With a general election later this year there should hopefully be some good debate about transport matters. A lot of this will inevitably revolve around projects: City Rail Link of Puhoi-Wellsford? In Wellington, Basin Reserve Flyover or light-rail to the airport? But should we perhaps take a step back from these debates and give a bit more thought to the fundamental way in which we allocate transport funding? What are the flaws with our current system and how could that be improved? These are all interesting questions that should be explored by the transport policies presented to us later this year – particularly by opposition parties.

Whether there are flaws in our current system of funding allocation obviously depends on what you think of the current government’s decision to prioritise roading projects, particularly building new state highway projects. The proposed Government Policy Statement shows how building new state highways will dominate funding allocation over the next six years:

At first glance, it doesn’t seem particularly smart for us to have one aspect of our transport funding so much higher than everything else – but maybe that is simply because I don’t think we should be spending so much on new state highways. Would I feel the same about such a huge focus on say public transport infrastructure? Well good question – these are all political issues, whether one thinks that we should have more of a roads-focus or a public transport focus.

Obviously one would expect political parties to have transport policies that reflect their particular political bent. But there are some elements of funding allocation which seem obviously open to improvement – regardless of our particular political position. At a broad level, I think these are:

  • Giving the regions more say over how transport money is spent in their area. In other words, providing some level of “bulk funding” to local government and leaving them to decide how they spend it. The main justification for this is that local governments are likely to have a better idea about what’s needed for their area than central government and that people tend to vote on transport issues more in local government elections than in national elections (meaning that giving them more spending power is quite democratic).
  • Allowing all transport projects to compete against each other for funding. At the moment the GPS splits transport funding into various “activity classes” as shown in the different bars of the graph earlier in this post. An upper and lower band of possible funding levels are outlined in the GPS, with projects within each activity class effectively competing against each other for funding – but crucially not allowing projects across the activity classes compete against each other for funding. So we can end up with very cost-effective projects missing out on money because that activity class has been exhausted, while other low-quality projects still get funding because they have a bigger allocation in the GPS. This seems fundamentally a very inefficient process, and I would prefer simply to see the whole National Land Transport Fund being available to any project each year, with the projects ranked for funding regardless of type.
  • Ensuring that all project funding is adequately “risk assessed”: By this I mean that all projects should be assessed based on higher, lower and mid-level fuel prices in the longer term, as well as other sensitivity testing about slower or faster traffic/patronage growth than expected.

These three changes to the funding allocation system seem fairly obvious and independent of political ideology, except perhaps the issue of how much direction central government should give to transport policy and how much should be decided on by local government.

What other changes could we make to the process of allocating transport funding? Obviously some decisions will always depend on the political situation (as it should in a democracy, hence the desire to give more power to local government as that’s often where transport is more of an issue in voters’ mind) but there are probably other ways of improving the effectiveness of how we spend transport dollars. NZTA spend around $3 billion a year on transport, how can we better make sure that money is allocated in the smartest possible way?

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  1. Vaguely connected to this issue is an interesting post on Red Alert today. Phil Twyford champions commercial and retail development on greenfield sites in West Auckland and says there needs to be motorway development (in this case, dedicated off ramps) to support this. This is to promote jobs in West Auckland. In the comments he talks briefly about public transport. He criticises Steven Joyce for not building enough motorway junctions.

    It seems that Labour might support the CBD rail tunnel, even if they haven’t announced a policy for funding yet. But they’re also in favour of retail sprawl rather than CBD centralisation, and in favour of motorway development.


  2. It’s important to note however that rail funding is not included on the graph. Upgrades to the national rail network have their own funding, outside transport spending. Remember, the National government excludes rail from its definition of transport.

  3. @Geoff but what rail funding is there actually? Admin has gone over it several times in the past and there is literally no planned future expenditure on rail at all.

  4. In addition to your third point on oil price are also assumptions about vehicle numbers. Changes in these numbers are uncertain too and should expressed as possible ranges.

  5. That chart still has the power to shock, especially when you realise that the second two bars are also state highway spending so add an additional 500m to the crazy blue one….. How anyone can see any balance or sanity in this policy is beyond me.

  6. Wow. The first 6 (or arguably 7) columns in the graph are for roads spending and is over $2 billion a year when added up and walking and cycling is a mere blip and is what, 4 or 5 million? That’s at least 400 to 1 outspending on road transport.

    That’s really, really bad policy and promoting unsustainable forms of transport over active transport. Is it just Steven Joyce’s failing, or is it the whole conservative side of politics, bereft of ideas and wasting our money?

