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. We also provide advice on aviation, maritime and rail modes that improves 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 decision-making needs to consider these factors, and current and likely future demands, 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.
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. In fulfilling this role, the Ministry supports the achievement of the government’s Business Growth Agenda.
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 drivers 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 has a role in advising the government on the demands for future passenger travel, as well as walkways and cycleways. Analysing changing demographics and the economic rationale for increasing expenditure in these areas informs 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.
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 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.
Government-owned 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 in achieving this, the government has invested $750 million in the KiwiRail Turnaround Plan to 30 June 2013 and an additional $94 million to 30 June 2014.
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 Canterbury’s 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 implement increases, agreed by the government, to the levels of fuel excise duties and road user charges on 1 July 2013, 2014 and 2015. We will monitor the effectiveness of these changes and additional short-term borrowing agreed in 2012. 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 provide advice as required.
The Ministry has a key role in ensuring that investment in the New Zealand 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 New Zealand Transport Agency, KiwiRail, port companies 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, including future freight growth, demographic changes nationally and within our communities, and changes in urban form and population density. As part of this, we have commenced work to 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.
In the medium to longer term, new technology will offer New Zealand major opportunities to improve transport productivity and safety, and reduce harmful emissions and fuel use. The Ministry will develop an intelligent transport system action plan that will enable decisions to be taken on how new technology can be applied in the New Zealand context and when New Zealand should be looking to invest in and deploy new technologies.
Impact 5: Ministry provides good investment advice (in the national interest)
Auckland is forecast to account for over 60 percent of New Zealand’s population growth to 2030. This growth will drive a significant increase in demand for travel. Making the necessary improvements to 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 work with Auckland stakeholders on the next generation of major projects. We will provide advice to Ministers on projects where Crown investment beyond the National Land Transport Fund may be required, such as the next Waitemata Harbour Crossing.
We will explore opportunities for further work with Auckland Council on its transport strategy to address key concerns about affordability and effectiveness outlined in the Government Response to the Auckland Plan. In particular, there is a need to improve alignment on transport priorities and agree a common strategy for medium to long-term transport investment that meets both central and local government goals.
The Ministry will monitor progress of the Auckland City Rail Link project and provide advice to the Minister as required.
The Ministry will continue to work with the Treasury on progress in implementing the KiwiRail Turnaround Plan and its funding requirements.
In November 2012, Cabinet agreed that the business case developed by the Ministry of Transport for a proposal to develop a ferry terminal at Clifford Bay was strong enough for further consideration of the project’s potential feasibility. This involves testing assumptions around the commercial parameters in the business case with key stakeholders. The Ministry of Transport is leading this stage using a specialised project team, led by a Commercial Director. Further work may continue, depending on Cabinet decisions in mid to late 2013.
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
The Government Policy Statement on Land Transport Funding is a key lever for the government to deliver its land transport priorities. The next Government Policy Statement on Land Transport Funding needs to be prepared for 1 July 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 much funding is required, and how funding will be shared 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. We will also review the policy rationale for the levels and distribution of proposed funding.
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.