Swain Speech on the Land Transport Management Bill given to the Local Govt Forum

Good morning and thank you for the invitation to speak today.

As you’ll be aware there’s been a lot happening in the transport sector recently. On Tuesday the government released the New Zealand Transport Strategy as well as tabling the Land Transport Management Bill in Parliament. Today I’d like to take the opportunity to speak to you about these two important initiatives.

This government has set itself the goal of returning New Zealand to the top half of the OECD. All of us here today will appreciate that transport has a huge role to play in achieving that goal. We can’t commit to economic growth without committing to improving our transport infrastructure.

To improve our transport infrastructure we recognised the need to reform the land transport funding system. The current system is inadequate in a number of ways, lacking flexibility, strategic direction, long-term focus, integration and with funding criteria that is too narrow.

Moving Forward

Before I talk about the bill and strategy I’d like to briefly mention the Moving Forward package, announced in February, which set the stage for Tuesday’s announcements. The key feature of the package was an extra $227 million in funding for transport to June 2003, on top of the $1.3 billion already being spent each. This money was spent on:

$94 million for roading, especially congestion. $30 million for regional development. $30 million for alternatives to roading. $36 million for public transport. $34 million for road safety. $3 million for walking and cycling

The New Zealand Transport Strategy

The NZTS is a very important document that outlines the government’s strategic focus for transport. It spells out the government’s vision that – “by 2010, New Zealand will have a transport system that is affordable, integrated, safe, responsive and sustainable.”

The strategy has five objectives: to assist economic development to assist safety & personal security to improve access & mobility to protect & promote public health, and to ensure environmental sustainability

The NZTS links what happens in the transport sector with our wider social, economic and environmental responsibilities. This is the first time a government in this country has looked at all modes of transport in an integrated way, and taking a long-term view.

The strategy was informed by three years discussion and consultation across the transport sector and I’d like to thank you for your contribution. It embraces policy from other areas including Growing an Innovative New Zealand and the National Energy Efficiency and Conservation strategy. We will implement the strategy through policy, rules, programmes and legislation, such as the Land Transport Management Bill.

The Land Transport Management Bill

The Land Transport Management Bill is the first key step in achieving the visions and objectives of the NZTS.

The bill will change the way in which we fund land transport. Currently, Transfund allocates more than a billion dollars of funding to land transport while Transit and local authorities are responsible for putting together and implementing approved programmes. The primary objective of the bill is to achieve a more balanced funding system with a longer-term focus. The focus of the system needed to be broadened from just roads.

The bill, therefore, contains a strong statement of purpose based on the government’s vision laid out in the NZTS.

Local Government NZ and local government generally have played a major part in the development of policy that led to the bill, a great example of the strong working relationship that has developed between central and local government.

The bill changes the objectives of Transit and Transfund. Transfund’s objective will be to allocate resources to achieve an integrated, safe, responsive and sustainable land transport system. Likewise Transit’s objective will be to operate the state highway system in a way that contributes to an integrated, safe, responsive and sustainable land transport system. The bill also provides for the objectives of the NZTS to be brought to bear on funding decisions made by Transfund and on the way that Transit develops its Land Transport Programme. The NZTS expands on these objectives.

The government’s transport vision and objectives are already influencing the way that Transfund and Transit do business. The funding provisions of the bill have been designed to support the new approach by allowing more flexibility in the way land transport is funded, including more flexibility to fund projects other than roads, such as rail and public transport and to promote walking and cycling. Funding must also follow the priorities identified by regional land transport strategies.

The current system does not always allow local government to implement solutions to land transport issues in their region. This bill allows regional councils to fund, and both own and operate, public transport infrastructure and services, unless prohibited by an Order-in-Council. While allowing flexibility, the government has not abandoned the need to ensure that money invested in land transport is spent wisely. This is implicit in the objectives of the transport agencies and the requirements laid out in the bill, that expenditure needs to be cost effective.

The government has also sought to give the transport entities more guidance on priorities and on the amounts of funding to be put into particular activities, however the Minister for Transport cannot give directions about particular projects.

