• Road management would be streamlined and administration costs reduced.
• The way roads would be funded would result in much wiser use of our roads and investment in building new ones.
• Road safety would improve for motorists, cyclists and pedestrians.
• The environmental impact of roads would be reduced.
• There would be lower levels of congestion in major urban areas, particularly Auckland.
• The roads New Zealand currently has would be retained.
• The way we pay for roads would be fairer because it would reflect actual use.
• Urgently needed roads in rapidly growing areas such as the Bay of Plenty would be built faster.
• Forestry roads in areas such as Marlborough, Northland and the East Cape would be able to able to be built and maintained without ratepayers footing the bill.
• A greater variety of funding options would be available to pursue projects such as the Transmission Gully road north from Wellington.
• There should be a significant reduction in property rates, especially for rural ratepayers.
• Local authorities would continue to play an important role in running roads.
• Local road companies would be accountable to communities through local authorities - the sole shareholders of local road companies.
• Maori interests would be protected.
• Public transport would be improved and would grow in importance.
• The access that motorists, cyclists and pedestrians currently enjoy to our roads would not change.
• People's privacy would be protected.

Making sure New Zealand has a transport system that meets its needs now and in the future is an on-going process. As part of that process the Government has, since 1994, led extensive public discussion on how New Zealand should fund and manage its roads. Better Transport Better Roads has emerged from that. It sets out a proposal aimed at making sure that, in the future, New Zealand has the roads and transport system it needs.

Better Transport Better Roads is a consultation document. Its purpose is to outline the Government's analysis, the direction of proposed policy, and to provide a further opportunity for interest groups and the public to have their say.

THE NEED FOR CHANGE

For years we have seen steady growth in traffic volumes. Currently, the traffic on our roads is increasing by about 4 percent each year. Also, the way we use our roads has changed. Expanding industries like forestry, dairying and tourism have increased road use in many rural areas beyond their capacity. Population growth in areas such as Auckland, the Bay of Plenty and parts of Waikato has meant that road use in these places is growing more quickly than in other parts of the country.

Some roads are less safe than they could be because they were not designed to carry either the volume of traffic or the amount of heavy vehicles they do. We can improve the safety of our roads, and reduce the human and financial costs that crashes create. The increasing use of our roads also puts greater emphasis on the environment - the environmental impacts of road use can be reduced.

Traffic growth is causing increasing congestion problems in many, particularly urban, areas. It is also increasing maintenance costs and the demand for new roads. We are struggling to meet these new financial demands.

Simply spending more money on the problems would add costs to our total economy, which we would all have to bear. What we need is a system that is smarter at informing road users of the costs they are creating, and smarter at deciding where new investments should go.

A system that results in our road resources being used very wisely. If we wait the problems will get worse and the costs of changing will be greater. If we act now, the changes can be managed in a gradual process with minimal upheaval.

Key Features

Specialist road organisations

The organisations that run our roads would be streamlined and would focus on the business of running roads.

• Four to eight regionally based local road companies would take over running local roads (that is, all except the state highways and motorways) from New Zealand's 74 local authorities.
• A Crown-owned company (Transit New Zealand Limited) would operate state highways and motorways.
• Collectively, local road companies and Transit would be known as public road companies.
• Another Crown-owned company, Transfund New Zealand Limited, would provide road funding.
• The principal objective of the newly created entities would be to: operate as successful businesses; be as profitable and efficient as comparable non-public businesses; be good employers; and "exhibit a sense of social responsibility".

• Rates would no longer be used to fund roads. Currently costs of roads account for between 7 and 60 percent of rates depending on the area.
• At the moment, part of the Fuel Excise Duty on petrol, CNG and LPG is used to fund roads. On petrol the amount is 13.6 cents per litre. This charge would be renamed the Road Use Levy to clearly distinguish it from the general taxation on these fuels.
• Regional variances in the Road Use Levy could be used to fund different regional roading needs. A Vehicle Levy collected at the time of vehicle licensing could also be used for road funding.
• The current use based payment system of Road User Charges on heavy vehicles and light diesel vehicles would be retained.
• Collectively these charges would be called the 'levy system'. Transfund, a Crown-owned entity, would be responsible for recommending the rates of these charges to the Minister of Transport.

