Yesterday I received from NZTA all the board papers from their May meeting. There are probably a few posts to put together over the next while that share information from those papers, but one that stood out as particularly interesting was an update on how actual transport spending is tracking against expectations laid out in the 2009-2012 National Land Transport Programme. You can read the whole paper here. The NLTP is the most detailed and ‘projects focused’ of the various transport strategies and programmes that are produced: outlining which projects NZTA is to fund over the three year period and how much they expect to spend on each of those projects. Up until recently there was no such thing as a three-year NLTP: but rather budgets were done on a year-by-year basis.
Turning to the update document, the paragraphs below highlight the critical issues: that spending (especially on new state highways) has tracked quite a lot above expectations over the past couple of years, meaning that the money still available for spending in the final year of the NLTP (that is, the current 2011/2012 financial year) is pretty limited:
Along with falling fuel sales (as I outlined in this post recently), it would seem that the ‘above expectations’ spending on new state highways over the last couple of years is the likely reason why projects such as the Hill Street intersection works in Warkworth are now being delayed. This is further expanded upon in the paper:
The second paragraph outlined above is potentially somewhat worrying – that if money from other activity classes (like local roads, roads maintenance, PT spending and walking/cycling spending) isn’t full utilised, then it could be redirected to building more motorways – rather than simply deferred until a later date. From what I’ve read previously, an underspend in public transport, walking and cycling is incredibly unlikely (in fact rumours are that if anything there’s likely to also be an overspend in those areas), so it might be local roads or roads maintenance that misses out.
So how much money are we talking about here in terms of the ‘blown’ state highways budget? Well the graph below sheds some light on that, and as you can see they are some pretty big sums of money:
The dotted line indicates the level of expenditure that was anticipated by the 2009-2012 NLTP, while the grey shaded blocks show the level of spending that actually occurred in 2009/2010 and is what’s anticipated to happen in the subsequent two years. In order for the totals to match up over the full three years there will have to be a pretty dramatic reduction in what gets spent this year: from $1.177 billion down to $908 million.
I suppose that the natural cycle of many of the large motorway projects should assist this process. The big spending on the Victoria Park Tunnel is now largely complete, as is the big spending on the Hobsonville Deviation – which is due to open in the next month or two. While the Waterview Connection is due to start construction within the 2011/2012 financial year, the big expenditure won’t kick in for a couple more years – when the real tunnelling work gets underway.
If we look longer term we really start to get an idea about how tight NZTA’s cashflow is, with any surpluses they once had completely disappearing – it would appear largely as a result of the RoNS projects as time moves on:
What this ultimately means is that if their revenue is lower than expected (as has been the case in recent times) due to higher petrol prices encouraging people to drive less, there’s almost no wriggle room for NZTA to take a bit of a short-term financial hit yet still keep pushing forward with all their projects in the timeframes originally hoped for. We will have to see further projects drop off, with the money simply not being there from NZTA to make them happen.
Which projects or subsidies get the chop and which retain their funding, should revenue from petrol taxes and road-user charges be lower than expected, will be interesting to follow. By blowing the motorways budget in the past couple of years NZTA have certainly left themselves in a bit of a funding predicament for the foreseeable future.