60 The issues identification drew heavily on related recent reviews (EXG Review of Value for Money in the Land Transport Sector, Ministerial Advisory Group on Roading Costs, and Ministry of Transport Review of Business Processes and Work Flows) which focused on matters relevant and complementary to the scope of the Next Steps Review.
61 There is a 'strategic gap' between the vision and the broad objectives in the NZTS and their implementation through the NLTP. The NZTS objectives are too high-level, lack specificity and do not contain measurable targets. They do not provide sufficient guidance for decision-making and, in particular, how to prioritise funding decisions or activity selections across the land transport system.
62 The 'strategic gap' results in the NLTP being a collection of activity classes and projects, rather than a land transport programme with a truly strategic focus. Other agencies have stepped in to fill the 'strategic gap' (e.g. Transit NZ has taken de facto responsibility for State highway strategies) resulting in confused accountabilities and roles.
63 There is also a lack of clarity regarding the inter-relationship between the NZTS objectives and whether and how they may need to be weighted or traded-off against each other. Approved Organisations have commented that they are unclear about how they should take account of the five NZTS objectives and how they can establish whether they have chosen the 'right' projects for funding. This lack of clarity results in a weak alignment of national and regional needs and processes.
64 There is a need for national objectives to be clearer and guidance regarding how the NZTS objectives should be used in decision-making and weighted. There is a need for measurable sector targets and performance measures to be developed.
Barriers to effective regional planning and prioritisation
65 Decision-making at the regional and local levels is fragmented and there are tensions between local and regional interests that are not always managed well through current processes. This can result in a lack of effective prioritisation across regions.
66 RLTSs in their present form may not be an adequate tool to assist regional councils through Regional Land Transport Committees (RLTCs),in making tradeoffs between the priorities of TAs. RLTSs tend to be aspirational documents, and set out what a region would like achieved rather than what is possible within current funding, policy parameters and the region's rating base. As a result, RLTSs can include demands in excess of available funding. There is no requirement for RLTSs to include a list of priorities for the region.
67 The political nature and structure of RLTCs may also be hindering effective regional prioritisation. In trying to be representative some RLTCs are large and unwieldy and may not be appropriately balanced for effective decision-making. The accountabilities of RLTC members are mixed with some concerns that those who do not represent agencies that have funding responsibilities have voting rights on the recommended projects.
68 There is a need for good regional prioritisation processes and an effective body along the lines of RLTCs to undertake this role.
Balance between national and regional priorities
69 There is a lack of balance between national and regional priorities. This has been exacerbated by a lack of top-down strategic direction and as a result planning decisions are frequently driven from the bottom-up. Land Transport NZ has noted that it can only consider projects that have been submitted to it by Approved Organisations (it cannot itself direct Approved Organisations to put forward certain projects).
70 The separate consultation on the State Highway Programme also tends to create expectations and stakeholder support for State highway projects at the local level. That support is exacerbated by the funding arrangements that mean that there is no local contribution to State highway projects. This means that Land Transport NZ's ability to filter projects is constrained.
Frequency of planning
71 A planning cycle of one year does not provide sufficient certainty and is too short for the development of a NLTP, which is expected to have a strategic focus.
72 There are extensive consultation requirements on Approved Organisations with associated compliance costs on them. There is also potential duplication on consultation around State highways.
73 There is a need to rationalise and streamline the planning process.
Lack of robust evaluation including focus on value for money
74 There is no specific requirement to evaluate and report on the effectiveness of the NLTP as a whole, and therefore it is difficult to determine how effectively the NZTS objectives are being met.
75 There is insufficient consideration of factors such as:
- cost-effectiveness in the evaluation of projects;
- value for money indicators in the performance monitoring system resulting in a lack of focus on evaluating major projects and monitoring scope and cost;
- transparency in Land Transport NZ's funding allocation process; and
- emphasis on cost-efficiency in the LTMA.
Fiscal risks and system distortion
76 Recent Crown funding injections (i.e. revenue and State highway guarantee) have provided additional funding. However they have confused accountabilities and resulted in increased fiscal risks for the Crown. These risks include an expectation that cost increases will be funded by the Crown rather than from existing revenue.
77 The Crown funding injections have also resulted in:
- less integrated decision-making across modes and activity classes; and
- blurred accountabilities for Land Transport NZ.
