28 February, 2002

Land Transport Changes - An Overview

New Zealand has some 92,000 km of formed road, of which 10,700 km are state highways and motorways.

During the 1990s, the number of vehicles on our roads increased by 26 per cent and we now have nearly 2.6 million road vehicles - the fourth highest ratio of vehicles to population in the world. The distance we travel on our roads is increasing by an average of three per cent each year, and the volume of traffic on our roads is increasing by more than three per cent a year.

The government's new land transport package, Moving Forward, recognises that land transport is critical to our economy and to our social and environmental well being. It also recognises that major changes are urgently needed.

At present, the government spends some $1.3 billion (including GST) on land transport each year. Even so, our land transport system today simply isn't coping with demand.

Below is a brief overview of the problems, the government's solutions and how those solutions will be implemented. Further details are in the accompanying fact sheets.

The problems

• A legacy of inaction Years of under-investment in land transport by previous governments mean that current demand cannot adequately be met. As well, construction and maintenance costs have increased and growth in revenue is not keeping pace with demands on the National Roads Fund.

  In the next few years, the government's ability to meet the funding needs of major roading projects will outstrip the existing capacity of the National Roads Fund. This is an unsustainable situation.

  There is no capacity in the current funding system to spread the cost of big projects over the many years of their life. At present, the costs are spread only over the years of their construction. In addition, there are severe constraints on involving private sector finance.

  Tolling is a funding option for some projects but, at present, each time a local authority or Transit New Zealand wants a particular toll road, it must get legislation passed and this can delay the project.

• Congestion Crippling traffic congestion in Auckland causes daily frustration for Aucklanders and costs every New Zealander through the burden it is placing on our economy. Auckland's congestion is estimated to cost our national economy nearly $1 billion every year.

• High road toll Our road toll is still too high - 452 people died on the roads last year and nearly 5900 were hospitalised. Despite major gains in road safety in recent years, New Zealand still compares unfavourably with the best performing countries in the world.

• Regional development hindered Poor rural roading and rail networks are hampering regional development initiatives. Some roads in the East Cape and Northland, for example, are expected to carry many more tonnes of logs over the next few years as forests in the region mature. Without significant investment in transport infrastructure, economic development in some regions will be hampered.

• Alternatives to cars disadvantaged The current funding framework is focussed on roads and impedes support for alternatives to cars, such as public transport, cycling and walking. Funding allocations are currently made using a nationally consistent economic efficiency test that applies to projects as diverse as new motorways and public transport facilities. This often disadvantages projects other than roads.

  While a record $70 million (including GST) has been allocated to public transport in 2001/02, more funding and initiatives are needed to improve access to public transport.

• Local government concerns Regional councils are frustrated by limitations on their ability to own and operate public transport infrastructure and services that would benefit local communities. There are also legislative barriers to local authorities working cooperatively on roading issues.

• Inflexible funding system The existing funding framework for land transport is inflexible and does not easily allow government priorities to be translated into funding.

  Funding decisions also often have a short-term focus, even though land transport infrastructure invariably involves long planning periods and a commitment of resources over many years.

• Outdated road user charges system While the current, paper-based system for collecting road user charges from heavy and diesel vehicles was a world-leader in its time, it is now inefficient and imposes high compliance costs on users. Charges are calculated on the average cost of the roading system and on vehicles' average rather than actual costs.