    1. Geoff has got it, above, unless it’s got an engine and it’s on a road, it isn’t transport, according to the Business As Usual crowd. There’s only that little bit for the rest to shut us up, and as far as they’re concerned we should be grateful for their generosity.

  7. The entire GPS is a crock of the proverbial. It gives the cost of repairing eathquake damaged roads in Canterbury as “up to $450m” over the next five years despite Treasuries budget forecast citing the cost for CCC roads at $750m. This discrepency is due to the fact that the NZTA’s funding manual does not mention earthquakes and therefore only damage that resembles storm or flood damage is accepted as being caused by the eartquakes and aftershocks. The fact that earthquakes are having exactly the same impact on the pavements as millions of logging trucks and thereby wiped decades off the useful of the pavements is being ignored by the NZTA. CCC’s estimate is based on the proportion of road kms that exceed 150 NAASRA counts and therefore require immediate renewal to meet NZTA’s minimum performance standards.

    The simple reason that NZTA is being forced to take this hardball approach is because if it accepted that the acctual emergency works cost over the next 5 years is $750m, or $150m per year, then it would be obliged by it’s emergency works funding formula to pay 90% of the cost which means it’s annual contribution would jump from $50m a year to $135m a year which would mean that instead of taking $50m a year from CCC road users to subsidise other council’s roadworks it would have to take money from cities with either more voters or more aggressive or greedy ratepayers/councils and that might hurt the government’s chances of re-election which, after all, is what Government Policy is all about.

  8. @Patrick – I read that article too, if there was ever an example of the ridiculous outcomes minimum parking requirements result in then this is one of them. Removing MPR is something the council should be doing as a matter or urgency, surely even National would support it be removed (or maybe they wouldn’t as it’s a nice policy to enforce car dependency). The article mentions that they can’t buy further land in the area as most properties are selling for millions – so basically the council is forcing the school to subsidise car drivers to the tune of a million dollars. Absolutely ridiculous.

  9. I wrote something long and detailed this morning, but I must have forgotten to post.

    Short version; all funding should be pooled, everything scored on a number of weighted criteria and given a value, and all high scoring projects attempted until money runs out. If there are overwhelming reasons otherwise (community interest, for example) these can be given a score and added to that project. Roads of National Party Significance should compete directly against pedestrian crossings for funding (although in practice I think you’d set a number of internal funding pool categories, and rank within these. Nevertheless the point stands).

  10. I think the local government control point is a good one. Ultimately this is why Joyce doesn’t want a regional fuel tax, as it is essentially giving funding to local government. Yes it would be introduced on top of the existing fuel taxes, but Joyce knows the punter won’t differentiate very much. If Auckland council puts 5c on, it will make it that much harder for Joyce to put his increases through. When the goose hisses, it will hiss at all pluckers :).

    I also like the idea of a range of forecasts. A BCR should be expressed as a probability distribution.

  11. I think the local government control point is a good one. Ultimately this is why Joyce doesn’t want a regional fuel tax, as it is essentially giving funding to local government.

    The one point any constitutional review should be focussing on is over-centralisation, questions of becoming a republic, or even about the role of the Treaty of Waitangi are secondary to this fundamental issue. Unfortunately I see no desire for any Wellington politician to do anything about this.

  12. I guess one thing though about giving local govt control is that you can’t then be confident that projects will be given priority according to your wonderful formula… Because local govt can (and probably will) prioritize parochial projects. It is certainly a difficult balancing line. My fear of having everything done according to formulas away from public scrutiny is that what if the formula is wrong? Then it is very hard to change the outcomes. This already happens with the EEM.

  13. George your comment did run, over under my post on fuel tax….

    Bottom up decision making instead of centrally imposed is more democratic and more likely to led to more satisfaction for communities.

  14. The original Main Highways scheme functioned in much the way George is proposing. 22 District Highway Boards, with one rep from each borough or county, decided which main roads would be declared Main Highways and prioritised the list of desired improvements. Initially the National Roads scheme worked the same, with 16 Regional Planning Authorities deciding on 20 year plans. Both schemes relied on a national fuel levee so any council wanting to do its own thing had to rely on rates funding. What most of you seem to be arguing for is for the national scheme to be the minimum and local authorities being able to charge more and do more. That notion was firmly biffed when Labour slapped down the Tauranga council for using surplus harbour bridge tolls revenue to fund a modern motorway system for the city.

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