Drivers are becoming increasingly concerned about the state of New Zealand's roads. Photo / John Borren
A $1 billion hole in the country's transport fund and large budget blowouts in infrastructure construction poses serious concerns about New Zealand's roads.
Senior political reporter Thomas Coughlan tells the Front Page podcast that the Government's fuel tax break and a trend of less driving will leave the transport fund $926 million short over the next three decades.
"Whenever you fill up your car, you pay fuel taxes or road user charges," says Coughlan.
"So, if your drive more, you use more petrol and therefore pay more petrol tax. However, the Government shaved 25 cents a litre off the fuel tax and adjusted the road user charge to match that. So that has essentially been the cause of most of the $1 billion hole."
The Government has topped up that shortfall with money from general taxation, but the problem isn't going away.
The continued trend of high petrol prices and the shift to electric vehicles means that the Government will likely be able to collect less tax on fuel as commuters change their transport preferences.
"The Government is working on different ways of funding the transport network. This could include stuff like targeted rates along light rail corridors, which could pay for things like light rail. It could also include a GPS-style system that would go in your care and calculate how much you've driven."
The problem is that these aren't short-term plans, which will likely take more than a decade to come to fruition - during which the road fund will continue to atrophy money.
This is all happening at a time when major roading projects around New Zealand are facing major budget blowouts.
The Government's $8.7 billion NZ Upgrade transport package is flashing red as projects get delayed and become more expensive, according to Waka Kotahi.
Each month, individual projects are assigned a green, amber, or red colour, which indicates the "health" of the project.
By May this year, the number of amber projects had dropped to six, the number of green projects had fallen to one, and the number of red projects had more than doubled to 10.
Coughlan explains that this can't all be put down to the Government.
"These were massive projects, which were meant to be built at a time when New Zealand had open borders and secure supply chains. We then had access to workers and all the materials you needed."
The pandemic did change all these factors, but Green Party transport spokesperson Julie Anne Genter has publicly criticised many of these roading plans.
"She makes the point that these infrastructure projects always go over budget and are poorly costed to being with," says Coughlan.
"I mean one of them has already doubled in costs in little under a year - and it's scheduled to go over budget again. If you look at Transmission Gully in Wellington, that was meant to cost about $800 million, but it cost $1.2 billion. This is just part of the problem that New Zealand has in general."
Questions have also been raised about whether all these billions of dollars should be spent on roading projects when the Government has clear objectives to meet its climate change objective and improve public transport.
"The Government transferred a lot of money from the national land transport fund to public transport, walking and cycling in 2018," says Coughlan.
"But the Government did get scared because of the politics and basically topped up the fund with taxation money for the upgrade programme to build all those roads. And the criticism coming from the Green Party is that you're basically building stranded assets that people will not be able to afford to use in the future."
Coughlan says this type of short-term decision-making in response to politics isn't limited to Labour.
"We've known about the potential for high fuel prices for 15 years - in fact, arguably, since the seventies. But we're not ready," says Coughlan.
"We don't have cities that are ready for people to live a car-free or car-light life... And if you live in a large city that still requires massive amounts of private vehicle use, then you have to ask questions about whether that transport investment is going to the right places."
•
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.
• You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
Bayly apologised for his behaviour last month.