Last week the Herald revealed that Waka Kotahi is worried that if too many people stop driving and use other modes that it will hurt their revenue.
Transport officials are worried that a green revolution could wipe hundreds of millions of dollars off their future budgets.
But it’s buses and trains rather than electric cars that pose the biggest threat to the Government’s $4 billion war chest for funding new transport projects, according to advice obtained by the Herald under the Official Information Act.
Each year, Waka Kotahi NZ Transport Agency rakes in about $4b a year, mainly from fuel taxes and road user charges.
That money is recycled into everything from maintaining existing roads to building new ones, investing in public transport infrastructure, subsidising public transport ticket costs, and road safety campaigns.
The agency has publicly fretted that this funding source is under threat as the transport system moves away from emissions-intensive fuels. It has successfully convinced Transport Minister Michael Wood that it needed an urgent review into the sustainability of the fuel tax system, despite previous policy advice saying revenue would be stable until the end of the decade.
Speculation has focused on the role of EVs, which currently freeride on the public transport system, paying no fuel taxes (because they use no fuel), and paying no road user charges, thanks to an exemption that will run until 2024.
The Waka Kotahi modelling that sparked Wood’s review – released to the Herald under the Official Information Act – shows that it isn’t EVs, but increased public transport use and cycling that really has Waka Kotahi spooked.
In one way it’s quite funny that Waka Kotahi are playing right into the caricature of themselves that has been built up over many years of being a car/motorway loving and public transport/cycling hating organisation.
While there are definitely some like that in the organisation, that’s not what is really driving this concern though. Rather, Waka Kotahi are responsible for managing the National Land Transport Fund (NLTF), and the reality of addressing climate change means we need fewer people to be driving. The NLTF is made up of fuel taxes, road user charges and registration and licencing costs.
This modelling is looking at the potential impact on the NLTF of the various scenarios drawn up by the Climate Change Commission (CCC) and the Ministry of Transport (MoT) on how to reduce our emissions.
Extrapolating existing trends under a business-as-usual scenario would continue to see driving increase and as a result, revenue from existing sources would increase from $4.4 billion now to over $6 billion in 2050.
The Climate Change Commission’s scenarios assumed an unrealistically high level of uptake in electric vehicles, and limited levels of mode shift. Waka Kotahi’s modelling seems to suggest that scenario would keep vehicle travel fairly similar to what it is today and that would mean revenue stays roughly the same out to 2050.
The scenario that drives the Herald’s headline though comes from the Ministry of Transport and the Pathway 4 option in their green paper. That scenario was developed in response to the emissions reduction target set by the Climate Change Commission, but with an updated prediction for EV uptake. It calls for an almost 40% reduction in travel in cars by 2035 and an over 55% reduction by 2050. Waka Kotahi suggest this would see the amount of annual revenue into the NLTF drop to about $3.8 billion by 2050.
There are a number of reasons this may not be the catastrophe Waka Kotahi seem to worry about.
- While mode shift will reduce some revenue, it will have other benefits. Fewer cars on the road will reduce somewhat the pressure on maintenance but perhaps more importantly, it will reduce the pressure to build more roads. Waka Kotahi currently spend around $1 billion annual on new and improved state highways and with less pressure on them, the focus only needs to be on lower cost improvements.
- More people on public transport will require us to run more buses, trains and ferries but the scale of change needed in our big cities, where we’ll need to see a 40-60% reduction in car use, means we should see public transport become more efficient and thereby improving the percentage of costs covered by fares.
- There will be many other wider economic benefits from mode shift. Fewer cars on the roads should make for more efficient freight movements and fewer emissions combined with more people using active modes will lessen pressure on the health system etc. Over the last few years, governments of both flavours have poured a lot of additional money into the transport system by paying directly for some projects through schemes like the NZ Upgrade Programme. There’s no reason they couldn’t just provide more direct funds to Waka Kotahi, especially given the wider benefits mode shift would deliver.
To me the biggest risk here is not the funding but that Waka Kotahi still do yet understand that it is their job to drive mode shift. By and large they still seem very much at the stage of greenwashing and pretending that adding a cycleway to the side of a massive highway project is all they need to do.
The government in their Draft Emissions Reduction Plan have chosen a figure between the CCC and MoT scenarios. The draft ERP calls for a 20% reduction in light vehicle travel so about half that of what the Ministry suggest we need – though I guess that figure will change in time.
Finally, the Herald give the last word to the truckers who, as usual, don’t like money being spent on things that aren’t roads.
They argue that the increase in public transport subsidies funded by this government has transferred funding generated from their expensive road user charges, to public transport, at the expense of funding improvements to roads.
Ia Ara Aotearoa Transporting New Zealand (formerly the Road Transport Forum) chief executive Nick Leggett said that his organisation was “always concerned when we see information about a reduction in funding for roads”.
“The cost of maintaining roads has increased 30 per cent in the past five years. With no signal of any increase in budget, and possibly even less money available in the future, this is more bad news for people who think maintaining roads is a job for government.
“And that’s before we even start on new road projects, which seem to be on hold,” he said.
He said that his members, road freight transport operators, contributed heavily to the National Land Transport Fund via RUC, but were beginning to see less and less benefit from their contributions.
If we as a nation achieve the goals in the ERP, perhaps the single biggest beneficiaries of it will be the trucking companies. With effectively 20% fewer vehicles on the roads, and more in the big cities, it will make it much faster and more reliable for trucks to get around. How could they not like that?