NZ Transport Agency Lowers Ruapehu’s Road Subsidy

Maintaining and developing Ruapehu’s local road network will be a lot more challenging following a probable reduction in its Funding Assistance Rate (FAR) by the NZ Transport Authority’s (NZTA).

The NZTA has been undertaking a comprehensive review of their FAR model that determines the subsidy level councils receive on any particular type of road works has been the cause of widespread concern amongst many rural territorial authorities.

Ruapehu District Council (RDC) Chief Executive, Peter Till, said that RDC had urged the NZTA to take into account value in terms of the export driven Gross Domestic Production (GDP) produced by rural communities when making road investment decisions.

“Ruapehu currently district accounts for $321 million* in primary value for forestry, meat and dairy alone excluding any value added processing or tourism returns with only 0.03% of NZ’s population *(BERL economic data),” he said.

“The key to Ruapehu making an even bigger contribution to the NZ economy is in opening up the productive potential of our primary producers, forestry and tourism sectors which are all dependent on having access to an efficient and effective road network.”

“The NZTA seems to have rejected this thinking which is especially difficult to reconcile given that the Government’s own Policy Statement states that ‘Economic growth and productivity is the primary objective for land transport expenditure’.”

Mr Till said that the new FAR model works on one subsidy level being applicable across all a council’s roading activities including maintenance, operations, renewals, emergency works and Special Purpose Roads.

“NZTA has set the new base rate for Ruapehu at 63% for the coming 2014/15 down from a current overall effective base FAR of 66%.”

“The 63% FAR is a ‘starting point’ and going forward RDC will be engaged in discussions with the NZTA to settle a final FAR rate that will be transitioned in over the next nine years,” he said.

“Other major changes impact on funding for Emergency Works and Special Purpose Roads such as the Mt Ruapehu access roads to Whakapapa and Turoa ski fields.

“These were both significant points in RDC’s submission to the FAR Review consultation.”

Mr Till noted that setting the Emergency Works subsidy at the same level as the normal roadwork subsidy and not giving any consideration to a district’s unique geology, topography or weather is a substantive departure from the historic FAR regime that recognised different road networks in different parts of the country have different underlying costs.

“The funding formula for Emergency Works will see Ruapehu ratepayers funding around the first $900,000 of any emergency works at our base rate before being able to take advantage of a higher subsidy rate equal to our base rate plus 20%.”

“The higher ‘base rate plus 20%’ subsidy for emergency works is only applicable to an ‘out of the ordinary short duration event’ that is unusual, or of unusually large magnitude or severity,” he said.

“Ruapehu had been enjoying up to 91% subsidy on Emergency Works.”

“The new lower FAR subsidy could mean that situations such as large slips on remote rural roads may remain unworked on for some time.”

Mr Till added that another significant impact is around Special Purpose Roads where the FAR subsidy for maintenance will drop from 100% to our ordinary FAR level (63%).

“On current expenditure on the Ohakune Mountain Road this would cost Ruapehu ratepayers around an extra $200,000 per annum,” he said.

“Other concerns are around bridge subsidies which will be prioritised and lower minor (road) improvement subsidy rates.”

“With Ruapehu bridges being a long way down the NZTA priority list major bridge repairs may not happen unless ratepayers pay more.”

“The dropping of minor (road) improvement subsidy rates means this work is also less likely to occur.”

“While RDC still has to have discussions with NZTA on some issues the substantive framework of the new FAR model has been set.”

“Ruapehu ratepayers now need to carefully consider the implications and how to best apply the available resources we have going forward.”

“The types of actions RDC and communities may have to consider include; rate rises, closing roads or giving them to farmers to maintain, unsealing of roads, lesser renewal work and have more bridges with weight restrictions.”

“Council will be shortly starting consultation for next year’s Long Term Plan (LTP) 2015/25 with community focus groups.”

“We would encourage ratepayers and other stakeholders to utilise these meetings and the LTP consultation process to discuss these issues with Council.” ends

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