Analysing the 2012 Government Policy Statement ‘Engagement Document’

Perhaps prompted by the various items on Radio NZ this morning, the Ministry of Transport has finally got around to publishing a discussion document for the next Government Policy State for transport funding. You can read the document here and you can also make submissions on it between now and May 27th by emailing: GPS@transport.govt.nz.

As I suspected this morning, the 2012 GPS is proposed to very much continue the “1960s thinking” basis of the current policy statement. The bulk of NZTA funding is to be spent on building new state highways (particularly new roads of national significance) even though traffic on them is steady or falling, while funding for just about every other transport activity class (except, interestingly enough, public transport subsidies) is going to be squeezed enormously.

The discussion document outlines the three main focus areas for the 2012 GPS:
Personally I can’t quite see how spending up large on projects with very low cost-benefit ratios and falling demand, plus taking money away from the road safety budget is likely to achieve these three main goals – but I guess it’s interesting to at least know what they are.

The engagement document talks quite a bit about the RoNS – and confirms the potential addition of the further RoNS that I discussed a few days back, including the bizarre Cambridge to Taupo route:
If 6800 vehicles a day along SH1 for much of the section between Cambridge and Taupo represent “high volume”, then the bar is set pretty low. Remember that the one lane Kopu Bridge carried nearly 10,000 vehicles a day back in 2009 – why wasn’t its replacement bridge a four-lane superhighway? (not that I’m saying it should be)

Most of the wording in the document is just fluffy words that generally appear to me as completely contradictory. What really matters are the funding bands that the GPS sets out – with the 2012 version highlighting the maximum and minimum expected spend on each particular funding class for 2012-2015. It also hints at the potential funding bands for years beyond 2015, right through to the 2021/2022 financial year.

But to start with the next three years, the funding bands are shown in the table below:The funding ranges are apparently put in place to give NZTA some ‘wriggle-room’ about what they choose to invest in, but what’s particularly important to look at is the upper limit of the funding range – as it’s my understanding NZTA find it very difficult to fund anything beyond that limit. However, there’s obviously not enough funding in the total ‘pool’ to fund everything at the upper limit, so inevitably some things will miss out and be funded much lower. It’s not hard to guess that state highway funding is unlikely to be the thing that misses out.

A few things stand out for me – firstly the reduced funding for pretty much all the “small things” that NZTA does, like research, transport planning, manging the funding allocation (which I think generally means NZTA staff numbers) and road safety. A lot of things also have their funding pretty much held level – which obviously means a cut in real terms. Those are major expenditure points like local roads and state highways maintenance. One truly bizarre thing about the priorities of this GPS is that we’re throwing money at building new state highways while at the same time being less able to look after the ones we already have.

In terms of public transport, the GPS is a strange mix of OK news and terrible news. On the positive side, a significant increase in funding for public transport services (translation: subsidies) is proposed. This is good as it will ensure Auckland’s rail network can be properly funded, and it should also allow a bit of breathing space to increase service provision levels in response to rising public transport patronage. But on the downside is the absolute gutting of the public transport infrastructure fund – which helps pay for things like railway station upgrades, bus priority projects, ferry terminal upgrades and the like. The gutting of the PT infrastructure fund comes through particularly clearly if we start to look a bit more long-term at the government’s proposed funding bands: To make a little bit more sense out of all these numbers, I have put together a couple of tables in Microsoft Excel, which look at which activity classes dominate the funding, and whether that changes over time throughout the course of the GPS. I’ve used the midpoint between the top and bottom end of the funding range to give a single number for what I think might be the “most likely” level of funding for that activity in a particular year. To simplify it a bit, I also created sub-totals of the various types of spending: state highways, local roads, public transport, road policing and “other”. It’s probably worth noting that the “grand total” available to spend in year in the table above is simply found by adding up the totals of all the mid-points (rather than the actual total of available funding, which as shown in the above tables is somewhat higher).

This shows some relatively interesting results. We can see that while spending on state highways as a whole remains relatively constant in the mid-50% of the total fund, the proportion of that spend one new state highways goes up a lot, while the proportion that’s spent on renewals and maintenance declines. Local roads remains around 20% of the fund throughout the whole period – although considering around 50% of vehicle kilometres travelled in the country are on local roads (the other 50% being on state highways) it’s probably fair to say that local roads in general are under-funded.

It is the public transport funding that probably confuses me most though – with the big increase in funding for PT services but the slashing of funding for infrastructure improvements. Considering that most PT infrastructure improvements (like bus priority measures, ticketing system improvements, ferry terminal upgrades etc.) will improve the efficiency of public transport as well as boosting patronage, some investment in PT infrastructure is likely to mean a lower reliance on subsidies further down the track. It would seem that the government’s deliberate public transport strategy is to withhold funding that would allow the system to be upgraded, while accepting the result of withholding infrastructure funding is the need to boost money spend on subsidies significantly over the next decade.

If we look at the changes to funding allocations over the 10 year period covered by the GPS, some of the changes proposed in this document start to appear a bit clearer (once again these take the midpoints):

The table above really highlights what I’m talking about in terms of public transport funding. Funds available for subsidies almost doubles over the 10 year period, while funding for infrastructure improvements is cut by three quarters. That just seems plain dumb – setting yourself up to have poor infrastructure in the future that will force you to pay out really high levels of subsidy.

In actual fact, there’s a lot in the GPS that’s actually just plain dumb. Like spending up large on building new state highways, but neglecting the ones you already have by cutting funding for renewal and maintenance. Like strongly limiting local road funding even though that’s where most of the traffic growth on the road network is. Like promoting further Roads of National Significance in absolutely stupid places, when you can’t even afford to fund your existing pet projects without stuffing up all other parts of the transport budget. Like cutting money for road safety when supposedly it’s a major focus on the policy statement. Like dramatically cutting public transport infrastructure funding so the PT networks can’t improve, but accepting that will lead to way higher subsidies in the future so making plenty of cash available for them.

I suppose to summarise, the GPS could be worse as there is some good news for public transport in the funding boost for services. However, I just can’t get my head around how utterly dumb much of the document is and how utterly contradictory the goals of the GPS are with what’s actually being promoted to achieve those goals. Surely it’s not hard to realise that, if one is trying to boost economic growth and improve road safety, it’s pretty dumb to spend more on the parts of your road network people are using less, cut money from funding parts of the network that are being used more, drastically cut funding from public transport infrastructure improvements while patronage in the country’s largest city is booming, and decrease funding for road safety initiatives.

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