Improved planning and investment in infrastructure and services

The Ministry has a large programme of land transport work that falls under this intermediate outcome. We also provide advice on aviation, maritime and rail modes to improve planning and investment in their infrastructure and services.

With the government investing approximately $3 billion annually in land transport, and local government committing approximately $1.2 billion, it is essential that the transport sector continues to lift the quality of transport planning and investment decisions. This includes the Ministry, transport Crown entities, local authorities and private sector participants in the transport sector.

As part of that, we need to ensure the transport system provides essential road and rail routes that connect well to our sea and air ports, and support NewZealand’s exporters. We need roading networks that meet the needs of local communities and public transport that provides efficient and effective choice of modes in our metropolitan centres. 

Transport infrastructure often lasts for decades or longer, influencing business investment and local urban development patterns. Decision-making therefore needs to consider these factors and current and likely future demand, alongside capacity to fund transport priorities. Existing revenue sources for transport are coming under pressure for a number of reasons. We need to consider how we can best meet the cost of the transport system in the medium term.

The Ministry’s role in improved planning and investment in infrastructure and services

The Ministry’s role is to analyse the transport system across all its transport modes to identify opportunities to enhance where, how and when investments should be made, particularly by the government. It also provides information to enable other participants in the transport system to make their own best transport choices. In fulfilling this role, the Ministry supports the achievement of the government’s Business Growth Agenda.

Road transport infrastructure is largely funded from revenue generated from fuel excise duty, road user charges and local authority rates. This contrasts with the aviation and maritime sectors that are largely self-funded. Rail freight, metro rail and bus public transport are funded from a mix of revenue and central and local government contributions.

The Ministry needs to understand the drivers of transport demand in each sector, and how these drivers change over time and impact on the infrastructure and services that New Zealand will need in the future.

Land transport sector

The Ministry has a direct role in the land transport system with government investment of approximately $3 billion a year.

The Ministry has to form a view on both what the right level of investment is in the land transport system, and when that investment should be made. However, we know that the investment equation is dynamic. It changes as the demand for and supply of transport adjusts over time, and in response to the country’s fiscal constraints.

The Ministry has a role in advising the government on the demands for future passenger travel, and for walking and cycling. Analysing changing demographics and the economic rationale for increasing expenditure in these areas inform our decisions for future policies.

The Ministry advises government on a range of planning and investment issues including:

  • the design and operation of the planning and funding system as set out in the Land Transport Management Act
  • the Government Policy Statement on Land Transport Funding, which sets out the government’s priorities for expenditure from the National Land Transport Fund
  • specific advice on large transport investment decisions outside the National Land Transport Programme
  • how revenue for the land transport system can be raised efficiently and fairly to fund investment priorities.

Aviation sector

The aviation sector includes domestic and international aviation. The government is a joint venture shareholder in six domestic airports. In addition, the government owns and the Ministry operates the Milford Sound/ Piopiotahi Aerodrome.

Each year around 2.5 million visitors arrive in NewZealand, contributing nearly $9 billion to the NewZealand economy. The vast majority of those passengers arrive by air. Aviation is also essential to the export of time-sensitive goods, which include fresh horticulture and seafood products. Effective air services allow firms to shorten delivery times, minimise inventory costs and limit interruptions to production.  

International aviation is governed by the Convention on International Civil Aviation. As a party to the Convention, NewZealand has very clear obligations including having a comprehensive safety and security regime based on the standards and recommended practices prescribed by the International Civil Aviation Organization. 

Maritime sector

International shipping carries the vast majority of NewZealand’s import and export goods, and the cruise industry plays an increasing role in our tourism market. With sea freight accounting for 99.5 percent of our exports and 99.4 percent of imports by volume, NewZealand is economically dependent on high-quality, timely, safe and cost-effective international shipping services.  

These services in turn rely on efficient and competitive sea ports as the critical nodes that represent the land-sea interface, or gateways, for our exports and imports. Our port sector needs to be able to anticipate and respond to changing shipping patterns, vessel capacity, advances in freight handling technology and predicted future freight demands.

