The Government is launching an independent investigation into the cost of major transport projects as it looks to overhaul how New Zealand’s road network is funded and delivered.
Transport and Infrastructure Minister Chris Bishop announced the work at the Civil Contractors New Zealand conference on Thursday, saying major projects such as motorways, expressways and public transport infrastructure are costing significantly more than comparable projects overseas.
The Infrastructure Commission has been directed to investigate the drivers behind the higher costs and recommend ways to bring them down, with its report due in the first quarter of 2027.
Bishop says benefit-cost ratios for land transport investment have fallen from a minimum of 4:1 in the 1990s to 1.2:1 in the 2010s, while major projects frequently exceed their original cost estimates.
“This is not a system that is delivering cost-effectively.
“Ministers are deeply frustrated, and we simply cannot continue to accept it.”
He says factors behind New Zealand’s infrastructure cost premium could include higher equipment, land and material costs, difficult geology and terrain, consenting and planning requirements, procurement practices, project specifications and institutional settings.
The Government also intends to examine whether major projects are being over-specified or over-scoped.
Bishop says bringing costs down is essential if New Zealand is to continue building major highways.
“I think we can and should build more four lane highways.
“Perhaps just not at their current design, scope or specifications – or not under the current institutional or regulatory settings.
“We can build more.
“We just need to find a way to do it in a more cost-effective way.”
The review comes as the Government faces a widening gap between planned transport investment and revenue flowing into the National Land Transport Fund (NLTF).
Bishop says Crown funding accounted for 3% of the National Land Transport Programme in 2018-21, rising to 24% in 2021-24 and 39% in the current 2024-27 programme.
Fuel excise duty and road user charges have not increased since 2020, with fuel excise falling around 21% in real terms.
The Government estimates delivering its Roads of National Significance (RoNS) programme in full over the next 20 years would cost $56 billion.
Funding that entirely through petrol tax and road user charges would require a one-off 70% increase, equivalent to an additional 49 cents per litre in petrol tax.
“That kind of increase is obviously not going to happen,” Bishop says.
Instead, the Government plans to make greater use of funding mechanisms including Infrastructure Funding and Financing Act levies, tolls, toll concessions and time-of-use charging alongside NLTF and Crown funding.
Bishop says these mechanisms could be used for projects with high traffic volumes, significant land-value uplift or clearly identifiable beneficiaries, reducing pressure on both the NLTF and Crown funding.
Work is also progressing on a broader reform of land transport funding and investment oversight following recommendations in the National Infrastructure Plan.
Options include returning to a system where investment is largely confined to user revenue, introducing independent economic oversight, prioritising funding for maintenance and renewals, strengthening performance standards and reviewing institutional structures and funding mechanisms.
The Ministry for Cities, Environment, Regions and Transport has been asked to develop detailed options, with Bishop due to report back to Cabinet in early 2027.
“My overall goal is to create a high-performing land transport system where maintenance and renewals are prioritised, the network is mostly funded from users and beneficiaries, investment aligns with demand, and where major projects are sequenced according to value for money,” he says.
Meanwhile, work continues on the Government’s RoNS programme.
Ōtaki to north of Levin, the Hawke’s Bay Expressway, Takitimu North Link Stage 1 and SH29 Tauriko West are under construction.
The first stage of the Northland Expressway between Warkworth and Te Hana is expected to begin construction by the end of this year, while Cambridge to Piarere is scheduled to start in early 2027.
Bishop says that will result in six RoNS being under construction by early next year.
The Government intends to consult on its draft Government Policy Statement on Land Transport 2027 early next year, following the election and after receiving the Infrastructure Commission’s cost investigation.
The GPS is expected to focus on value for money and cost control, network maintenance and resilience, productivity-enhancing investment, safety and getting greater use from existing infrastructure.
It is also expected to introduce a stronger focus on transit-oriented development, aligning transport investment with housing around transit nodes, major corridors and strategic connections.
Bishop also highlighted renewable energy as a key infrastructure opportunity, saying New Zealand has a competitive advantage that could help lower electricity costs, reduce emissions and strengthen energy independence.
More broadly, he says more than $20 billion of central government infrastructure projects will have started construction by the end of 2026, while the wider infrastructure pipeline stands at around $290 billion, including about $190 billion with confirmed funding.
