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Funding local transport projects

On Wednesday the Council’s Infrastructure committee meet again and there are a couple interesting papers on the agenda. One is about transport trends which I’ll write about in a separate post the other is about funding assistance rates (FARs). They are probably a fairly boring topic for many people but they can have huge implications on councils as they determine how much money the councils get to help pay for transport projects. A brief explanation as to how transport is funded in New Zealand.

  • Money from fuel excise duty, road user charges, vehicle registration and a few other sources all go into the National Land Transport Fund (NLTF)
  • The NLTF is used to pay for transport projects and other associated activities (like road policing)
  • State highways are funding 100% from the NLTF
  • Local roads only get a proportion of their costs paid for from the NLTF, the rest comes from rates. It varies from project to project but averages out at about 50%. This covers not just new projects but maintenance too.

This infographic from the NZTA shows breakdown of funding in more detail

NLTF 2013

The NZTA have been reviewing the FARs over the last 18 months to see if the way they’ve been doing things is the best for going forward. The current way of setting FARs has been in place for over 30 years while the overall concept has been in place since the 1920’s. One of the issues with the current method is that it varies from project to project. In some cases the NZTA will contribute more than 50% and in others less. One of the outcomes of the review is that the NZTA will be setting FARs at a council level so that all qualifying projects within a council area get the same level of funding. The benefit of that is it should allow councils to better plan how much funding assistance they will be able to get.

The paper says that the over the entire country the NZTA will fund an average of 53% of local programmes and most councils will get a FAR of 52%. It has been proposed that Auckland will get a 50% FAR initially which suggests that for most activities this will represent a drop in funding.

FAR Review Auckland Impact

Metro services refers to the mount of funding assistance provided to the rail network which is reducing over a longer period of time as was decided a few years ago. It’s also possible that the current state is higher that it normally would be due to the NZTA being bailed out by the Auckland Council a few years ago and are meant to be getting higher FARs at the moment as a result.

Over time the paper says Auckland should move to a 52% FAR however that is likely to take a few years and potentially result in a funding shortfall.

  • It is probable that the FAR for Auckland Transport would transition from 50% to 52% over the 2015-2018 period. The effects of these changes need to be calculated in relation to the transport programme being developed for 2015-2018 and discussed with the NZTA. Auckland Transport calculated that a FAR of 52% would be at a similar overall level to the FARs that applied to the 2012/2013 transport programme. It is possible that Auckland Council could suffer a funding shortfall in the years transitioning to a 52% FAR.
  • The NZTA Board indicated that FARs should be set at a FAR in the transition which avoids a substantial drop. It is important that the transitional FAR for Auckland Transport is as close to 52% as possible in order to achieve this. The NZTA may need to adjust the starting point FAR for Auckland Transport.
  • In the longer term, a single FAR would bring neutrality to investment decisions in relation to the percentage funding contribution from the NZTA. The increase in FAR in relation to maintenance and renewals provides a greater level of certainty regarding the ongoing ability to maintain the condition of transport assets. The proposed reduction in the FAR in relation to public transport activities would place a greater strain on rates funding in order to achieve the transformational shift to outstanding public transport sought in the Auckland Plan.

Any form of funding shortfall is going to mean that Auckland Transport and the council will likely need to make some tougher decisions about which projects they are able to deliver. That means better prioritisation, in some cases getting creative with projects to find cheaper ways to get the majority of the benefits and particularly in the case of streetscape improvements perhaps some JSK style temporary improvements will be what is needed.

It’s also worth noting that Auckland Transport is getting funding pressure from the council too. AT the council’s annual plan debate a month ago the decision was made to reduce capital spending by$50 million however Chris Darby managed to get this very useful amendment in.

That the Budget Committee:

agree that the $5.1 million transport opex increase is dedicated to public transport and the $50 million reduction in transport capex will not be applied to public transport.

That might have been the first time in many decades where PT ended up with a better result than roads.

20 comments to Funding local transport projects

  • bbc

    It’s always amazing seeing the skew of funding towards motorways and roads at the expense of everything else: you are what you build.

  • It is worth noting that the CRL although more comparable to a State Highway than a local road won’t be 100% funded from the NLTF. And, as Auckland makes up at least a third of the contributions to the ‘government’s’ 50% Aucklanders will in fact be funding around 64% of it, compared to only 34% of State Highways in the region. Auckland’s motorways are more of a burden on the rest of the country that the CRL.

  • Jon Reeves

    I am certainly hoping we get a new mix of parties in Govt. in this years general election. We need to make changes at the top so the outcomes are more favourable to PT projects, after 70 years of being in favour of roads. Fingers crossed for a NZ First, Labour , Greens (maybe mana-internet as well) Govt.

    • Stu Donovan

      I’d prefer just Labour-Greens.

      • NZ First is the only party with a forward-thinking, progressive policy on rail transport, including a “Railways of National Significance” programme. Winston has indicated the CRL may be on that RoNS list, in which case the CRL may get 100% government funding. At least provided NZ First get into a position of pwer, which Winston has a knack of pulling off every few elections.

        I have yet to see any indications of specific rail projects from either Labour or the Greens.

        • Stu Donovan

          I want less central government involvement in picking transport projects, not more.

          CG should set policy and associated funding ranges for types of transport investment and let NZTA (into which KiwiRail should be amalgamated) determine which projects deliver best value for money.

