sign up log in
Want to go ad-free? Find out how, here.

Crown to top up National Land Transport Fund with a $2 billion loan, contributing towards a record $24.3 billion of infrastructure investment being planned for the next 3 years

Crown to top up National Land Transport Fund with a $2 billion loan, contributing towards a record $24.3 billion of infrastructure investment being planned for the next 3 years

The Crown has agreed to provide a $2 billion loan to top up the pot of funding Waka Kotahi - NZ Transport Agency (NZTA) uses to grow and maintain the country’s transport network.

The loan will contribute towards the $24.3 billion to be invested in the 2021-24 National Land Transport Programme, unveiled on Tuesday.

The new programme is nearly 44% larger than the 2018-2021 programme.

The idea behind the National Land Transport Fund is that it’s largely funded by transport network users, and that the NZTA decides how funding is allocated independently of the Government.

So, the National Land Transport Fund is mostly funded by road user charges, fuel excise duties, vehicle registration fees, and local council rates.

However, the Government has in recent years provided additional funding to NZTA for specific projects, via the NZ Upgrade Programme and Provincial Growth Fund for example.

There’s been an acknowledgement for some time that the user-pays model the National Land Transport Fund is based on is insufficient to cover the cost of getting the country’s transport infrastructure up to scratch.

So now the Government is offering to lend NZTA $2 billion to use as it wishes for its National Land Transport Programme. The Crown will borrow the money to lend to NZTA, rather than it enabling NZTA to issue the debt itself.

NZTA said the terms of the loan are yet to be agreed. However, it assumed the facility will be available and fully utilised within the next three years, and that no debt repayments would be made in the next 10 years.

The bulk of the funding will go towards roading. Here’s a high-level breakdown of how the funding will be invested.

  • Road, walking and cycling network operations and maintenance - $7.2 billion
  • Local, regional and state highway road improvements - $6.6 billion
  • Road to Zero safety improvements - $3 billion
  • Public transport services - $2.6 billion
  • Public transport infrastructure - $2.3 billion
  • Rail improvements - $1.3 billion
  • Walking and cycling improvements - $1 billion
  • Miscellaneous (includes coastal shipping and long-term planning) - $450 million

For more on specific projects that will be funded, see a copy of the National Land Transport Programme.

Commentary from Transport Minister

Transport Minister Michael Wood said: “This NLTP marks a step-change with nearly $6 billion being invested in public transport and walking and cycling - a nearly 40% increase compared to the previous three years.

“To further reduce emissions and help freight move efficiently, the NLTP delivers $1.3 billion to implement the NZ Rail Plan and $30 million to support coastal shipping. There will be further announcements on how this will support moving freight along the blue highway in the future.

“Safety remains a top priority for this Government and we’ll be investing $2.9 billion in our road safety plan Road to Zero to help prevent tragedies. This will include making 17 high risk state highway corridors safer, with 51 intersection improvements, 25 new roundabouts, and 164kms of safety barriers.

“Almost $7 billion will be invested in local road and state highway maintenance, which will see around 7,000 lane kilometres of state highway and 18,000 lane kilometres of local roads renewed. The previous government flatlined road maintenance spending, so since coming into government, we have boosted it by nearly 50 per cent to help bring our roads back up to scratch.

“Our transport network is increasingly being impacted by severe weather events as a result of climate change, so on top of our road maintenance investments, a further $3.9 billion will be spent on road improvements that will help connect communities, ensure the reliable movement of freight and improve resilience across the country.

“This will see important projects like Te Ahu a Turanga Manawatū Tararua Highway and the Waikato Expressway completed.”

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

34 Comments

Not sure why general taxation is needed to subsidise roads. If there is a shortfall in fuel tax and RUC it's still going to be there in 10 years, why not raise them now? That way you get the additional bonus of slightly reduced demand

Up
3

I believe it's related to what the public consider to be palatable costs relating to fuel tax and RUC. 

Up
0

Plus the Pressure National will pile on about Labour been the tax increase government. Even though alot of it is to make up for the 9 years of neglected maintenance , while everything was piled into the roads of national significance. 

Oh well , bang it on the credit card. 

Up
2

They're not "roads of national significance", they're "roads of National significance"

Up
2

Could it be that being able to move goods and people around the city and country facilitates trade and employment opportunities? 

Up
1

Sure, but why move the costs away from those experiencing the benefits? Moving the costs away from road vehicle users/operators means the market gets distorted, without even taking into account our emission reduction goals

Up
2

In theory agree. We need to start gaining some familiarity with the true cost of certain services. The problem for politicians is everyone baselining their expectations against what they see in other countries. It would probably be political suicide to step too far outside the "norm" which is evidenced by basically every other developed country. Highly subsidised transport & farming sectors.

