Higher rates or rougher rural roads

ROAD FUNDING: Federated Farmers believes national road use revenue represents a better way of funding roading costs than local government rates.

The New Zealand Transport Agency (NZTA) confirmed a new framework for funding our local roads, all but concluding a review of significance to rural ratepayers and road users.

The funding assistance rates (FAR) system is the way money available for investment in local roads is allocated. By extension it impacts on the annual rates bill, and it is a particular issue for rural councils with large roading networks and relatively small populations.

While the new FAR framework is easier to understand and implement, for many councils it will mean significantly reduced funding. This in turn means some councils and communities will need to make a decision between higher rates or poorer roading quality.

One welcome conclusion is that the overall level of the FAR will increase, with the proportion of overall local roading costs shouldered by central government's road use revenue increasing from 50 per cent to 53 per cent overall.

Federated Farmers believes national road use revenue represents a better way of funding roading costs than local government rates, and we sought a more considerable increase in the overall rate. But it is at least something. The news is not so flash when it comes to emergency works funding. A greater proportion of cost risk from adverse events like flooding will sit with our local councils and ratepayers. The NZTA were concerned the existing framework left some councils too reliant on NZTA funding, rather than making good investment decisions aimed at reducing the risk to local roading networks from adverse events.

There remains an emergency works funding provision within the new framework, but it is less generous. With extreme weather events forecast to occur more frequently, this will be of concern for lesser resourced councils, meaning farmers may be looking at increased disruptions to vital roading services, as well as higher rates bills. This compounds the issues for lesser resourced councils already reacting to changing demand factors, including heavier and more frequent traffic movements requiring stronger bridges and roads. The NZTA is yet to answer the critical question of which councils should receive a rate that exceeds the average. Overall submitters to the review, including Federated Farmers, considered the size of the roading network relative to population was a key concern to consider.

The change to the new framework will occur over a nine year period, beginning in 2015. It is clear the new framework will mean challenging times are ahead for rural councils and road users.