20 March 2007
New road funding system undermines carbon neutrality goal
Green Party Co-Leader Jeanette Fitzsimons today released Cabinet papers and other documents obtained under the Official
Information Act that reveal how the Government circumvented the Land Transport Management Act 2003 legislation with its
$1.5 billion roading package announced in last year's Budget.
"The papers are disturbing in that they show Michael Cullen, Helen Clark and Pete Hodgson effectively invited Transit NZ
to compile a wish list of roading projects, with little or no constraint on subsequent cost blow-outs. The Government
then issued a virtual blank cheque to fund the 5 year package of state highway projects Transit had been invited to
"mock up" regardess of cost escalation.
"The Government has, to all intents, created a new funding system for road construction in this country that is of
dubious legality, is inflationary, and gives priority to state highways over other land transport spending.
"While the statutory independence of Land Transport New Zealand is cited in the Cabinet papers, related advice is given
on how Ministers might exert control over the additional funding allocations. At one point, the papers say : 'Any govt
publicity [for the Budget] must not be seen to constrain this independence.' (Emphasis added.) Some officials still felt
disquiet. Other agencies besides Treasury, one briefing note says, 'may still have some discomfort with the proposal as
developed.'
"The Government was aware of the dangers. 'Committing the Government to funding a package regardless of cost represents
a significant fiscal risk for Government,' Treasury says on page eight of the central Cabinet paper. In similar vein,
Treasury says on page seven, 'Committing the Government to funding projects regardless of cost or changes in priority
makes it much harder to achieve value for money...which is an important goal of government, and a focus for the
transport sector. If project proponents consider funding for a project is certain, they will have no incentive to adjust
the project to meet budget constraints...[and] this removal of financial discipline could also extend to other
activities.'
" Officials at least, recognised public transport could be one of the prime losers. As a briefing note of a meeting with
Transport Minister Pete Hodgson states 'Singling out the activity class of State Highway construction for Crown
guarantee would signal a preference for funding state highways over all other forms of transport. This may be perceived
as being inconsistent with the New Zealand Transport Strategy, the LTMA or integration of the transport sector...' All
of which it is.
"Overall, the emphasis in these papers placed on funding state highways, regardless of cost tends to undermine the
credibility of the Government's recently discovered goal of carbon neutrality. A genuine carbon neutral policy would
prioritise public transport, cycling, walking and travel and management, rather than leaving them the crumbs," Ms
Fitzsimons says.
ENDS