pressure on families to try and source accommodation in some instances where it was very difficult to source accommodation, because of the lack of supply but also, in some instances, because there are other barriers to them being able to get into more stable and secure accommodation—private rentals, perhaps—things like credit, things like—particularly that, but other things as well that might be a barrier to them being able to get into long-term accommodation. So it made sense to extend it to three weeks so that at least these families and individuals that were in emergency accommodation had time to be able to actually sort out the other things that might be happening in their lives, as well as look fairly and reasonably for accommodation that might be available to them.

There are some outliers that are in emergency accommodation for longer than the six months or less that I said earlier. Usually, those are very complex cases. Those cases existed under the previous National Government as well. Sometimes, it is hard to house people that perhaps have mental health issues, perhaps have drug and addiction problems or other sorts of complex challenges that make it hard to get them into longer-term accommodation. I want to make it clear that not everyone that’s in emergency accommodation has those same challenges. There are some people who have just, for whatever reason—they may have lost their private market rental because it’s been sold and then have actively been looking for accommodation and not been able to find it, and so, therefore, they end up in MSD looking for emergency accommodation for an interim period until they are able to find it. So there are a range of complex cases that we’re dealing with in emergency accommodation.

But the point that I want to end with is that no one wants to see people in emergency accommodation, but until we are able to meet the demand with respect to housing—and we are on track to deliver on our commitment to housing that we set out—people do need to have some sort of accommodation. The reality for us is that we would much rather see people in emergency accommodation, in the likes of motels, than we would want to see them on the streets or living in their cars.

💬 Hon Louise Upston: Madam Chair.

Time is up for this part of the debate, Hon Louise Upston.

Economic and Regional Development and Tourism