New Zealand’s transport network is in need of a new funding model and needs to be resolved within the next decade.
That’s according to Waka Kotahi NZ Transport Agency board meeting notes from June where the issue was discussed alongside the Ministry of Transport.
The board noted the “impact funding limitations on local government relationships and the risk of the network deteriorating due to the lack of available funding for maintenance”.
“Waka Kotahi may need to start making decisions to stop work given funding constraints.
“While the Ministry believes that there is 10 years before the funding issue needs to be resolved, modelling done by Waka Kotahi shows that the issue is more imminent.
“If funding is not resolved in the near term, decision-makers need to be informed of the consequences and trade-offs,” it says.
The board says there are a number of decisions that need to be made by the Government following the Climate Commission’s report that will inform Waka Kotahi’s response.
“However responding to climate change and emissions targets will require additional funding,” it says.
It notes that the transport minister Michael Wood does not intend to amend the Government Policy Statement on land transport (GPS) for the current period “but will signal early the likely changes for the next period”.
The board concluded that a review of the legislative framework is needed.
Funding review
The Ministry of Transport (MoT) is already undertaking a programme of work to review the current land transport revenue system to ensure it is “fit for purpose and can meet future requirements”.
It comes as the uptake of electric and other alternative fueled vehicles is expected to increase over the coming years, meaning less fuel tax revenue as EVs are currently exempt from road user charges.
Details of the project, named The Future of the Revenue System, were released through the Official Information Act.
In a MoT briefing sent to transport minister Michael Wood in November last year, it says The Future of the Revenue System is a medium-to-long term project that considers a range of fundamental questions around the revenue system.
It says the transport revenue system has been impacted by COVID-19 but remains “relatively stable” and is expected to increase for the next 10 years.
However, issues to address include a heavy reliance on road users as a source of revenue and a system which was not designed to fund large-scale investments, it says.
“Although there is no immediate pressure to change the system, policy work needs to continue now as any new system may require a decade to develop and implement,” it says.
“Our RUC system is world-leading in the way it recovers the costs of road damage caused by heavy vehicles and – along with FED [fuel excise duty] – it has provided a stable source of revenue with low collection costs.
“Revenue from these two sources in particular is not declining, and will not decline in the foreseeable future, even with greater uptake of electric vehicles (EVs),” it says.
