Federation awaits NZTA review

Federated Farmers wants the NZTA to adopt a more 'hands-on" approach to funding emergency road repairs.

As a rule of thumb, the options that account for the size of the roading network result in better outcomes for rural councils.

The New Zealand Transport Agency (NZTA) is reviewing funding for local roads. For road users, the worth of the review will be judged by the outcomes. So what are the options being considered?

Local roads in New Zealand are funded under a partnership between the NZTA and councils. Under this partnership, the NZTA carries roughly half of the costs, and collectively councils fund the other half.

However, the NZTA funding is not divided equally between the councils, with some getting over half their roading costs paid for by the NZTA, and others getting less. This means in practice the implications will differ depending on where you live.

In previous phases of the review, the NZTA concluded it needed to take into account differences in councils' ability to raise the local share of costs. The current phase looks to decide which councils should get more, and which should get less.

Options include the level of deprivation within a district, relative capital value per property or a measure of the size of the roading network. The NZTA have provided some estimates of the shifts in funding as a result of each of these options, offering some significantly different outcomes for councils, roading and ratepayers.

As a rule of thumb, the options that account for the size of the roading network result in better outcomes for rural councils. In those options where the deprivation index is used, rural councils come out significantly worse off, and in some districts the differences run into the millions of dollars.

Is funding on the basis of relative deprivation a more efficient, effective or equitable approach than assessing the relative costs imposed on councils as a result of the extent of the size of the roading network?

Federated Farmers argues it is not. If the aim of road funding was to provide a social welfare safety net, the answer may well be different. As the aim is to provide a functioning roading network the cost impact of roading is the most important factor.

Another key question is, in what instances will councils receive funding for emergency repairs and remediation in an adverse event?

Federated Farmers favours the NZTA taking a more hands-on approach to the funding of emergency repair works. A council cannot proactively plan or manage a roading network to avoid roading costs from an adverse event, and emergency roading costs have a tremendous impact on rates in a small, low-populated rural council, and particularly on ratepayers.

Clearly the money for local roading has to come from somewhere, but the source of funding is a vital consideration. Federated Farmers has long argued that central government's road use-derived revenue, fuel taxes, road user charges and fees, is a far preferable funding mechanism for roading-related costs than property-value based rates.