From the submissions and comments made on the consultative documents released so far it is clear that any changes must take full account of the following:

• Road corridors contain more than carriageways; they are important areas of public space. The amenities in a road corridor can shape the character of a community. A community can also be affected by the nature of a carriageway - its size and shape. Communities, therefore, want to have meaningful input into how road corridors are used;
• There is a general requirement that the Crown have regard to the principles of the Treaty of Waitangi in any policy changes. This applies to the management and funding of roads;
• People value the opportunities to travel along the current road network, and want it retained;
• People want their privacy about where and when they travel protected;
• Road corridors are important for the provision of utility services to properties. Electricity, telephones, gas, cable TV, water, sewage and storm-water services all use the space. Any changes need to recognise the rights of utility operators to use the corridor; and
• Many roads are to a significant extent natural monopolies because, for many uses, there is no realistic alternative. Users, therefore, need to be protected against monopoly pricing practices.

EVOLUTION NOT REVOLUTION

Should the draft Roads Bill to implement the proposal be passed, nothing would instantly change for road users. The roads they use would not visibly change. The charges they face for using the roads would not immediately change, nor would the way they pay those charges.

However, if implemented, the proposed changes would start off a number of steps that over a period of 5 to 10 years would improve the management and funding of New Zealand's roads by addressing the efficiency, safety and environmental problems of the current system.

The following diagram shows the current system in simplified form.

INITIAL CHANGES

The initial changes would be to:

• The current 75 road controlling authorities - Transit New Zealand, which runs state highways, and the district and city councils, which operate local roads; and
• Transfund - the Government's road-funding body.

TRANSIT AND TRANSFUND

Transit and Transfund would be formed into companies wholly owned by the Crown. The Minister of Finance and another minister would be joint shareholders. Transit would continue to operate the state highways and Transfund would continue to fund public roads.

All current staff, apart from the chief executives, would automatically transfer to the new companies at their current rates of pay and with all current conditions, but without any right to redundancy payments as a result of the transfer. Assets and liabilities would also be transferred.

In the case of Transit, a long-term lease over the land in the state highway road corridor would be granted. The Crown would own all the land in the corridor. The land covered by the lease would exclude paper roads, unformed roads, stopped roads, legal roads not required for operating purposes, air and substrata rights unless required for road purposes, and properties not required for road developments.

Transit and Transfund would have financial reporting and other statutory management obligations, such as the production of a Statement of Intent, similar to those of a state- owned enterprise.

The standard process for creating corporate entities out of government agencies would be used. Establishment boards, assisted by small establishment units, would oversee the formation of Transit New Zealand Limited and Transfund New Zealand Limited. The new companies would begin operation about nine to 10 months after the legislation was passed.

LOCAL ROAD COMPANIES

The road controlling activities of the 74 local councils would be amalgamated into a much smaller number of local road companies (probably between four and eight). A special statutory agency called the Local Road Companies Establishment Commission would be created to oversee the formation of these companies.

The three members of the Establishment Commission would be chosen primarily for their commercial skills and their ability to oversee and manage the formation of local road companies. The Governor-General would appoint them by Order-in-Council on the recommendation of the Minister of Transport. The Minister would have to consult with an organisation representing local government before making the recommendation.

For each local road company, the Establishment Commission would:

• Recommend boundaries to the Minister of Transport after consultation, and in accordance with the criteria contained in the legislation;
• Appoint the establishment board from nominations provided by local authorities;
• Provide guidance and, if necessary, direction on the valuation of assets, treatment of access rights, and company constitutions to ensure consistency; and
• Approve the local road company's plan covering the transfer of assets, liabilities and employees.

The criteria the Commission would use to determine its boundary recommendations would be:

• The promotion of a competitive and efficient road system;
• The ability of road companies to achieve their principal objective of operating as successful businesses in the provision of roads and road-related services; and
• The interests of the community and road users.

The Governor-General would determine the number of local road companies, and the boundaries of each, by Order-in-Council, on the recommendation of the Minister of Transport. The final boundaries would be announced about six months after the legislation was passed. If the Commission recommended more than eight or fewer than four local road companies, then it would be required to provide a justification showing satisfactory financial viability for the road companies it recommends.