Up
0

Fuel tax in the UK is 58p/L (1.12 NZD), in Germany it's 0.65 Euro/L (1.08 NZD), both much higher than our 77c/L. Sure ours may be higher than Australia and the USA, but our rates are still low compared to most countries we normally compare ourselves to.

Up
3

I agree, however I suspect we are in the minority of rational voters who are happy to pay a fair price for something we get benefit from. 

Elections and the results thereof so often seem to be emotion rather than logic driven.

Up
1

If we are serious about meeting our Paris obligations , then a bigger portion  should have gone to  rail , coastal shipping and public transport. 

Up
3

This is an exceptionally large package for rail and public transport, historically speaking.

Less than 1/4 going on road improvements (which may be capital projects), that's a significant change from what has gone before.

Up
1

Indeed, a zero carbon nuclear powered State owned coastal shipping line would solve a number of issues simultaneously....

Up
0

It's well worth reading the Programme - thanks for the link Jenee.

Largely on the right track (intended). Bit biased to big scale, missing just how local we will be shortly - say within a decade. Also they - like almost everyone - make the mistake of calling $$$$$ 'investment', when it's actually allocation of real resources, real energy. And done with debt - which an expectation that the future will pay. Which it increasingly can't - indeed the need to borrow proves it already can't.

But a lot of the initiatives are well targeted, given the James Shaw type vision of what is ahead. In actual fact, we will be moving much, much less (covid hit their revenue, I'll bet - there is more to come and deeper). And we will be migrating back to the land, hollowing out the cities. They clearly don't have their heads around that.

Up
0

I'm with you on your thinking of this in terms of an investment of real resources, but what's your concern about 'debt'? Do you mean debt in dollars (which is relatively meaningless) or debt in terms of resources? 

Up
0

Debt is an expectation of - indeed a proxy for - future energy and future resources to apply it to. To do tha paying-back. I can tell you there isn't enough planet - now - to do the paying back. https://www.bbc.com/future/article/20120618-global-resources-stock-check

So debt is stealing from the future, and if we did our research/due diligence, we'd realise this was the case. We have chosen not to.

So then, I ask: Whither debt? And I can only see one scenario; we keep on piling it up, keep on reducing the 'cost' of it (lowering interest-rates even below zero, which makes a nonsense of the economics we were all fed). Eventually, mass pretension (that it will one day be repaid) has to implode. At that point, what is money worth? Who will believe in what?

Up
0

I may need to return serve your recommendation to read Graeber - Debt the first 5,000 years. Private debt to unscrupulous, parasitical financiers is dangerous. But, Govt debt is just a count of the net financial assets that Government has put into the economy (spent but not taxed back yet). RBNZ have directly financed transformational change in the past (housing), and will need to again to support the transition. What is important is what Govt spends it's dollars on and the policy and legal settings it puts in place to guide how money and natural resources are used in the economy .

Up
1

net financial assets that Government has put into the economy (spent but not taxed back yet)

Sorry, that's debt, right? Not 'financial assets - in fact, I don't regard finance as anything to do with assets. I regard the stuff you can buy, or buy and use to process more stuff, as assets. I regard the rest as proxy. No stuff; no proxy underwrite (meaning invalid issuance). Taxing begs the question: Taxing what? And the answer is: activity; always energy, always resources. If they're not there? No taxpaying. You will have seen this recently; less travel through covid; less fuel-tax.

Up
0

164km of safety barriers.

I hope that the bulk of this is for median barriers. Before the road was widened north of Rangiriri, sections of the wire median barrier  were taken out by cars/trucks on an almost weekly basis. So it was EXTREMELY useful in reducing death within the innocent oncoming vehicles. I do not care one jot for the incompetent drivers who drive off to the left hand side of the road. Their passengers I suppose yes, but the drivers. No. For me the priority should be way more in saving the innocent oncoming passengers.

Median barriers please.

Up
1

Trust me, you're not going to be disappointed...

For those who liked overtaking they may feel differently!

Up
0

Anyone has worked out the cost benefits of the investments in walking and cycling?

I think the funding is still too low to make an impact and the top up loan comedy is basically pulling in future budgets.

NZTA should be allowed to issue infrastructure bonds to the public to raise their capital in transport infrastructure investments. With a bond in place, they will then have an incentive to ensure every project that they embark on will have a realistic cost benefit to all stake holders and save the agency from popular politics and vanity projects.

Up
0

Cost benefit ratios are an imperfect metric, and while they may seem impartial they are also subject to being "worked". They do not translate well at all across different investment classes, and the outcomes prove this time and time again.