Rail sector

State-owned enterprise KiwiRail has responsibility for the rail track network and moves approximately 16 percent of NewZealand’s freight – largely high volume and heavy freight. The metro rail network also carries large numbers of urban commuters in Auckland and Wellington. Auckland Transport and the Greater Wellington Regional Council own the rolling stock that provides urban passenger services. 

The rail system reduces the pressure on NewZealand’s roads and by doing so can provide safety, health and environmental benefits. 

The government wants KiwiRail to compete on a commercial basis with other freight transport modes, with services funded from customer revenue. To assist KiwiRail in achieving this, the government has invested $844 million in the 10-year KiwiRail Turnaround Plan to 30 June 2014 and an additional $198 million to 30 June 2015.

To deliver improved planning and investment in infrastructure and services, the Ministry will:

  • ensure central and local government have good frameworks for investment decision-making
  • provide good investment advice that is in the national interest
  • ensure enough money is raised efficiently and fairly to fund investment priorities.

Improved planning and investment in infrastructure and services – What we intend to achieve

The Ministry’s intended impacts in this area over the next four years, and the projects and activities that will deliver them, include the following:

Impact 4: Central and local government have good frameworks for investment decision-making

National Land Transport Fund

The Ministry will develop advice to address the pressures on the transport funding system. The pressure is a consequence of significant issues including the rebuild of Canterbury’s transport infrastructure and ongoing needs for significant improvements in Auckland’s transport infrastructure. In developing our advice, we will need to address a range of options, including reviewing priorities, timing of investments, setting revenue levels and the use of other funding mechanisms.

We will implement increases, agreed by the government, to the levels of fuel excise duties and road user charges on 1 July 2014 and 2015. We will continue to monitor the effectiveness of these changes and the ongoing need and use for the revenue generated. Work is underway on amending the short-term borrowing facilities available to the NZ Transport Agency so that the revenue collected can be spent as efficiently as possible. We will also monitor progress made towards a public-private partnership to construct the Transmission Gully route of the State highway network, ensuring the government’s land transport priorities can be delivered as required.

The Ministry will continue its work to better understand the range of alternative funding approaches to land transport and their impact on demand, and the operation of the transport system.

The Ministry has a key role in ensuring that investment in the NewZealand transport infrastructure takes account of economic and population growth, and the opportunities that arise for coordinating road, rail and sea transport linkages (intermodal solutions). 

The Ministry will work with the key players (local and central government funders and regulators, the NZ Transport Agency, the transport industry and others) to ensure that a strategic view of how best to deliver efficient and cost-effective long-term transport solutions is explicitly factored into decision making.

We will continue our work to understand, at a more detailed level, the relationship between good land transport planning and management, and economic development and productivity.

We will also undertake further work to enhance our understanding of the drivers of future demand for transport across a range of areas. This will include future freight growth, demographic changes nationally and within our communities, and changes in urban form and population density. We have started a demand modelling project to begin to improve our understanding of the demand across all passenger transport modes, which will help to assess where in the transport system investments are best targeted.

We will also engage with business and the transport sector to better understand how they operate, and identify any blockages in our transport supply chains and remove these as necessary.

Intelligent transport systems

In the medium to longer term, new technology will offer NewZealand major opportunities to improve transport productivity and safety, and reduce harmful emissions and fuel use. The Ministry advised the government on an intelligent transport system action plan that will enable decisions to be taken on how new technology can be applied in the NewZealand context.  The action plan provides a strategic overview of the government’s aims for the transport system and will help inform government and non-government decisions about investing in, and deploying, new transport technologies.  

Impact 5: Ministry provides good investment advice (in the national interest)

Auckland transport

Auckland is forecast to account for over 60 percent of NewZealand’s population growth through to 2030. This growth will drive a significant increase in demand for travel. Improving Auckland’s transport system to enable it to work effectively, efficiently and safely is crucial to improving the contribution the city can make to national economic growth. 

The government is currently investing around $1 billion a year in Auckland transport, including completing the Western Ring Route and improving and electrifying the metro rail network. This investment will deliver significant benefits across the Auckland transport system.