          Politicians picking transport projects is 1) asking for stupid decisions and 2) sensitive to pork barrel politics. Lest we forget Winston making toll-free second harbour crossing in Tauranga as a condition of his support for a previous government …

          • Winston’s ideas may be his choices for what should happen, but they are more soundly based than the current RoNS projects. He knows rail is more efficient, and he knows other modes should be funded more than they are now.

            For as long as government money is used to pay for transport projects, spending decisions will be in the hands of government. If you don’t want government having a say in transport projects, then you’ll need to shift to private investment or direct user pays funding.

            As for amalgamating a freight company with NZTA – a bit odd? How about making Mainfreight part of NZTA too? Users should be completely separate from infrastructure providers.

          • Don’t need to shift the freight part of the business, shift the network operations and management to allow it to benefit from the future planning capability that the NZTA have and that Kiwirail lack. Also allow rail projects to be considered as part of wider transport outcomes. Then open up the network to whoever is prepared to pay to use it, be that Kiwirail or any other operator.

    • bbc

      I haven’t ever heard much coming out of NZ First that made me think they’re at all progressive in terms of transit or building a walkable compact city. If anything their voter base are exactly the ones that kicked up the most fuss and caused the watering down of the unitary plan. Having them involved is fine if it’s the only way to change government but ultimately I think they’d be more of a hindrance than a help.

  • Jon Reeves

    Stu, BBC – NZ First did the largest thing in NZ for public transport – the Gold Card! They have not launched their 2014 transport policy yet, but their past looks better than whatever Greens has given NZ yet! I know Greens mean well, but the fact their transport policies have not actually got anywhere.

    NZ First demanded Kiwirail be brought back into public ownership, Labour agreed. Did Greens demand that? No.

    • bbc

      Unlike NZ First they’ve never actually been in a coalition with Labour in government, merely supporting on confidence and supply. I agree the Gold Card was a great initiative as was buying back Kiwirail. But where’s the equivalent of Julie Anne Genter in NZ First?

      • conan

        In fact can you name another member of NZ First in Parliament without resorting to google? I can only remember one because of the issues he had with going to the toilet in a public place…

        • Glen

          conan – Tracy Martin has some public profile, though not much. If she (or anyone else) is to take over when Winston retires then she needs to be up front a lot more.

          Agree with bbc that yes the Gold Card and Kiwirail buyback were good. No complaints. But I would go further on the next point, and say less ‘where’s the equivalent of Julie Anne Genter in NZ First?’ and more ‘where’s the equivalent of Julie Anne Genter in any other party in NZ?’

          Having someone who actually understands how cities work and all the land use/resource allocation/externalities etc etc involved in transport actually as the Transport Minister (shocking thought I know, qualified people in the right position!) will be revolutionary for NZ.

          In the mean time, we can sit back and see what NZ First’s transport policy is. When push comes to shove, would they back the CRL over the Holiday Highway? Would they make the effort to sell to their elderly supporters the benefit in something they could use every day (CRL and better train frequencies etc etc that come with it) over the motorway to Warkworth that they might use once or twice a year? I’m not holding my breath…

    • Stu Donovan

      Jon,

      1. SuperGold card was not a good decision in my opinion. I would support a discount for seniors similar to children, but not free travel. That aside, I don’t see how supergold is the “largest” public transport “thing”? I suspect there’s many projects in Auckland that have had a larger impact on patronage; and
      2. Unlike NZF, the Green Party was not part of last government so were not in a position to “demand” anything with regards to KiwiRail. Their transport policy has, as far as I know, always called rgued for rail network assets to be publicly owned. Hence they would have supported the last Government’s decision.

      What do the Green’s offer over NZFirst? Many, many things.

      The Green Party’s recently announced carbon tax and dividend policy, for example, will likely drive demand for sustainable transport modes of all forms. And it’ll be a relatively efficient way of shifting demand, rather than simply building and hoping.

      But this is not a post about CG politics – with an election looming that discussion will come in due course!

    • Supergold trips accounted for 10 million trips across all of NZ in 2011/12 according to the MoT. In the same year combined patronage was 132.79 million trips so that means Supergold accounts for only about 7.5% of all PT trips. Hardly substantial and many of those trips were likely to have been taken even if the supergold card wasn’t there.

    • Julie Anne Genter

      The Greens got electrification of Auckland’s rail network – it would not have happened if it were not for the Greens – who managed to make it happen not even being in Govt w Labour.

      NZ First supports Puhoi to Wellsford. I doubt they have a costed plan for rail. I have never seen a budget for what they will supposedly do in Govt.

      The Greens have a comprehensive plan that covers getting our rail network up to scratch, utilising more coastal shipping, making walking and cycling safe and enjoyable in towns & cities, making public transport faster, more reliable and more affordable. And we know exactly how we will pay for it.

      • mfwic

        And now Russell Norman has become a member of the Pigou Club. Tell him well done from me! http://en.wikipedia.org/wiki/Pigou_Club

      • tuktuk

        Hi Julie, great for you to drop by this site. It certainly spurred me to take a closer look at the Green Party website. All good material there, but if you get a chance, it may be worth you elaborating a little further on some of the technical and financial areas of your transport plan across all the modes. Among those of us with an interest in these areas, we have a high “tech-geek” threshold, and will lap up any detail you’re in a position to provide ;)

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