The NLTP, which gives effect to the Government Policy Statement on land transport 2024 (GPS) and reflects a partnership between NZ Transport Agency (NZTA) (which invests National Land Transport Fund funding on behalf of the Crown), and local government (which invests on behalf of ratepayers), sets out what transport projects (including both central and local government) will be funded for the next three years.
The NLTP has a strong focus on more state highways (Roads of National Significance), road maintenance, pothole prevention to reduce the number of potholes on our roads, and greater public transport in the country’s main cities. Meaning that many regional cities like Palmerston North are, I think, being short-changed, with revenue derived from here through fuel taxes and road-user-charges being directed to fund roading projects located in and around the upper North Island regions – namely Auckland, Waikato and the Bay of Plenty. (Out of the $33.9 billion NLTP funding, Auckland alone is set to receive $8.4 billion over the three-year funding period.)
And despite being one of New Zealand’s fastest growing regional cities, the three-year funding allocated for the 2024-2027 period saw the Palmerston North City Council (PNCC) receive only a total funding of $56.2m, or 43%, of associated Long-Term Plan (LTP) budgets.
While the PNCC has received nearly all the funds we requested for under the Local Road Pothole Preventions and Local Road Operations Activity Classes, the confirmed NZTA allocation to the city has created a shortfall in the council’s LTP budget, putting pressure on our roading/transport network and leaving little to spend on new roading projects. As an elected member, I find this lack of central government contribution to fund core infrastructure very upsetting.
Councils are, for the most part, strapped for cash. As our cities and districts experience population growth, it is becoming increasingly challenging for territorial authorities to fund infrastructure projects that will accommodate such growth. As a result, our roads are left congested or degraded.
This has become evident in Palmerston North, where the council has had to constantly change the timing of key roading projects in the LTP, as well as delay work on dangerous stretches of roads and safety improvements on street intersections due to a lack of central government funding/contribution; and the 51% NZTA subsidy to carry out road improvements is not always guaranteed.
For context, NZTA subsidises a significant portion of council’s transport programmes through the NLTF. And the NLTF funding is allocated through the NLTP. It is also the case that each council and NZTA have an agreed Funding Assistance Rate (FAR). The FAR for PNCC is 51%. Of the remaining budgets, the majority are co-funded by 51% of the total costs.
Council’s local share is 49%. In some instances, specific to certain projects or activity types, the FAR can vary and can be either higher or lower than the 51%.
The implications of not receiving this funding cannot be ignored. In a report presented to council on October 2, officers confirmed that the Government’s transport priorities over the next three years will leave the council with a shortfall of 51% of the total budget variance of $73.8m, or $37.7m.
This means that major projects, minor improvements, intersection upgrades, new essential road links, and improving safety are all at risk across the city from a lack of funding. It also means that there will be serious flow-on effects for the council’s own LTP and subsequent annual budgets, which guides spending and how it is paid for in the decade ahead, and is likely to push rates up when budgets are revised.
There are also serious implications for service levels - with ‘opex’, or operational spending, impacted alongside ‘capex’, or capital spending.
Councils around the country have been chronically under-funded by successive governments. The next big challenge for us is to come up with solutions on how we tackle this shortfall and continue delivering much-expected infrastructure investment in a very challenging economic environment.