78 There is a need for separate processes for the management of Crown funding outside of the NLTF in order to ensure greater accountability and transparency.
79 There are a number of incentives that distort the effectiveness of the planning and funding system and affect tradeoffs being made. These incentives include:
- State highway development being favoured by councils over other activities because State highways are 100% funded and require no local share;
- the Government's cost guarantee for State highways does not incentivise Transit NZ to achieve efficiencies; and
- as a large, well-resourced organisation with a single focus, Transit NZ is able to have a stronger influence in the planning processes than is appropriate for its role.
80 These incentives result in insufficient trade-offs between modes (e.g. between expenditure on State highways and passenger transport). There is a need for enhanced ability for making trade-offs across modes, and correct incentives.
Unclear roles and accountabilities
81 The roles of the Ministry, Land Transport NZ, and Transit NZ and how the agencies should engage with each other are unclear. Councils comment that they are unclear of the Ministry's role and consider the Ministry to be less visible than Transit NZ and Land Transport NZ. The EXG review reported that TAs consider the Ministry's low visibility is due to its lack of engagement with the sector and communication on key policy issues.
82 Role confusion is heightened by the role the Treasury plays in respect of rail, the tendency for Transit NZ to step in to fill the 'strategic gap', and no shared view about the degree to which Land Transport NZ should review and evaluate projects. Regional councils have commented that they are unclear which central Government agency they should engage with on funding and planning matters.
83 Working relationships between agencies are variable and inconsistent. There is a lack of information sharing and consistent engagement at an early stage on areas of common interest, and insufficient consideration given to the impacts of operational policy decisions on strategic policy (and vice versa).
84 These unclear roles result in:
- a lack of clarity between the Crown entities and the Ministry as to the inter-relationship of strategic and operational policy;
- Ministers receiving inconsistent or conflicting advice;
- multiple engagements within the sector, and overlapping/duplicated work effort;
- Crown entities focusing resources on 'backfilling' the strategic policy gap rather than their operational roles; and
- rail decisions policy not being integrated with other modes.
85 One key reason for both the confusion over roles and the lack of effective working relationships is that the Ministry is not yet fulfilling a strong policy or sector leadership role. The lack of effective monitoring and reporting on Crown entity performance by the Ministry has also perpetuated unclear roles and sector objectives.
86 There is a need for greater role clarity. There is also a need for the land transport Crown entities to focus clearly on their respective roles and for the Ministry to fulfil its role of providing of strategic policy advice, leadership and monitoring the overall land transport sector. Sector performance could also be enhanced by Ministers fully using the levers available to them (e.g. accountability documents, board appointments) to hold the land transport agencies accountable for delivering their roles, and to improve responsiveness and alignment between policy and operational actions.
87 The NZTS and the 2004 Government Transport Sector Review required the sector, particularly the Ministry, to improve and build capability in a number of new areas (e.g. sector leadership and strategic policy). The recent review of the Ministry has highlighted that, although some progress has been made, significant capability gaps have not been addressed.
88 For example, the review of the Ministry states that: "some key functions are undervalued or absent: strategic policy (integrating economic, environmental and safety, and access and social perspectives to form an overview of the transport sector, and applying this consistently to policy development to ensure alignment with sector outcomes)". The review also noted that: "Almost certainly, existing MoT staff do not have all the knowledge, skills and experience necessary to fulfil this function, and further staff development and/or targeted recruitment may be necessary". The review of the Ministry also identified capability gaps related to sector monitoring and integrated, cross-ministry approaches to wider transport policy issues.
89 The Ministry needs to ensure it addresses existing capability gaps.
Lack of sector integration and collaboration
90 Lack of sector collaboration and integration is a problem underpinning many of the issues present in the sector. The lack of role clarity, sector leadership, and common expectations about how the sector should engage has helped perpetuate a fragmented sector culture. As a result, there is mistrust and 'competition' amongst the agencies. The agencies are individualistic and act independently. A similar conclusion was reached in the 2004 Government Transport Sector Review.
91 There is need for agencies to become less individualistic and independent and act more as a 'transport team' working with a common purpose and shared outcomes under the NZTS. Importantly, there is a need to be more specific about the type of collaboration expected, (e.g. collaboration for agreement/consensus building; collaboration meaning supporting each other and being open and communicative) how this should be achieved, and for these expectations to be sanctioned in accountability documents.