There was an interesting media release from NZTA a couple of days ago, in relation to their decision to delay moving ahead with a reconfiguration of a major bottleneck in Warkworth – the Hill Street intersection. Somewhat unsurprisingly, NZTA have made the decision to delay this project – presumably because they’re working on advancing the Warkworth bypass section of the holiday highway and it would be pretty crazy to continue to spend tens of millions of dollars on upgrading the existing road when you’re going to bypass it soon. However, rather surprisingly NZTA give as one of the main reasons for delaying the project the fact that they don’t have enough money to do it quite yet:
Mr Parker says three key reasons behind the NZTA’s decision: reduced revenue for all transport projects across New Zealand; rapid progress on other Auckland roading projects that need to be paid for earlier than anticipated; and increased costs for the Hill Street upgrade.
“We are committed to the project but the costs for improvements have increased 50 percent (to $15m) since they were originally estimated in 2006 and growth in Warkworth has slowed down coupled with the construction of larger projects in Auckland we need to delay this work” says Mr Parker. “We will still continue to negotiate with landowners around Hill Street over property purchases and property access rights so that we will be in a position for a quick start when we do go ahead with construction.
Interestingly, the mega-expensive RoNS projects don’t seem to be suffering from this funding shortage:
Mr Parker says the Hill Street decision does not affect work on the Puhoi to Wellsford road of national significance.
“I can assure people that Puhoi to Wellsford is still underway in the area, and has the changes at both the Hill Street and Hudson Road intersections incorporated in its planning. Funding for this RoNS project has not affected anything in Warkworth as it is still in a planning stage and most of NZTA’s allocation is spent during construction” says Mr Parker.
But what’s really interesting is the first reason that Mr Parker gives for the delay: reduced revenue for all transport projects across the country. There can only be one reason for this – people are driving less than expected, buying less petrol than expected and therefore NZTA are getting less money from excise taxes and road-user charges than expected. For regular readers of my blog, this is hardly unexpected – just look at traffic levels over the past few months – April as an example:
All of the government’s transport spending plans have a giant assumption in them – being an expectation that revenue from fuel taxes and RUCs will increase over time. If you look at the expectations of revenue in the draft Government Policy Statement, the assumed increase is pretty significant – from around $2.9 billion at the moment to $4.2 billion in 2021.
While I like the simplicity of fuel tax as a way of generating revenue (and the fact that it punishes fuel inefficient cars), it would seem to me that it certainly has a limited lifespan as an effective way of raising money to spend on transport. Over time, as petrol gets more and more expensive, we are surely going to see either (and probably both) a dramatic increase in the fuel efficiency of vehicles and a significant uptake of other transport modes such as PT, walking and cycling.
I suppose what will be interesting to see is which projects get the chop from NZTA if there simply isn’t enough money available from road users to fund the optimistic transport project list that government has. As long as this government is in power, it seems unlikely to be the massively expensive RoNS projects. With local councils (particularly in Auckland) putting a greater emphasis on public transport than ever before, one doubts that the government can practically cut much more from the PT budget (there’s almost nothing left in the PT infrastructure budget anyway). Maybe it will be the smaller state highway projects that miss out, or will NZTA start to skimp on maintenance?
Until we figure out a new way of generating revenue from transport that’s independent of these long-term trends, it seems a pretty inevitable process that we are going to have very constrained transport budgets.
Can anyone tell me the current percentage of the Transport Fund that is supplied through petrol taxes and RUCs? Last time I did the figures it was less than half..
All of it I thought. Well some comes from vehicle licensing fees but not much.
OK, I have revisited the figures. It always does my head in.. So fuel excise + RUCs make up about 90% of the NZLTF. But then Local and Central govt contribute another $3 420m into projects dropping the fuel excise and RUCs percentage down to about 63%. http://www.nzta.govt.nz/resources/national-land-transport-fund-annual-report/docs/NLTF-annual-report-2010.pdf
I have thought for a while now that we really need to change how transport related taxes are collected, yes a fuel tax is the easiest way to do it and you can’t escape it but I feel its effectiveness is increasingly reducing. If we had cars that were far more efficient the tax take would be far lower even though the impacts on things like congestion may not be improved. I hope that if the the trend of falling tax takes continues that it spurs the government to come up with a new system or overhaul the RUC’s with introduction to all vehicles and as part of that they include things like congestion type costs. To me the only tax on petrol that we should end up with is one to cover the impacts of burning it.
I’ve wondered since the RoNS were invented that the urgency in part wasn’t about the thought that we are almost certainly at ‘peak NFTL fund’. Despite NZTA’s consistently crazy and booming predictions it is hard to believe that everyone in a suit in Wellington is so hopeless that it hasn’t occurred to them that with rising vehicle efficiency and ballooning vehicle running costs [and therefore flat to falling vehicle use] that this resource may well be entering a structural decline. Joyce may be a lot of things but stupid or bad at sums aren’t two of them- I see the RoNS as political positioning for an even tougher funding environment. He is pushing his people’s mega projects to the top of the pile well before they are needed in order to crowd out everything else- the harbour crossing is a case in point, far too early really. He wants no discussion of alternatives.
AC should consider funding the CRL through debt, say infrastructure bonds, with the expectation that there will be a different gov. probably before the project is open and they will see the sense and utility of taking this debt, or at least the interest on.
We can’t rely on getting near the NLTF anytime soon, and as it shrinks, maybe at all.
Remember peak oil is really peak money.
Hasn’t anyone thought of the simple step of just increasing the petrol tax? Or reinstating the 10c/litre option for regional councils (even better)
yes but not Joyce, especially the regional one, and anyway i wouldn’t advocate it if it just means funding more crazy RoNS….
Alan, The NLTF and it’s predecessor the NRF, has always been fully funded from road user levees. Since 1959 the fund has provided 100% of the funds for State Highway and 50% of the funding for local roads. Rates funding for roads has always operated as a form of capital gains tax on property values because they are always highest where there are the best roads. In the 1800s that included special rates for properties on streets with footpaths and street lights.
IMHO there is no really good reason that the progressive increases in the motorists portion of the cost of local roads stopped increasing in 1959. The huge increase in traffic and the much greater uniformity in road quality since then shoulld have seen the share progressively increased to as much as 99%. But as others have pointed out, with Joyce’s fixation on RONS now is not the time to make that happen.
Jarbury, Visit NZTA’s website and look for the NLTP 2009-2012 mid-point updates released last December. You’ll find NZTA was worried about balancing the books to pay off the debt they were forced to take on to accelerate the start of major projects in 2009/2010.