The Ministry will continue to work with Auckland stakeholders on the next generation of major projects, and provide advice to Ministers on projects where Crown investment may be required.

The Ministry will also monitor the implementation of the government’s Auckland Transport Package. The package is focused on accelerating key State highway projects that will address congestion, capitalise on the benefits of the Western Ring Route and improve access to Auckland airport.

The Ministry will monitor progress on the Auckland City Rail Link project and provide advice to the government as required.

KiwiRail investment

The Ministry will continue to work with the Treasury on progress in implementing the KiwiRail Turnaround Plan and its funding requirements.

Regional airports

The Ministry will provide advice on proposed divestment of the six regional airports where the Crown has a joint venture partnership interest.

Impact 6: Enough money is raised efficiently and fairly to fund investment priorities

Government Policy Statement on Land Transport

The Government Policy Statement on Land Transport is a key lever for the government to deliver its land transport priorities. The next Statement is expected to be released in 2014 and will come into effect on 1 July 2015. This will set out the government’s priorities for expenditure from the National Land Transport Fund for the next 10 years. It will also determine how funding will be shared between activities such as road policing, road safety promotion, State highways, local roads and public transport.

We prepare regular forecasts of revenue for the National Land Transport Fund. These inform the Ministry’s advice on funding pressures and options for managing these, including the required level of fuel excise duty and road user charges. We will also consider alternatives to revenue rate increases like reviewing priorities, altering the timing of investments and the use of borrowing or tolling. The forecasts are also used by the Treasury and for forward planning by the NZ Transport Agency.

We will continue to investigate the adequacy of the current funding system to meet long-term requirements and alternative revenue approaches that could be used in the future.

Improved planning and investment in infrastructure and services – how performance will be assessed

Outcome measures

Decreased network congestion in the A.M. peak period in the five largest metropolitan areas.

Congestion index (min delay/km), March surveys

 

2009

2010

2011

2012

2013

Auckland A.M. peak

0.88

0.76

0.66

0.69

Not yet available

 

Tauranga A.M. peak

0.35

0.27

0.33

0.37

Not yet available

 

Wellington A.M. peak

0.42

0.57

0.55

0.54

Not yet available

 

Christchurch A.M. peak

0.64

0.75

*

*

Not yet available

 

Hamilton A.M. peak

0.52

0.40

0.52

0.50

Not yet available

 

*Comparable data not available due to impact of Canterbury earthquakes

Increased level of freight moved by KiwiRail.

 

2008/ 09

2009/ 10

2010/ 11

2011/ 12

2012/ 13

Freight moved by KiwiRail (tonne-kms in billions)

4.0

3.9

4.2

4.6

4.6

Impact measures – Ministry provides good investment advice (in the national interest)

Quality of final advice to government on major investment projects is externally assessed by New Zealand Institute of Economic Research as being 8.0 out of 10 or better.

The New Zealand Institute of Economic Research assessed two significant papers that related to major investment projects (relating to the Clifford Bay ferry proposal and KiwiRail) in 2012/13 and assessed both papers as 9 out of 10.

Impact measures – enough money is raised efficiently and fairly to fund investment priorities

Growth in revenue (in real terms) remains stable in relation to change in traffic volumes.

Revenue growth relative to kilometres-travelled growth* in percentages.

 

2008/ 09

2009/ 10

2010/ 11

2011/ 12

2012/ 13

Fuel excise duty and light RUC revenue growth

93

101

101

99

102

Fuel excise duty and light RUC vehicles kilometres-travelled growth

99

100

99

99

100

Heavy vehicle RUC revenue growth

95

99

108

106

105

Heavy vehicles tonnes- kilometres growth

96

95

101

103

Not available

* 2007/08 is base year, calculations adjusted to 2011/12 dollars and percentages rounded.

All questions or issues raised by a cross-agency forecasting group, that reviews the results of the Ministry’s revenue forecasting model, are resolved to the satisfaction of the group prior to the next forecasting round.

Achieved

 

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