An article in today’s NZ Herald picks up on the funding squeeze for transport that I posted about a couple of days ago. For a start, it points out the irony of potentially significant funding shortfalls at the very time we’re seeing public transport patronage skyrocket:

Auckland Transport faces a tight funding squeeze as it struggles to cope with unprecedented numbers of commuters switching to buses, trains and ferries.

After overseeing a record seven million public transport passenger trips in March, the organisation fears having to cut service costs by $31.2 million in the next financial year because of savings sought by its two main funders, the Auckland Council and the Government’s Transport Agency.

This is a little unfair on Auckland Council, as the decrease in operating funding of $31.2 million is caused by a $16 million shortfall in NZTA funding and the assumption that council will cut that amount too. Funding of local transport projects is generally funded approximately 50/50 between NZTA and the Council (previously public transport was regionally funded while roads were locally funded, but with Auckland Council the distinction no longer applies). So the Council could always choose to either continue its funding (in which case the only shortfall would be from NZTA) or even make up NZTA’s funding share – if it so desired. The table below seems to indicate a $2 million operational funding boost from the council in the Annual Plan compared to what had previously been expected: All of the $16 million decrease in operational funding seems to come from the reduced NZTA subsidy.

The $16 million decrease in funding for operations is peanuts compared with NZTA’s savage cutbacks in funding available for capital projects in the Auckland region:

A capital projects wish-list of $674 million of public transport infrastructure and local roading proposals inherited from Auckland’s former regional, city and district councils will also have to be hacked back after a gloomy Government subsidy forecast.

Chief infrastructure officer Kevin Doherty has told Auckland Transport’s board that although the list assumed Government subsidies of $274 million, there was unlikely to be more than $147 million available, and possibly even less. He said the Transport Agency had indicated a combination of previously strong regional spending and lower than forecast revenue into the national land transport fund had depleted the amount available for subsidy distributions in 2011-12, the final year of a triennial funding cycle.

As I said the other day, this reduction in available funds for capital projects isn’t all bad news. Hopefully it might mean some really dumb projects get the cut – like Penlink and new multi-level carparks in Manukau City and Takapuna. The surprisingly large amount of money Auckland Transport was planning to spend on capital projects also reflects a lot of the former councils promoting big expensive transport projects in the last couple of years, when they knew they wouldn’t end up being the ones who had to pay for them. Penlink is probably the most obvious example of this. Mike Lee picks up on this point:

But council transport committee chairman Mike Lee, who is an Auckland Transport board member, said the council would be very unwise to cut public transport spending after years of patronage growth.

“That doesn’t mean throwing money away or open slather for subsidies,” he said. “It means ensuring expenditure is in place to meet the rising demand to maintain the momentum of recent years. Because going through my inbox of issues, complaints and questions, transport seems to be the major issue that is concerning Aucklanders.”

Even so, Mr Lee acknowledged that the region’s former territorial authorities had caused budget difficulties by “front-end loading” their long-term plans with spending on local roads “which they themselves couldn’t really afford. Obviously they hoped that if they threw it over to the Super City, they would get those items paid for”.

The really big issue that will need a lot of thinking about is how major projects that do make sense, like AMETI (in its revised form) and some form of Dominion Road public transport improvements, are going to end up being funded. Looking forward over the next 10 years, the government doesn’t seem to see itself as enabling NZTA to contribute much to these large and rather expensive projects. Will NZTA’s contribution to AMETI’s rapid transit aspect be able to be funded out of the local roads budget, or will it have to come out of the “Public Transport Infrastructure” budget that just about disappears over the next decade?

These are the consequences of the various Roads of National Significance being prioritised so much. I just can’t see how, if NZTA is spending billions on the Waikato Expressway, on tunnels in Wellington and the Transmission Gully motorway, or on the Puhoi-Wellsford “holiday highway”,  they’re going to be able to make much contribution to projects like AMETI, Dominion Road or any other major local project. Which may mean that those local upgrades simply don’t happen.

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7 comments

  1. I really worry that station upgrades, and parts of the AMETI project will be delayed by a few years.
    This will substantially increase their cost as they were planned to be brought forward before electrification to make them cheaper.
    So often these short term spending cuts lead to longer term cost increases.
    On the other hand its sort of a waste of money spending on rail capital projects this year as there is no more room for peak hour passengers until the mid 2014 anyway 🙁

  2. Taking the cut as given, it seems that there are two possible ways out in the short term:
    1. Increase fares by 10% and you’d bring in around $14 million, which is most of the shortfall; or
    2. Trim underutilised “coverage” services that wander around the suburbs but don’t carry many people.

    In the long run, obviously NZTA need to get their cashflow sorted (why has this come up suddenly now?) and New Zealand needs to get a new transport minister. Maybe we should encourage Joyce to roll English as finance minister, just to get him out of our hair?

    1. I don’t know whether, if you’re the council, you really do have a PT funding problem though. The council planned to spend masses more on roading projects than on public transport. They have enough money to easily fund all the necessary PT projects, with or without NZTA’s help – but they will need to cut back on funding roading projects in order to free up the money.

      It’s the council’s choice.

      With the GPS, the problem won’t be finding money for PT subsidies. It seems as though – somewhat strangely – the GPS is happy to set aside a lot of money for that. Just none for infrastructure improvements.

      1. Yes that is true – the third option is to reallocate money from other areas. You’re probably right – all that’s really needed to free up $16 million is to defer some of the big ticket projects a few years.

  3. “With the GPS, the problem won’t be finding money for PT subsidies. It seems as though – somewhat strangely – the GPS is happy to set aside a lot of money for that. Just none for infrastructure improvements.”

    That’s because Joyce wants to keep NZBus on their side, they don’t want a large company like Infratil going against them in the upcoming election, easier just to keep the money flowing to keep them quiet.

  4. I do hope this means large rather stupid projects are cut and I think Mike Lee is well aware of the ludicrous funding priorites of AT, I do still wonder whether an upgrade of Dominion Road is considered by NZTA as a PT project or merely a local road project – or a mixture of both. I do find it ridiculous that we’re turning (have turned) into places like the US where, taking an example in Boston, bus lane markings were not painted on a road for 10 years because the city claimed it was a PT project so refused to do it and the PT transport authority (who are striggling with 10 billion in debt) refused to do it saying it was a local road project – outcome, the rest of the markings were happily painted but noone claime responsibility to paint “BUS”. We’re really playing with the future of NZ when projects are not being done based on what’s best transport wise but rather what fits a flawed-ideological view. Sadly I don’t see any possibility of this changing until potentially the 2014 election.

  5. NZTA isn’t making any “savage cutbacks in funding available for capital projects in the Auckland region:” The statements in last December’s mid-term updates make it abundantly clear that the recession is over so NZTA will no longer be borrowing to advance construction start dates and will therefore be returning to the normal practice of providing funding solely from cash flow. This creates the impression of a reduction in funding whilst actually still providing the amount of funding originally committed in the NLTP 2009-2012. All the regional mid-term updates I looked at have these same “savage cutbacks” that you refer to. There is a tone in these reports that suggests that NZTA is far from happy with being forced to fund RoNS as top priority.
    http://www.nzta.govt.nz/resources/national-land-transport-programme/2009-2012/regional/auckland/index.html
    has the Auckland and national mid-term updates clearly visible but to get the other regions start with
    http://www.nzta.govt.nz/resources/national-land-transport-programme/2009-2012/regional/
    That page gives no indication that is access to anything other than the original NLTP regional programmes.

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