• Road users that choose alternative payment arrangements would be free to rejoin the levy system.
• Public road companies would be able to introduce tolls on specific roads and facilities and to introduce congestion prices to restrain traffic demand on heavily used routes

ALTERNATIVE PAYMENT ARRANGEMENTS

Better Transport Better Roads would allow more flexibility in the way road use would be charged. Road User Charges, the system we use now for charging heavy vehicles, is a more targeted way of paying for roads than the straight fuel consumption methods used in many countries. However, it does not make it possible to vary charges for the time of travel, the actual vehicle weight, the road travelled on, the level of noise and gas emissions, or the suspension system of the truck. The cost to road providers and to other road users caused by heavy vehicles can depend on all these variables. It is now technically possible to set charges that vary on the basis of these different factors.

The following illustrate opportunities created by the proposal.

• A public road company could be concerned that heavy vehicle traffic passing through a small town in the middle of the night meant it was breaking its obligation to reduce road noise. The changes to the Resource Management Act that are part of the proposal make this a real possibility. The road company could avoid the risk of heavy fines by negotiating lower charges with trucking companies on the condition that their trucks use a by-pass during night hours;
• A public road company might be concerned about the damage trucks are causing to roads. It could negotiate a deal encouraging trucking firms to avoid vulnerable routes, or to install better suspension so their trucks create fewer problems;
• A trucking firm wanting to offer low cost cartage between two main centres might negotiate special charges with the road companies involved providing their vehicles did not travel during peak hours;
• A bus operator in Christchurch, in light of proposed vehicle emission restrictions, might suggest to the local road company that if it ran a fleet of low emission buses it should be charged less. The road and bus companies could then agree on a mutually satisfactory deal for low emission buses. The road company could offer the scheme to other bus operators; and
• An organisation representing major truck operators might negotiate with road companies a payment arrangement that has charges based on truck movements that are tracked using GPS (Global Positioning System). Members of the scheme would generally expect to pay somewhat less than they would if they remained outside the scheme.

  However, should their trucks use specified congested roads at certain times, fail to use by- passes around small towns, or enter residential streets which have 'no truck' restrictions they would be charged higher fees and could end up paying significantly more..

Improved safety
In recent years considerable effort has gone into improving driver behaviour and vehicle safety. The road toll has significantly reduced. However, the state of roads contributes to around 15 percent of fatal crashes. Under Better Transport Better Roads:

• Public road companies and some other providers of roads would have to have an approved safety management system setting out traffic management and engineering standards. They would be accountable for the safety of the roads they provide; and
• The Director of Land Transport Safety would have powers to ensure compliance. The directors and management of a road company with unsafe roads would be liable to be prosecuted.

Protecting the environment
Roads have significant affects on the environment and communities through air, noise and water pollution. They also affect the landscape. Under Better Transport Better Roads:

• Charges would better reflect the environmental impact of road use - they would be designed to bring home to road users the impacts due to the amount they use roads, the times that they travel, and the type of vehicles they use; and
• The Resource Management Act would be amended to make regional councils hold road service providers responsible for managing the combined discharges to air from vehicles using roads in their area.

These changes would be evolutionary, and their full effect would not be experienced for many years. Once legislation was passed to enact the proposals nothing would immediately change for road users.

The removal of rates funding for roads would occur about 18 months after legislation was passed. This would be the first change most road users would notice. Any increases to the levy system charges needed to offset the reduction of rates funding would happen at this time. Increases are likely to be modest and would require parliamentary approval. Road users could choose direct payment options for road use, rather than paying levies, about two-and-a-half years after the legislation was passed.

Technology would probably limit tolls and congestion pricing for some years to new motorways and bridges, or to heavily congested roads. The impact of other changes, such as the improved safety and environmental regimes, would occur over several years.

WOULD ROADS COST MORE?

No, roads would not cost more. In fact, it is expected they would cost less than if the changes did not occur.

The immediate direct financial effect on households of stopping rates funding of roads and increasing the levy system prices to compensate would be minimal.

In general, the impact on a particular household would depend upon the extent to which it currently contributes to roads through rates (directly or through rental payments) and how much it uses roads. For example, many older people would be likely to benefit immediately from the proposed changes because they tend to travel relatively little, but often contribute significantly to the funding of roads through property rates.

The longer-term impact on individual households is difficult to quantify precisely. However, road costs represent only a small proportion of total transport costs, and are only a small proportion of the total costs faced by most households and businesses. The financial impacts on the budgets of the vast majority of households and businesses would be likely to be very modest.

