Creating a system that improves planning and investment in infrastructure and services.
Improved planning and investment in infrastructure and services is essential
The Ministry has a large programme of land transport work that falls under this intermediate outcome. However, we also provide advice on aviation, maritime and rail modes that 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 annually, 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 New Zealand’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.
Some government transport infrastructure lasts for decades or longer, and it influences business investment and local urban development patterns. This means our decision-making needs to consider these factors, and current and likely future demands, alongside our capacity to fund our 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.
It is critical that we continue to improve our planning and investment in transport infrastructure and services to get the best possible results for all New Zealanders.
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.
The government land transport sector largely operates on revenue generated from taxation and local authority rates. This contrasts with the aviation, maritime and rail sectors that largely operate in competitive markets.
The Ministry needs to understand the drivers of transport demand in each sector, and how these change over time and impact on the infrastructure and services we need in the future. We also need to be well connected to industry and remove unnecessary blockages in our transport supply chains.
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 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.
The aviation sector includes domestic and international aviation services and supporting infrastructure.
The air traffic system is operated commercially by the Airways Corporation. Airport infrastructure has a mixture of providers including local authorities, shared government-local authority entities and private entities. The government has up to 50 percent shareholdings in Christchurch International Airport Ltd, Dunedin Airport Ltd, Hawke’s Bay Airport Ltd and Invercargill Airport Ltd. These are all managed by The Treasury. The Ministry administers the government’s partnership interest in six regional airports and operates the Milford Sound/Piopiotahi Aerodrome in the Fiordland National Park.
Each year around 2.5 million visitors arrive in New Zealand, contributing nearly $9 billion to the New Zealand 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, New Zealand 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.
The maritime sector operates in a competitive market, although most of New Zealand’s major sea ports have a majority or significant shareholding that is held by local authorities.
International shipping carries the vast majority of New Zealand’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, New Zealand 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.
The government owns KiwiRail. KiwiRail has responsibility for the rail track network and moves approximately 15 percent of New Zealand’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 New Zealand’s roads and 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 achieve that, the government supported the KiwiRail Turnaround Plan and, through it, has already committed $750 million in KiwiRail.
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 - Ministry impacts and actions
The Ministry’s intended impacts in this area over the next three 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
The Ministry will develop advice to address the pressures on the transport funding system. This is a consequence of significant issues including the rebuild of Christchurch transport infrastructure and Auckland’s decisions on its future transport priorities as set out in the new Auckland Plan. 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 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 includes future freight growth, demographic changes nationally and within our communities, and changes in urban form and population density. As part of this, we will develop a ‘forward look’ to help the transport sector better plan their investments in the transport system.
New Zealand does not have an integrated network planning approach to the transport system and we will examine whether this gives rise to any inefficiencies in our transport system. 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 where they are unnecessary.
Following a recent review of the Land Transport Management Act, we will continue to progress legislation to implement a range of government policy decisions to reform the land transport planning and funding system, tolling and public–private partnership arrangements.
The Ministry will continue its work to better understand a range of alternative funding approaches including the potential benefits of increasing transport taxes or delaying major transport projects.
We will also explore how non-pricing approaches, such as network optimisation, can be used. Network optimisation provides an opportunity to improve the capacity and safety of the existing transport network using traffic engineering and other improvements. We will work with other stakeholders to identify network optimisation opportunities and reduce immediate demands for additional transport capacity on the network.
The Ministry will work with the Ministry for the Environment to provide transport policy input to the reform of the Resource Management Act. We will also work with the Department of Internal Affairs on amendments to the Local Government Act.
The Ministry will also continue to work closely with the Auckland Council on how the Council implements the new Auckland Plan.
Impact 5: Ministry provides good investment advice (in the national interest)
We have been working with the Auckland Council and other stakeholders on a study of central city access to address the matters identified in the government’s 2011 review of the City Centre Rail Link Business Case. Completing this work will enable the government to reconsider the merits of the project and make any decisions on next steps.
We will also advise the government on progress in implementing the KiwiRail Turnaround Plan and its funding requirements. The Ministry has also been analysing the potential national economic benefits that a ferry terminal at Clifford Bay might bring. Depending on the outcome of that analysis, the Ministry may be required to undertake further work in this area.
Impact 6: Enough money is raised efficiently and fairly to fund investment priorities
The next Government Policy Statement on Land Transport Funding needs to be prepared for 2015. This will provide certainty for the land transport sector for the subsequent 10 years by setting out the government’s priorities for expenditure from the National Land Transport Fund. It will also determine how funding is allocated between activities such as road policing, road safety promotion, state highways, local roads and public transport.
As part of our work on the next Government Policy Statement, we will review the role of land transport in supporting social cohesion and public health benefits, and assess whether any further guidance on these issues is required. We will also provide further guidance on the policy rationale for the activity class funding within the Government Policy Statement.
The Ministry undertakes the analysis necessary each year to advise the government on options to alter the level of fuel excise duty and road user charges to meet land transport funding requirements.
We also prepare regular forecasts of revenue for the National Land Transport Fund over a 10-year period for use in Crown accounts, Budget forecasts and forward planning by the New Zealand Transport Agency.
We will continue our work on the adequacy of the current funding system to meet requirements and how alternative revenue approaches could be used in the future