The local road companies would have financial reporting and other statutory management obligations, such as the production of a Statement of Intent, similar to those of a local authority trading enterprise (LATE).

They would take over all road improvements on roads currently owned by local authorities. Road improvements include all road and road safety related assets. Shares in the new companies would be issued to local authorities in exchange for these assets. Amenities in the road corridor, such as statues, bus shelters, toilet facilities and (non-safety related) garden beds, would continue to be owned by local authorities. The assets of utility providers, such as telecommunications cables, sewers, storm-water and water pipes and electricity reticulation assets, would remain the property of their current owners.

Ownership of the land in the local road corridor would remain with the local authority. Under the proposal, the local road company would have a statutory right of access to the road corridor. The definitions in the statutory access agreement would exclude paper roads, unformed roads, stopped roads, legal roads not required for operating purposes, air and substrata rights unless required for road purposes, and properties held by local authorities not required for road developments.

The road management staff of local authorities would transfer to a local road company and would do so at their current rates of pay, and with all current conditions, but without the right to technical redundancy payments as a result of the transfer. If the local authority and the establishment board of the local road company were unable to agree on what staff were road management staff, and hence to be transferred, the Establishment Commission would decide. Staff remaining with local authorities would be unaffected by the transfer process. Staff who transfer would have the same rights and entitlements as they had when employed by the local authority.

For each local road company, an establishment board would be appointed by the Establishment Commission from nominations provided by the local authorities that would contribute assets to the company. It would be the establishment board's job to set up the new company. A small establishment unit would assist each board. It is planned that establishment boards would be appointed about nine months after the legislation was passed, and the companies would begin operations about one year later. Only local authorities would own shares in local road companies. The shareholders would appoint the directors of road companies in accordance with the provisions of the company's constitution, and only a minority of directors could be members or employees of any local authority that is a shareholder.

Where a local authority owned shares in a road construction or maintenance business, the share ownership and management of this business would be required to be kept separate from the share ownership and management of the road company. Changes in the constitution of local road companies would require the approval of the Minister of Transport. The Establishment Commission would approve the initial constitutions as part of the establishment process.

Local authorities would be precluded from owning any road generally open to the public, or engaging in any road-related service other than through a road company. The only exceptions would be if owning the road or the service were secondary to another function, such as providing a reserve.

PUBLIC ROAD COMPANIES AND ROAD SERVICE PROVIDERS

Transit and the local road companies would be referred to as "public road companies". Their main objective would be to operate as successful businesses in the provision of roads and road-related services. They would also be required to be good employers and exhibit a sense of social responsibility by having regard to the interests of the community. The proposal restricts them to road activities, and precludes the companies owning or participating in non-related businesses and assets. Public road companies would be able to enter into joint ventures with each other and with other companies. They would be able to borrow and invest capital in anticipation of future demands. They would pay taxes and would be able to pay dividends to their shareholders. Local road companies could transfer roads between themselves and to Transit, but Transit would not be able to transfer roads to local road companies.

The proposal recognises that there are numerous other entities that provide roads for public use - ski-fields, airports, the Department of Conservation, forestry firms, and so on. Aspects of the proposed legislation would apply, or could be made to apply, to some of these roads. The term "road service provider" would be used to refer to public road companies together with other organisations that provide roads generally open to the public.

TRANSFER OF ROAD MANAGEMENT AND ROADSIDE PARKING

Transit New Zealand Limited would take over the state highways about nine months after the legislation was passed. Local road companies would take over road management from local authorities about a year later. Approximately 18 months after the legislation was passed, the powers to manage roads and to control roadside parking would pass to the new public road companies.

By-law-making powers would not be transferred from local authorities to public road companies, because the latter would be commercial entities and should be required to seek, where practicable, commercial solutions.

However, in some cases, such as the setting of speed limits and weight restrictions, or dealing with overhanging trees affecting road safety, public road companies would need the ability to make enforceable rules. Public road companies would only have such powers when they are necessary to protect roads, or to ensure their safe and efficient use. Powers would only be given when the property rights of road companies were insufficient.

