28 The Next Steps project was required to report to the Minister of State Services, Minister of Transport and Minister of Finance by 30 April 2007, with recommendations to improve the performance of the land transport sector ("the sector") through addressing investment planning, funding and structural issues. The project considered the performance, roles and responsibilities of the Ministry of Transport ("the Ministry"), Land Transport NZ, Transit NZ and the Treasury (with regard to Rail). The interface with regional councils and territorial authorities ("TAs") was also considered. The terms of reference are attached as Appendix A.
29 The project was asked to:
- consider ways to enhance the responsiveness, performance, capability and value for money of the sector;
- review the range of funding mechanisms currently in place and consider ways to better link demand and expenditure and effect improvements consistent with accountability requirements; and
- consider the best placement of policy, planning and procurement functions to fit with the NZ Transport Strategy ("NZTS") and any new funding and planning regime.
30 The Review was required to ensure that any proposed changes are financially sustainable for the sector and would not result in a structural imbalance or bias between transport modes or communities of interest.
31 The Review was undertaken in conjunction with the Department of the Prime Minister and Cabinet, the Treasury, and the Ministry. Each was represented on the Steering Group for the Review. Each agreed with the recommendations.
32 A number of stakeholders were invited to have input into the Review. The Review benefited from their contributions.
33 Next Steps follows the 2004 Government Transport Sector Review which identified the problems of the transport sector as: lack of leadership by the Ministry; less than ideal placement of functions; poor alignment of the enabling legislation of the safety agencies with the NZTS; lack of collaboration within the transport sector; and poor policy development resulting in advice that is often unsatisfactory.
34 The 2004 Review recommended:
- softwiring the transport sector through Ministerial mandate for collaborative action and behaviours, under the strategic leadership of the Secretary of Transport. Strategic leadership for sector policy development was assigned to the Ministry and the role of the Crown entities' boards in policy development processes was clarified;
- transferring selected functions within the transport sector to improve alignment and integration;
- amending the enabling legislation of the Civil Aviation Authority and Maritime Safety Authority to address administrative improvements, allow consideration of wider NZTS objectives and enable functions to be transferred; and
- creating a new organisation to undertake the activities that would remain in Transfund and the LTSA following functional transfers.
35 In the period since the 2004 Review expected improvements in the land transport sector from its recommendations have occurred only slowly. The sector continues to create ongoing fiscal risk for the Government, is insufficiently responsive, is not delivering adequately on the NZTS (nor the Government's wider agenda, e.g. sustainability), and is failing to achieve sufficient value for money.
36 The underlying causes of these issues are:
- gaps in the interpretation of the NZTS objectives;
- the Ministry has yet to acquire sufficient capability to fulfil the leadership role envisaged by the 2004 Review;
- expenditure pressures are not addressed strategically;
- the roles of some government agencies remain unclear, and some functions are duplicated;
- inconsistent planning and funding policies distort incentives within the sector; and
- inefficient churn in planning and limited sector collaboration which fails to align central, regional and local plans.