In addition, the amount of revenue a road company could generate would be controlled under the proposals. For example, to control demand at peak time a public road company could introduce congestion prices. However, it would then have to lower its prices for using other roads so as to keep its revenue constant. If a toll on a new facility recovered more than its full costs, the other charges of the road company would have to go down.

Overall, the proposal would benefit New Zealanders through improved investment efficiency, lower maintenance costs, lower administration costs, reduced congestion, improved road safety and better environmental outcomes.There would be increased costs to run new charging systems and restructure the existing organisations and to develop and maintain safety management systems. However, the net benefit to New Zealand as a whole from the proposed changes has been estimated at $115 million to $295 million per year. These estimates exclude the value of any environmental gains.

INVESTMENT

Presently work is proceeding piecemeal on building a four-lane expressway from the southern end of the Auckland motorway to Cambridge. Better Transport Better Roads would speed up construction because Transit would be able to borrow money to finish the project. At present, road funding is on a 'pay as you go' basis. Transit can only spend in any one year what it gets from Transfund, and Transfund only distributes the revenue it gets from road users. This means that projects are undertaken in small stages, and major projects are slow to be completed. What's more, the formal safety management system required under the proposal would place road companies under an obligation to deal with the more deadly sections of the road.

Building and maintaining local roads mainly used by forestry companies or tourists pose a real challenge to local authorities. At present, local authorities fund their contributions to roads through rates and, naturally enough, ratepayers can be reluctant to pay for maintenance and construction costs generated by a few logging trucks, or passing tourists.

Better Transport Better Roads would help deal with this problem. Rates would no longer be a source of local road funding. The possibilities for charging for roads would increase. For instance, a local road company could negotiate special tolls on logging trucks and tourist buses to cover the extra road costs generated by them.

KEEPING A LID ON PRICES

A number of the proposal's features would constrain the pricing power of road companies, and encourage them to be efficient.

• The separation of Transit, the state highway operator, from the local road companies would permit some competition between them and make it easier to compare performance.
• Choice in the way road use is paid for would also encourage competition to keep prices down.
• Information disclosure by road companies would let the public assess the companies' performance.
• Pricing principles would be established for road companies and disputes could be taken to the High Court.

A requirement that road companies could only earn additional returns by making additional investments would ensure that returns from the existing road network are constrained to current levels. The pricing principles would ensure that road companies cannot earn more on a new investment than its full cost.

THE INTERESTS OF MAORI

Public road companies would be required to consult with Maori over any roadwork which affects Maori land, or Maori historical, cultural or spiritual interests.

Crown road land currently used for state highways and motorways would be leased to Transit. Any leased land that is no longer required for road purposes would become subject to the protection mechanism for surplus Crown land which the Crown established in 1993 to ensure Crown land is available for potential use in settlement of Treaty of Waitangi claims.

Any land acquired by Transit after its corporatisation would also become subject to the protection mechanism should it subsequently become surplus to road requirements.

The traditional rohe (district or area) of Maori would be among the factors to be taken into account when determining the boundaries of local road companies.

Local authorities would continue to have a very important part to play in the management of roads. Local authorities would own all the shares in local road companies and appoint their directors. They would have the ability to comment upon or change a local road company's Statement of Intent (which defines the company's accountabilities).

Local authorities would also exercise oversight of road companies through their district plan procedures.

Road corridors (that is, the land through which a road passes) contain more than just roads or carriageways - they are important areas of public space. The amenities in a road corridor (such as statues, cycle lanes, gardens, trees or bus shelters) can shape the character of a community. Communities, therefore, want to have meaningful input into how road corridors are developed and used.

Unless they chose otherwise, local authorities would retain their ownership and management rights over amenities like cycle lanes off the carriageway, bus shelters and trees. Local authorities would also be able to declare sections of the road corridor, including parts of the carriageway, as land required for 'public space development' purposes. They would be able to use these provisions to create areas for pedestrian use and sidewalk cafe space, or for other public purposes.

There would be a Corridor Management Agreement between each public road company and the local authority to provide the link between the management of the road and the operations of the local authority.

A local authority would be able to purchase on-carriageway and off-carriageway services from a road company if there were other particular things the community wanted.

PUBLIC TRANSPORT FUNDING

Transfund currently subsidises public bus, ferry and rail transport. It also helps fund social service transport programmes: total mobility (taxi vouchers for less mobile people); concession fares for older people, school children and other targeted groups; and urban school bus services. Because some road users would choose to cease paying levies to Transfund, and choose alternative payment arrangements, the funding of these subsidies would fall unfairly to a smaller number of road users.