On the other hand, local authorities would lose powers that have road management and traffic safety as their primary purpose. Moreover, any powers they retained which affect the road corridor would be subject to a requirement to consult with the public road company. The existing powers available to the Minister of Transport to disallow any by-law affecting a road or road traffic on the grounds that it is unreasonable or undesirable would remain. Utility operators like gas, water and sewage, electricity and telecommunications providers currently enjoy the right to place distribution assets in the public road corridor. These rights would remain. However, utilities would be required to notify, in advance, public road companies of their intention to carry out work, and the public road company would be able to set reasonable conditions for their disturbing the road and occupying the corridor. Similarly, public road companies would notify, in advance, any affected utilities of their intention to carry out works.

A national code of practice under the Resource Management Act 1991 would be developed in consultation with local authorities and other interested groups. This would allow local authorities to manage adverse effects on the broader community of the construction and maintenance activities of utilities and public road companies. It would cover issues such as the notice required to residents before disruptive work begins, and requirements to mitigate inconvenience and reduced access for households and businesses.

Should the proposal be implemented, public road companies would take over responsibility for parking management and enforcement. They would employ parking enforcement officers, who would be required to hold a warrant from the Commissioner of Police. While parking revenue would go to the public road companies, revenue from the enforcement of all parking offences would be paid to the Crown. The Minister of Finance would have the power to determine, from time to time, an allowance to be paid to public road companies to cover the costs of enforcement. The maximum level of parking fines would continue to be specified in legislation.

The proposal is to give public road companies the power to determine parking terms and conditions. However, this power is subject to the provisions of Land Transport Rules specifying the signs and markings to indicate parking restrictions, safety matters to be taken into account when imposing them, and the procedures for public notification of changes. The Minister of Transport would have the power to disallow parking terms and conditions.

REMOVAL OF RATES FUNDING FOR ROADS

The road activities of city and district councils would pass to local road companies about 18 months after the passing of the legislation. At this point a change would occur in the way we pay for our roads: the contribution to local roads sourced through local authority rates would cease.

The money to replace rates would come from:

• Increases in Road User Charges on heavy vehicles and light diesel vehicles;
• Increases in the Fuel Excise Duty on petrol, compressed natural gas (CNG) and liquefied petroleum gas (LPG). The Fuel Excise Duty dedicated to roads would be renamed a "Road Use Levy" to clearly distinguish it from the tax on these products that is general revenue; and
• The possible imposition of an "Area Road Use Levy" on petrol, CNG and LPG and/or a Vehicle Levy collected with the motor vehicle licensing fee.

Any changes in Road User Charges or Road Use Levies, the introduction of a Vehicle Levy, and any subsequent change to an Area Road Use Levy would be by the Governor-General by Order-in-Council on the recommendation of the Minister of Transport. However, any Order- in-Council would need to be confirmed by legislation passed through Parliament within a specified time.

In making a recommendation, the Minister would be required to consider:

• Transfund's recommendation to him or her; and
• The adequacy of consultation that has taken place with road users and their agents.

The Minister would be required to state reasons for any differences between his or her recommendations and the recommendations he or she received from Transfund. When setting the Vehicle Levy, the Minister would be required to consider the impact of any fee on compliance with the vehicle safety and motor vehicle registration systems, in addition to the above factors. The current exemptions available from the Fuel Excise Duty dedicated for road purposes would apply to the Road Use Levy and any Area Road Use Levies.

• DESIRABLE ASPECTS FOR FURTHER IMPROVEMENT
• EVOLUTION NOT REVOLUTION
• INITIAL CHANGES
• TRANSIT AND TRANSFUND
• LOCAL ROAD COMPANIES
• PUBLIC ROAD COMPANIES AND ROAD SERVICE PROVIDERS
• TRANSFER OF ROAD MANAGEMENT AND ROADSIDE PARKING
• REMOVAL OF RATES FUNDING FOR ROADS
• TRANSFUND CHANGES ROLE
• PUBLIC TRANSPORT
• ALTERNATIVE PAYMENT ARRANGEMENTS
• COMMERCIAL REGULATION
• OTHER REQUIREMENTS ON ROAD COMPANIES
• TOLL AND CONGESTION PRICING OPTIONS
• SAFETY FUNDING
• SAFETY MANAGEMENT
• ENVIRONMENT
• MAORI INTERESTS
• COMMUNITY INTERESTS
• PRIVACY OF MOTOR VEHICLE REGISTER
• LAND TRANSPORT STRATEGIES