In establishing priorities, the government is not fixated on the need to build roads in Auckland. Most people rightly acknowledge the economic importance of improving the situation in Auckland. However, government also realises the need to address issues in the rest of the transport network. The current Land Transport Programme still contains significant sums for land transport projects around the country.

The bill will formalise the priority setting process. The government also wants to encourage a longer term focus to land transport planning. As a result, this bill requires that organisations accessing funding from the National Land Transport Fund will need to provide 10-year financial forecasts. Transfund, itself, will also need to provide a 10-year financial forecast.

The bill also provides changes to the way New Zealanders participate in land transport decision-making. It stresses the need for options and alternatives to be considered at an early stage and for interested parties to be involved in that process. The government has attempted to strike a balance between the views of communities affected by land transport projects and of transport users.

Even with the additional funding we are putting into the system over the coming years, there are roading projects that will bring benefits to communities and which are supported by those communities but which, under the current system, cannot be funded in the short term.

We had to find other ways to fund new roads. This bill paves the way for two sources – public/private partnerships and tolling.

Public Private Partnerships

Public private partnerships (PPPs) are common overseas, particularly in Britain and Australia. They give the private sector the chance to fund transport projects. PPPs can help us finance projects, which might not otherwise get off the ground, and are a useful way to spread the cost of infrastructure over time.

At present roading projects are paid for in the years of construction, which means current road users bear the full cost, even when the benefits arise years into the future. PPPs involve a concession agreement between a public sector roading authority and a private sector partner to build and operate new infrastructure for a number of years, before management reverts to the public sector.

The bill places a number of conditions on PPPs including:

the life of the partnership arrangement is limited to 35 years land transport infrastructure remains in public ownership initial acquisition of land (under the Public Works Act 1981) and designation of land for roading, remains with the public sector the public sector is not liable to compensate any party if traffic numbers are below forecast for the life of the project affected communities must be adequately consulted. the final PPP proposal will be subject to ministerial approval

The Ministry of Transport will develop guidelines for applicants seeking to put PPPs in place. Transit, along with the Ministry and Transfund, is now working through a process to determine which state highway projects might be suitable for a PPP approach. In the case of local roads, it will be up to local authorities to determine if particular projects suit a public/private partnership approach.

Tolling

Most, but not all PPPs, will involve tolling. Tolling schemes have already been used successfully here, on the Auckland Harbour Bridge and the Lyttleton tunnel. Until now, individual toll roads have required their own legislation. The bill provides a generic framework for toll roads which will make it easier for road controlling authorities to put in place tolls to fund new land transport infrastructure.

The bill places a number of conditions on tolling including:

tolling will be on new roads an alternative route must be available the project must be consistent with government and regional transport strategies. affected communities must be consulted tolling projects must have final ministerial approval

Because tolls may be collected by electronically, the bill includes provisions which will protect the privacy of anyone using the road. We don’t expect a large number of toll roads. Toll projects generally require high traffic volumes and there are unlikely to be very many in New Zealand. It will be the responsibility of Transit or local government to develop proposals for any projects they may wish to fund through tolling.

Conclusion I began by saying that the government has set itself the goal of lifting New Zealand back into the top half of the OECD. Reducing transport barriers to economic growth is essential if we are to meet that goal.

I’m confident this bill will do that. It delivers on many of the things that you as a group sought from us. It also carries on policy work that this government has been responsible for including boosting funding of public transport, introducing patronage funding for public transport, buying back the Auckland rail corridor and announcing a new road safety goal and implementation package, of no more than 300 fatalities by 2010. All of these measures reflect our strategic direction for transport laid out in the New Zealand Transport Strategy. The bill represents the biggest single change to land transport in New Zealand since the current system was introduced in the late 1980s.

I recognise that change like this creates a degree of uncertainty and the government is well aware of the need to move forward methodically and carefully. The bill sets the scene, which will allow these things to happen, but they will happen over time. Given the strong working relationship now being enjoyed between central and local government I’m confident of successful implementation.

I look forward to your submissions on the bill. I hope to have it passed by mid-2003.

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