Instead, under the proposals regional councils could collect an annual regional passenger transport levy from all public and some other road providing businesses to purchase public transport services of benefit to road users. Regional councils would still be able to use rates to provide public transport.

Congestion is a fast growing problem in Auckland, and to a lesser extent in Wellington. Congestion can be seen as either too much traffic trying to use the available roads, or too few roads for the traffic. Congestion can be tackled by reducing the demand for roads or increasing the amount of roads. Better Transport Better Roads would target both ways of reducing congestion.

First, road companies would be able to negotiate congestion prices. At present, users pay for roads partly through Fuel Excise Duty and Road User Charges, but the price does not vary according to the road they use or the time they travel. Congestion prices would provide users with incentives to travel at different times by charging more than at present for a heavily congested road, and less than at present for using the same road when it is not congested, or switching to another road which is not so heavily used.

A variety of pricing arrangements could be used to make this work. One possibility would be to reserve some lanes on a heavily used motorway for vehicles that have paid a special congestion fee. The revenue collected from the fee could be used to reduce levies in the wider urban area. This would mean that people who want speedy trips on roads in heavy demand would pay more, while everyone else would pay less to use the congested lanes, or another road. Moreover, some motorists would decide to leave their car at home and use public transport as an alternative, thereby reducing traffic on congested roads. Second, by allowing variable charges, the proposal would enable road companies to assess more accurately the real demand and the degree of willingness to pay for more road space. This would make it much easier to channel investment to those places where it was most needed.

OWNERSHIP

Road companies would not be privatised. The Crown would be the only permitted shareholder of Transit. Local authorities would own the shares in local road companies.

Other organisations which provide roads used by the general public - airport companies, forestry firms, port companies, the Department of Conservation, universities, and so on - would be little affected, apart from having to meet safety requirements appropriate to their circumstances. Private companies would be allowed to develop new roads that they would own.

No existing publicly owned roads would become privately owned as a result of Better Transport Better Roads.

RETAINING THE CURRENT ROAD NETWORK

Public road companies would be required to retain the physical road network they took over at the time they were established. That is not to say public roads could never be closed temporarily or permanently - they can at the moment.

However, at present, there are rules demanding public consultation if road closures are considered - Better Transport Better Roads ensures similar rules would apply.

If road companies wanted to change the quality of existing roads they would need to ensure the quality criteria contained in their approved safety management system were maintained. At the moment, roads can be downgraded, and there is no formal requirement to meet safety standards.

ACCESS

Better Transport Better Roads makes sure the access rights to roads that people currently enjoy would remain. Currently drivers must be licensed, their vehicles must be registered and licensed with a warrant of fitness, and petrol tax or Road User Charges must be paid. But vehicle users would be given an extra right; they could choose alternative payment arrangements instead of the tax-based levy system. There is no provision for pedestrians or cyclists to be charged to use roads.

PROTECTING PRIVACY

Consultation has shown privacy to be a key concern of road users. Better Transport Better Roads protects privacy in several ways:

• Access to the motor vehicle register would be tightened considerably to improve the privacy of owners of motor vehicles;
• Personal information collected from road users could only be used for road management, road safety and road service revenue purposes;
• If charging systems such as electronic tolls were introduced privacy would be protected through a compulsory 'anonymous purchase option'. That means a payment option (perhaps like a prepaid telephone card) that did not identify users would be mandatory. In this way people's movements could not be traced; and
• The privacy policies of road entities would be required to be available in a publicly accessible document.

The current rights of utility operators to place their water, sewage, telephone, gas or electricity assets in the road corridor would remain. Utilities would be required to notify public road companies of their intention to carry out work. Public road companies would be able to set reasonable conditions, such as not doing work during peak traffic periods. A national code of practice would be developed under the Resource Management Act to manage any adverse effects on the broader community of the construction and maintenance activities of utilities and public road companies.

• BENEFIT SUMMARY
• THE NEED FOR CHANGE
• Key Features
• ALTERNATIVE PAYMENT ARRANGEMENTS
• TIMING
• WOULD ROADS COST MORE?
• INVESTMENT
• KEEPING A LID ON PRICES
• THE INTERESTS OF MAORI
• LOCAL AUTHORITIES
• PUBLIC TRANSPORT FUNDING
• CONGESTION
• OWNERSHIP
• RETAINING THE CURRENT ROAD NETWORK
• ACCESS
• PROTECTING PRIVACY
• UTILITY OPERATORS