What Budget 2020 holds for trucking

6 MinutesBy NZ Trucking magazineMay 15, 2020

What a difference a year and a global pandemic makes. The 2019 Budget delivered a $7 billion surplus, the 2020 Budget, a $28 billion deficit.

Quite rightly, the 2020 Budget focuses on jobs as we look at about 1000 people a day joining the unemployment queue. Many of these are people who have never been unemployed, and have not previously experienced poverty.

Some commentators have remarked that it borrows big, splashes the cash and hopes for the best, rather than delivering a strategy to get New Zealand out of one of the deepest economic holes it has ever been in. You only need to look at the $32 million the Budget allocates to food banks to realise what‘s ahead.

Our net debt will be 53% of GDP – that‘s some borrowing.

Two aspects of the job creation interest us – the industry will be very pleased to read about significantly more support to trades training and a greater infrastructure spend.

We are also pleased to see an extension of the wage subsidy. Although, the threshold for the further eight weeks of wage subsidy is a 50% year-on-year reduction in the business‘s income, as opposed to the original 30% reduction. For businesses in that situation, you have to wonder about their viability going forward. 

As the RTF hopes to embark on a road freight transport specific training scheme later this year – Pathway to success – we hope the Budget allocation to trades training ($1.6 billion for a Trades and Apprenticeships Training Package to help workplaces retain their trainees) will have some capacity for our industry. We have, after all, demonstrated ourselves as a critical industry to our country‘s economy, particularly in the minds of the public.   

Infrastructure is a tried and true lever to create jobs, both as an economic stimulant and to enhance capacity for greater productivity over the long term. So it is not surprising to see a further $3 billion to fund infrastructure projects. This comes from the $50 billion the Government has set aside in this Budget to recover from COVID-19.

This infrastructure spend is in addition to the previously announced $12 billion New Zealand Upgrade Programme. The Government‘s Infrastructure Industry Reference Group is giving advice to Ministers on which projects should progress. As always, we advocate for spending on roads to ensure freight can move efficiently and more safely around New Zealand to the ports and airports that take it to our export markets. Exports will be a massive contributor to our economic recovery.

We are disappointed to see New Zealand First grab more money for rail projects that don‘t stack up, to the tune of $4.6 billion. Within the past week we have seen two rail lines ruled out by KiwiRail as uneconomic. The Gisborne to Wairoa freight line didn‘t stack up. And $250,000 was spent to find the obvious – that a passenger line from Hokitika to Westport on the South Island‘s West Coast came at an unrealistic price of $92 million. That would leave passengers paying $400 for the return trip on a train. Now, more than ever, the economic benefits of infrastructure projects must stack up so that they aid our nation‘s recovery.

We support spend on rail to ease city congestion and improve public transport. We‘d like to see Auckland‘s City Rail Link project completed, and the budget not to blow out completely, as a first best step. We think it is sensible the Government has shelved Auckland‘s light rail project. As the West Coast project showed, there has to be a realistic cost-benefit ratio to any future rail investment.

We support this Budget‘s goal to create jobs at a time many New Zealanders are facing unemployment. We support training and re-training as one path to employment and we believe road freight transport can make a strong contribution to this.

We support infrastructure spend but we want to be sure it is more than big announcements. We want confidence that there is the capability and capacity in New Zealand to pull off these big projects in a timely fashion and within budget.

By Nick Leggett, CEO, Road Transport Forum