Land Transport Sector today

Planning and Funding

Complex Sector

37 The land transport sector is complex. It has a wide range of stakeholders, which include Ministers, the Treasury, the Ministry of Transport, Land Transport NZ, Transit NZ, regional councils, Territorial Authorities (TAs), Auckland Regional Transport Authority (ARTA), transport operators and the wider community. There are also various components to the transport system including State highways, local roads, railways, passenger transport, walking and cycling and coastal shipping which compete for funding.

38 There is a detailed and complex decision-making framework which aims to ensure that both national, regional and local priorities are taken into account and that the wider community's views are represented. The Government's New Zealand Transport Strategy (NZTS) provides the overall vision and objectives for the sector. The Land Transport Management Act (2003), along with a raft of other legislation, sets out the framework and complex processes by which the sector must operate.

39 The key planning and funding processes are set out below. This is followed by a description of the key central Government agencies. The planning and funding processes, along with the current roles, functions and structure and institutions of the sector are described in greater detail in Appendix B.

Planning

40 The NZTS provides the overall context in which the planning and funding system operates, by setting out the Government's vision and objectives for the sector. These objectives are set at a broad overarching level. The vision and objectives are incorporated into the Land Transport Management Act 2003 (LTMA). This means that both central government agencies and regional councils and territorial authorities (TAs) must take these objectives into account when making decisions.

41 Land Transport NZ is responsible for deciding which land transport activities will receive funding. Each year Land Transport NZ prepares the National Land Transport Plan (NLTP) which sets out the list of activities it is prepared to consider for funding throughout the coming year. This is a statutorily independent function.

42 Land Transport NZ produces the NLTP by considering funding requests for specific activities submitted by Approved Organisations, such as regional councils, TAs, the ARTA and Transit NZ. These requests are set out in each Approved Organisation's Land Transport Plan (LTP). Individual requests are received from around 80 Approved Organisations. Land Transport NZ uses an extensive and detailed funding evaluation policy to prioritise these proposals. This policy is set out in a range of manuals and is complex.

43 In addition to the NZTS objectives, when preparing LTPs, Land Transport NZ and Approved Organisations must also take into account relevant Regional Land Transport Strategies (RLTSs). They are also required to consult with the community to a specified standard.

44 Activities funded include State highway construction and maintenance, local road development and maintenance, passenger transport services and infrastructure development, road policing and educational activities. State highways and road policing are fully funded by Land Transport NZ while other activities receive varying levels of funding. The remainder of the funding comes from councils, and directly from the Crown (see later).

45 Agencies are responsible for different activities. For example Transit NZ is responsible for State highways, while TAs are responsible for the local roading network. Regional councils are responsible for planning and funding passenger transport operations, while TAs are responsible for some key infrastructure aspects of passenger transport (e.g. bus lanes). Land Transport NZ is responsible for assisting regional councils and TAs to coordinate and plan across modes. Transit NZ has also taken a key role in the planning process. - both in terms of planning State highways and involvement in land-use planning.

46 The rail sector sits largely outside the LTMA framework with only urban rail passenger transport and some infrastructure expenditure for passenger transport being planned and funded under the LTMA framework. The majority of rail infrastructure is funded directly by the Crown.

47 Finally, special arrangements apply to the Auckland region. The Auckland Regional Transport Authority (ARTA) is responsible for planning, funding and developing an integrated, safe, responsive and sustainable land transport system. Unlike TAs in other regions, Auckland TAs cannot receive funding directly from Land Transport NZ. Instead funding is allocated to ARTA, which submits and coordinates an LTP covering passenger transport, local roading and local maintenance and construction.

Funding

48 The total amount of funding allocated through the NLTP is some $2.4 billion per year. Funding is traditionally sourced from road users through a portion of Fuel Excise Duty (FED), charges on diesel and heavy vehicles (Road User Charges - "RUC"), and motor vehicle registration and licensing fees. While the Crown controls the amount of money that goes into the National Land Transport Fund (NLTF) by setting the overall levels for the various user charges (FED/RUC), the amount collected depends on economic activity and changing patterns of fuel consumption. Currently, only a portion of the FED is paid into the NTLF.

49 Since 2004/05 the Crown has provided additional funding from general taxation either in the form of top-ups or appropriations for specific regional needs. In 2006/07 Crown funding of $608m makes up approximately 25% of total funding.

50 Decisions on FED and RUC levels and the amount of Crown funding to inject into the NLTF have tended to be driven by particular funding pressures. Funding is categorised into National, Regional and Crown (N, R and C) funding, each broadly targeted at different transport issues and programmes.

51 Local roads are the responsibility of TAs and are co-funded by Land Transport NZ, and TAs from rates and other revenue sources such as parking fees. Land Transport NZ's Financial Assistance rate (FAR) for maintenance varies across TAs and is approximately 50% while the FAR provided to each TA for construction varies.

Roles and Functions and Institutional Arrangements

52 The current roles and functions of the Treasury (as adviser on transport), the Ministry, Land Transport NZ, Transit NZ and ONTRACK (currently a State-owned enterprise, but proposed to be a Crown entity), are set out below. More detail is provided in Appendix B.

The Treasury

53 The Treasury is a Public Service department and central agency. Its core role is as the Government's principal adviser on economic and financial policy. It has three key specific roles in the sector:

  • lead agency for the current commercial negotiations on the Rail Network Access Agreement;
  • Vote Finance administration of funding for ONTRACK and certain other sector infrastructure investments; and
  • adviser on Crown infrastructure investment, including rail infrastructure.

Ministry of Transport

54 The Ministry is a Public Service department with four key roles in the sector:

  • lead adviser to Government on the transport sector;
  • provider of strategic leadership and international representation;
  • agent for the Minister of Transport with regard to sector Crown entities; and
  • administrator of the NTLF on behalf of the Crown.

Land Transport NZ

55 Land Transport NZ is a Crown entity with three key roles:

  • allocate and manage funding for land transport infrastructure and services;
  • manage access to the land transport system through licensing, registry and related regulatory enforcement functions; and
  • provide land transport safety and sustainability information and education.

Transit NZ

56 Transit NZ is a Crown entity charged with building, maintaining and operating the national State highway network.

ONTRACK

57 ONTRACK is a State-owned enterprise charged with owning, maintaining and managing the national railway infrastructure. ONTRACK is scheduled to become a Crown entity with the enactment of the Rail Network Bill.

Ministerial levers of influence over Crown entities

58 As Crown entities, Land Transport NZ and Transit NZ are legally separate from the Crown and operate at arms-length from the Minister of Transport. Land Transport NZ has a number of statutorily independent functions that it carries out free from Ministerial influence, in particular approving activities in the NLTP.

59 Despite the formal separation between the entities and the Minister of Transport, there are several important avenues available to the Minister to influence the entities' performance and operations. These mechanisms are detailed in Appendix C.

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