Well I have had the chance to read through the final version of the 2012 Government Policy Statement for land transport funding and two conclusions immediately leap into my head:
- It’s remarkably similar to the draft version. All that “consultation” seems to have been just for show.
- It’s just plain dumb. Dumb to the extent that even the Road Transport Forum aren’t happy with many parts of it (on surprisingly legitimate grounds).
If we look first at the issue of whether much changed between the draft version of the GPS and the final, this is what the Q&A has to say:
A key concern raised by some stakeholders, was that the proposed funding ranges for the maintenance and renewals of roads would be insufficient to maintain the roading networks at current levels.
In response to this feedback, the Minister increased the upper funding ranges for local road maintenance by $40 million and local road renewals by $10 million both from 2012/13. The Minister also raised the upper funding range for State highway maintenance by $25 million from 2014/15.
At the same time, to encourage efficiencies in roading maintenance, the Minister took up the suggestion from the roading industry to establish a road maintenance task force. The role of the task force will be to identify opportunities for efficiencies in maintenance and renewals, including the adoption of innovative products and methods of procurement, and to encourage their uptake through the country. The task force will be made up of individuals from industry, local government and the NZ Transport Agency.
Some stakeholders also emphasised the need for a longer-term direction to give greater planning certainty to the transport sector. To address this concern, the Minister will be releasing for stakeholders a document that summarises the government’s overallpolicy direction for transport. It is intended that this document will be released in August 2011, It will include a full summary of the key policy decisions made since the government has been in office.
While the changes are a small step in the right direction, as this post goes on it will be obvious that they really don’t address the massive issues relating to maintenance and renewals.
Like every GPS, there’s a lot of “fluff talk” up front about how the government wants transport investment to boost economic growth and how (apparently) important the state highway network is to this – and how important the various Roads of National Significance are to these goals. But what really matters are the proposed funding allocations – because that’s the real impact of the GPS: it sets the maximum and minimum amounts that NZTA can spend its money on over the next six years (and it’s interesting to see that this GPS has a six year outlook, the previous one was just for three years). The important table is included below: Because everything’s a “funding range” it can be challenging to analyse the split – so to make that easier I have assumed that the midpoint of each funding range is what ends up being spent. This is obviously not what’s actually going to happen, but it’s as good a guess as anything. This is the result:
Put the above table into a graph (without the sub-totals of course) and you can really see how dominant the “building new state highways” funding allocation is: The fact that the new state highways allocation increases significantly throughout the period of the GPS puts huge pressure on everything else – meaning that many other funding areas have to be frozen or even decreased.
This leads to the first really dumb thing in the GPS – even if we just look at road funding there is a huge squeeze on the maintenance and renewal of roads throughout the country: both state highways and local roads. This means that while we’re going to be hugely expanding our road asset – through the giant investment in building motorways – we may not actually have enough money left over to look after what we’ve got. This is the classic outcome of political interference in transport funding: as politicians much prefer to cut ribbons on new projects than be concerned with the day-to-day maintenance of the existing network. The graph below looks at the funding allocations for just the roading part of the GPS:
The USA has gone down the path of focusing too much on building new transport infrastructure and not enough on looking after what they’ve already got – and it’s a pretty ugly place to be. Skimping on maintenance might save you money in the short-term, but it’s going to hurt in the longer term: like not painting your house and then wondering why all the weatherboards are rotting.
The next place where the GPS is just plain dumb is in how it approaches public transport funding. At first glance, it seems as though the one good thing in the GPS is an increase in funding for PT services – and that is true, at first glance. However, pretty much all this “extra” money will be eaten up in a financial “merry go round” because KiwiRail are going to start charging higher track access fees for rail services in Auckland and Wellington, and Auckland is going to need to pay for its electric trains after all – with NZTA assistance. In fact, the assistance given to funding rail services in the GPS will actually decrease proportionally – as the government wants a funding assistance rate of only 50% rather than the current 60%. What all this means is that a heck of a lot more rates dollars will need to go into supporting the rail network in both Auckland and Wellington – despite the apparent increase in services funding. I’ve talked to a couple of people at Auckland Transport who actually expect to be cutting bus services over the next few years as a result of the GPS, not increasing them as might seem obvious at first glance. A graph of PT funding in the GPS is included below:
If we set aside the PT services funding, because it’s really little more than a distraction designed to make the GPS seem more PT friendly than it actually is, we see the real impact of the GPS is on public transport infrastructure – which only gets $272 million spent on it over the next six years. It’s worthwhile to point out that, for some completely bizarre reason, rail funding is not included within the PT infrastructure net – so things are not necessarily as bad as they may first seem on this count. But PT infrastructure still funds some pretty important stuff. Here’s a selection of projects that this PT infrastructure fund helped make happen over the past few years:
As you can see, a lot of these projects are pretty small but important aspects of improving our PT network. Things like integrated ticketing, ferry terminal upgrades, station improvements, design budgets for larger projects, real-time information signs and the like. Looking ahead, the PT elements of projects like the upgrade of Dominion Road, or AMETI, may have been funded out of the PT infrastructure budget – if it had not been slashed.
What all the projects above generally have in common is a contribution to making public transport more efficient, effective and attractive to users. You know, so that it doesn’t have to be so reliant upon massive subsidies forever. And this just highlights the second area where the GPS is just plain dumb: cutting back on PT infrastructure investment will mean a less effective system in the future that’s more reliant on long-term subsidies. So once again, for a little bit of short-term savings (really it’s chicken-feed compared to the amount being spent on new state highways) the GPS is setting up public transport to be less cost-effective in the future.
The third area of stupidity relates to the two sector classes that experience some of the harshest cutbacks: transport planning and maintenance of the funding allocation system. They’re the little things at the very bottom of the GPS funding tables that are easy to miss – but they are quite important to ensure cost-effectiveness throughout the transport funding system. A contributor on the Campaign for Better Transport forum made an excellent point about the cutbacks:
I find this funny however
The cost of both funding increases would be partly met by “reducing the funding available for some activities classes, such as, transport planning and management of the funding allocation system”.
“These reductions are important to encouraging greater value-for-money,” the Ministry of Transport said on its website.
So it seems by doing less planning and not managing the funding allocation system we get better “value-for-money”. Historic evidence however would suggest the opposite.
All up, as I said in my submission on the draft GPS there is a huge credibility gap between the high level objectives of the document – using transport investment in a cost-effective way to boost economic growth, and what the funding allocations actually are. But the stupidity of the GPS goes beyond this credibility gap: by freezing funding for maintaining our roads, by slashing funding for PT infrastructure improvements and planning/management, we’re actually likely to see the complete opposite of what the government supposedly wants from its transport investment. So really, it’s just an exceedingly dumb policy document – no matter how you look at it. (Even the NZ Council for Infrastructure Development seems to agree).