The impact from COVID-19 on the Council’s budget has been severe and even with a 3.5% rate increase, is set to see funding for projects slashed, with safety and cycling some of the worst hit. All up Auckland Transport estimate it could see $312m to $352m of “shovel ready” projects paused and more concerningly that could see up to 10 people die and 40 people seriously injured on roads that would have otherwise had safety improvements.
An article in Stuff a few days has highlighted that while Auckland Transport will suffer from the council’s budget cuts, it has already been suffering from reduced funding from Waka Kotahi – the NZTA.
An Auckland Transport (AT) submission to the Ministry of Transport (MoT) shows ongoing tensions over funding for the $29 billion Auckland Transport Alignment Project.
And it has also highlighted what it claims is a 10 per cent shortfall in the funds from the Waka Kotahi New Zealand Transport Agency (NZTA) for the project.
When Transport Minister Phil Twyford first announced the revised Auckland Transport Alignment Project (ATAP) in April 2018, he said it would see $28 billion invested in the city’s transport system over the next decade.
Under the original proposal, the Government would contribute $18 billion through the NZTA administered National Land Transport Fund (NLTF) ($16.3 billion), City Rail Link ($1.4 billion) and Crown Infrastructure Partners ($0.36 billion).
Auckland Council would contribute $10 billion in funding through rates, development contributions and borrowing ($8.45 billion), plus the Regional Fuel Tax ($1.5 billion).
But that hasn’t gone according to plan – something highlighted in the AT submission to the MoT on the Government Policy Statement on land transport from last month.
It claims while NZTA was expected to come up with at least 50 per cent of the costs, it had in fact been closer to 40 per cent.
“This has led to delays and required additional council support.
“While these issues have been managed so far, Auckland Transport will be unable to deliver its part of the ATAP programme if this situation continues.”
I decided to take a look at NZTA funding data. The below graph shows the total amount of funding Auckland had approved from the National Land Transport Fund (NLTF), which the NZTA administer. As you can see, Auckland’s share in recent years has been below the city’s population share. It was above share in the early teens but over the 10-year period it averages out below our population share. This is doubly concerning when you consider that Auckland has grown faster than other parts of the country.
It’s also worth pointing out that the results above don’t include funding for the City Rail Link so it is not all crown spending on transport, although from what I can tell, it would still be just on or more likely below the line still.
That leaves the question of, if not Auckland, who is getting more than their share. The graph below shows just the share of funding over the last 10-years and compares it to population. As you can see, Auckland has had slightly less than its share in population while the Waikato has done very Wellington.
One thing that might balance this out a bit for Auckland will be the NZ Upgrade Programme, in which Auckland saw the bulk of the projects. As such it’s also rumoured that it means Auckland won’t get a fair share of the government’s post-covid ‘shovel ready’ projects.
The submission mentioned earlier is AT’s one on the draft Government Policy Statement and that gives a bit more detail as to the problem. It seems the issue stems from the fact that while NZTA data shows they fund about 51% of the costs of projects and services that qualify, there are a number of projects the NZTA think don’t qualify.
Some of these issues arise from the scope of projects that the NZ Transport Agency is willing / or able to consider through its funding processes. For example, although technology is considered a key enabler of modern transport systems and was highlighted as a key ATAP priority, we have historically struggled to have technology projects funded by the Agency.
These problems of funding share are further complicated by the cumbersome funding application and approval processes. Simply put, these processes are taking too long, are very inflexible, reduce certainty and increase cost. While we appreciate the need for a sound business case process, a more streamlined solution needs to be found – particularly where there is an agreement to an overarching programme such as ATAP. We will continue to work with the NZ Transport Agency to improve these processes, but seek stronger guidance from the GPS to address the issues we have encountered.
And their submission welcomes some of the changes signalled in the GPS but think it needs to go further with the following changes
- set clearer expectations for certainty of funding for all projects in the ATAP programme list
- broaden the scope of what can be funded from the NLTF to ensure all projects in the ATAP programme list are fundable (some categories, such as technology and advanced property purchases, where there has been difficulty gaining funding although they were part of the programme)
- set clearer expectations around the achievement of the 50/50 funding share assumption that underpins the ATAP programme
- set clearer expectations of a streamlined business case process, building on the steps that NZTA has already taken to remove the need for strategic cases for ATAP projects.
We think these expectations could be set out through further elaboration of the Government Commitment in Table 4 of the document. This codification of an existing agreement would avoid the issue of precedence for other parts of the country.
We also suggest considering a specific activity class for ATAP, along with the other Government Commitments. A stated allocation is already included in Table 4. Turning this into an activity class would enable the GPS to more clearly set out the expectations for ATAP and remove some of the uncertainty about the overall allocation remaining with the general activity class structure.
Government can also have greater confidence in the changes proposed, above as the ATAP programme is governed by a standing group of Chief Executives under the ATAP Governance Group.
The changes proposed above would remove much of the churn we currently encounter in navigating the current funding process. Importantly, they would allow AT to concentrate on delivery of the agreed ATAP programme, offer certainty to the construction sector and enable us to pursue new and innovative procurement mechanisms based on that greater certainty.
Having a dedicated ‘Auckland’ funding class sounds like a good idea – although it would be good if we could still compare the activity classes they’re a part of ?
Finally, AT get close to saying it but don’t quite so I will, I wonder if they should be bulk funded. By that I mean that they get a set amount of money as a blank cheque with it left up to AT to decide how to spend it. The drawback to that is they’d probably spend it on a bunch of big new roads.
At least in the interim, the NZTA needs to step up and start funding Auckland properly.