Difficulty funding transport ambitions

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

In a briefing to new Transport Minister Simeon Brown, Waka Kotahi/NZ Transport Agency has warned that its spending plans for the next decade are about twice as much as it expects to receive in revenue, and that it won’t be able to deliver on what it said it would in its 2021-2024 National Land Transport Plan.

It describes ambitious goals for the country’s transport networks that is says are “key to unlocking economic potential, building thriving communities, addressing equity and meeting our climate commitments” — however, much of the planned future investment was “under- or unfunded”.

NZTA gets most of its funding from fuel excise duties (about $6.7bn a year) and road user charges ($6bn) — noting here that electric vehicles and plug-in hybrids will also be charged RUCs from April 1 this year, after getting a free ride on roading costs until now.

In the briefing, NZTA says its revenue sources have not been enough for some time, resulting in the need for top-up Crown funding and loans. It has also been underspending on sustainable levels of pavement rehabilitation and resurfacing.

NZTA notes that its roles and responsibilities have expanded, at a time of “rapidly increasing costs and ongoing supply issues”.

The forecast funding shortfall over the next 10 years ranges from about $3bn up to $7bn a year.

“The existing networks and services have grown and are aging, with many of the existing land transport networks and assets reaching replacement age,” NZTA says.

“The condition of the transport network has also been affected by increasing weather events in recent years which we expect will continue to escalate in frequency and impact. This, coupled with an increasing demand on the network due to growth in population and volume of freight on the network, means that investment in a sustainable transport network is increasingly important.”

The briefing lists other mechanisms to fund transport investment, such as value capture (charging the beneficiaries of new or improved infrastructure), congestion charging, tolling and the use of public-private partnerships. “Each has their own purpose, benefits, constraints and operational complexity.”

After meeting with officials from the NZ Super Fund recently to discuss its approach to infrastructure investment, Brown told the NZ Herald the Government was “committed to having innovative funding and finance tools to deliver the infrastructure New Zealand needs”.

National campaigned on a pledge to spend $24.8bn on transport infrastructure over the next decade, including $17.3bn on building 13 new roads of national significance.