Media Release For immediate release 1 September 2003

Further investigation into Transfund's financial assistance rates for local roading

Transfund New Zealand is to further investigate aspects of its financial assistance rate (FAR) policy for funding territorial local authorities for road maintenance and construction but has decided against a full-scale policy review.

Chairperson David Stubbs says a number of different variations to the FAR policy have been modelled but no alternative formula was better able to take into account the relevant factors across all councils than the current formula.

The Board agreed to keep the existing policy in place but asked for further investigations to be carried out into options for:

* Adjusting the formula to increase the FAR range.

* Lifting the overall contribution from Transfund from 50 percent to a higher figure.

* Establishing an intermediate category of local road to differentiate heavily used arterial routes from other local roads.

* Increasing the FAR for construction projects. Construction projects already qualify for additional funding with five percent added to each local authority's current FAR rate.

The existing formula ensures an average of 50 percent central government funding and 50 percent local government funding, with the minimum FAR being 43 percent.

Developed in the 1980s, it takes account of the cost of each local authority's annual road maintenance programme and rateable land value. Land value is used as a proxy for the "ability to pay".

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Transfund New Zealand is the government agency responsible for allocating funding toward an affordable, integrated, safe, responsive and sustainable land transport system for New Zealand. It funds a range of land transport solutions based on funding applications received from Transit New Zealand, territorial authorities and regional councils. See our website www.transfund.govt.nz for more information.

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