Unfortunately in my experience it has often been the cost benefit ratio which has been misused in isolation by politicians to justify vanity projects that are clearly not a sensible use of public money.

Up
1

They were a meaningless ratio - sort of like addressing which would be the driest deckchairs tomorrow.........

That 'stakeholders' comment is starting to identify the remaining dinosaurs, eh? Joan of Arc was a stakeholder, from memory......

Up
0

CBA's also don't account for the fact that road users are heavily subsidised and don't pay for their externalities.

The key one being congestion pricing.

Without it the only response is congestion (or poor regulation) from which the CBA loves to produce high travel time savings.

With the proper pricing in place (initially cordons & then dynamic congestion tolling by time & place) there would be a much reduced need for expensive additional roadiing capacity infrastructure.

The BCs for PT, cycle and walk would rise substantially.

Up
1

Yes!

Up
0

Who knows what nebulous "benefits" are included in such benefit/cost studies.

I would hope that there are no health benefits apportioned to those who use electric scooters and minimal ones for electric bikes because I would imagine that just standing there is not all that good for cardiovascular fitness.  And for some, riding such things would displace what would have been walking or riding an old fashioned push bike.

Up
0

They have tightened up the criteria that can be used but the problem is they can only assess things that can be impartially measured. As a result the metrics are heavily slanted towards roading infrastructure as we have the metrics in place for that (traffic count records, crash statistics, growth assumptions). The real world, and the very shortly arriving future just doesn't dance to this tune and it means we are measuring the infrastructure for the future against the standards of the past. I'm not saying throw the baby out with the bath water, it has a place, but it needs to come down off the pedestal it sits on at the moment a bit, because the outcomes don't seem to be meeting the best interests of the country.

Up
1

??? How can the government find the funds for transport but not more critical issues in society?

Based on marginal wellbeing per capita improvements across all government spending, especially since this addtional funding is effectively taxpayer provided, not road user, surely at least the below provides a better return:

1) Ensuring there are enough ICU beds. Once the borders open covid19 will spread and will put extra demands on hospitals (but at a lower rate with 80%+ vaccination than without)

2) Increasing MIQ capacity so that those in "emergency" situations can get spaces as not all people in "emergency" spaces seem to be able to given the relayed stories in the media.

Also the Labour Party's tax policy was no increase in the fuel excise tax.  This additional funding should have come from road users via that mechanism.

 

Up
0

You might find this article from an ICU doctor interesting on why it is difficult to increase ICU capacity

https://www.newsroom.co.nz/podcast-the-detail/upping-our-intensive-care

Up
0

Good news.

Big councils are at the edge of their borrowing, this will help them with some much needed transport infrastructure.

Up
0

You are starting to sound like a Labour tout.

We have to become more resilient, inevitably using the fossil energy infrastructure to do so. But there is only one, brief, receding, opportunity to get this right. And Labour are in a cleft stick; trying to keep this show on the road while paying lip service to the new show. Their problem is that this one is near-term doomed. They'd be better telling the punters the truth, and asking for support. As long as the punters are promised 'growth', we aren't going to change enough, fast enough. If fast enugh is still possible.

Up
1

Nice programme and objectives - but the level of ambition is shameful. We need a transport infrastructure for the 21st century that is vision-led - not something that tweaks things around the edges. For example, we know that commuting by private car needs to drop massively, that we need safe walking / cycling routes to schools and amenities in all of our communities, and that regional air travel is simply inconsistent with our climate targets. We also have transport routes (and communities) that will be regularly under water or damaged by extreme weather events within the next 30 years. What's the plan for moving them?

The other issue here is the real resources required for these projects - have NZTA or Government done any analysis to test whether it is feasible to deliver these projects in the period, given that they will be competing with other state and private projects for everything from skilled labour to concrete mixers?

 

Up
2

Well put.

Up
0

"The Crown will borrow the money to lend to NZTA",

So the government will borrow back its IOU (NZ Dollar Currency) by issuing a second IOU (a bond) and then re spend its first IOU again instead of just issuing another new IOU.

What a lot of nonsense mainstream economics is!

That is just not how our monetary system operates, every  NZ Dollar Currency (IOU) that the government spends is a brand new IOU. The government never re spends its IOUs, it would be pointless. It would make no difference to its outstanding liabilities.

Borrowing by the government is an interest rate mechanism and not a funding operation and it doesn't even need to do things in that manner, no borrowing is required.  

Up
1

The insanity of a sovereign currency issuing country borrowing money. Even for transport infrastructure.

Up
0