The Government is proposing to increase transport funding to a record $20.8 billion over 2024-2027 – but there’s mixed reaction from the transport sector.

Prime Minister Chris Hipkins and Transport Minister David Parker yesterday released the draft Government Policy Statement on land transport for consultation.

The funding – an increase of $5.3 billion, or 34%, on 2021-2024 – is the highest by any Government.

“Funding under the new draft Government Policy Statement on land transport 2024 will enable a major boost to road maintenance, along with key critical new roading and public transport projects that New Zealanders want and deserve,” said Hipkins.

“This funding targets spending where it’s needed most: reducing congestion and emissions, boosting productivity and improving the resilience of our transport network.”

Parker said the Government has been turning around the road maintenance crisis that it inherited.

“Flat maintenance budgets between 2008 and 2016 made our roads much more vulnerable to damage from the recent severe weather events,” he said.

“We have shown a commitment to maintaining the level of service on our roading network, increasing the funding going towards road maintenance by 20% in GPS 2018, and 15% in GPS 2021. This year we have committed more than $1 billion into road repairs in cyclone-affected areas of the North Island.

“The draft GPS 2024 increases the investment range available to essential maintenance of state highways and local roads, including pothole repairs, by 41% to between $5.4 and $8.1 billion over 2024-2027. This additional investment will greatly strengthen the resilience of our roading network.”

The draft GPS 2024 guides how funding will be allocated to different transport activities. Over the next three years, the draft GPS 2024 proposes a minimum level of investment of:

• $5.4 billion in road maintenance ($2.4 billion for local roads and $3 billion for state highways)
• $3.8 billion in road improvements ($460m for local roads and $3.4 billion for state highways)
• $3.6 billion in public transport ($1.9 billion for running services, $1.7 billion for public transport infrastructure)
• $1.5 billion on safety programmes like road policing and road safety advertising
• $1.2 billion on upgrading and maintaining the rail network
• $500m on walking and cycling improvements

Parker said the increase in funding for land transport is in response to demand across New Zealand to fix cyclone-damaged roads, build new roads and improve public transport choices.

“This Government agrees that this investment is essential – but it has to be paid for,”  he said.

Some of the additional funding required will be raised by small increases in petrol taxes and road user charges.

“These sources fund the core of our transport networks. Past governments have regularly increased these charges, and this will commence again,” Parker said.

The increase in the first year is proposed to be split into an initial two cent increase, with another two cents six months later. This is to be followed by a four-cent annual increase in 2025 and again in 2026 – a total increase of 12 cents over three years.

A two cent per litre increase in petrol taxes, equates to a 44 cent per week increase in cost to the average motorist, or a 0.9% in the cost of petrol (including GST) at a petrol price of $2.50 per litre.

Parker said the increases in petrol taxes and road user charges will raise the total revenue from petrol taxes and road user charges from $13.1 billion to $14.5 billion over three years, and will be dedicated to improving the transport network.

Cabinet has agreed to inject $1.5 billion of capital and $900 million of operating funding into the National Land Transport Fund (NLTF) to support Waka Kotahi to progress these priorities.

Other proposed funding sources for the draft GPS 2024, in addition to petrol taxes and road user charges, are:

Crown grant to the National Land Transport Fund ($2.9 billion – inclusive of CERF below)

Crown loan to the National Land Transport Fund, to be repaid over 10 years from petrol taxes and road user charges ($3.1 billion)

Climate Emergency Response Fund contribution, dedicated to walking and cycling activities ($500 million)

Safety camera and fine revenue, dedicated to safety initiatives ($300 million)

The Government is inviting local government, the transport sector, community groups and the wider public to have their say on the draft GPS.

The draft GPS 2024 is available now and consultation will close at 5pm on Friday 15 September 2023.

Industry Reaction

Ia Ara Aotearoa Transporting New Zealand said the theDraft Land Transport GPS “won’t deliver” a resilient roading network.

Interim chief executive Dom Kalasih said the proposal will result in “major tax hikes for road users, while failing to prepare the roading network for the future”.

“The proposed increases in road user charges alone would add thousands of dollars to the cost of operating a truck and trailer each year, that trucking companies would be forced to pass on to consumers,” he said.

Kalasih said the draft GPS misses the mark.

“The Government needs to be prioritising the fundamentals: a well-maintained state highway network with strong regional connections that can transport people and freight safely and reliably.”

He said increasing road user charges for the trucking sector is not the way forward.

“The Ministry of Transport’s latest study on road pricing shows that compared to all other road users, trucks are by far paying most of their share. It’s time other road users started paying more of their share of the costs and the same goes for rail freight. It’s also time that investing the money that is collected needs to be focussed on benefiting those that are paying for it.”

Kalasih is calling for the Government to reconsider its current approach.

“GPS sets out transport priorities for the next ten years. This current draft isn’t going to prepare our transport system for the major challenges it will face over that time, particularly severe weather and an increasing freight task. We’ll be hammering that point home in our feedback to Government.”

National Road Carriers

Meanwhile, National Road Carriers says the draft Government Policy Statement confirms a much-needed increase to transport funding is planned.

National Road Carriers Association (NRC) The organisation said it is pleased to see the Government committing to significant investment in roading infrastructure as this reflects the essential role the network plays in supporting the entire New Zealand economy.

“We have been calling for a long-term commitment to road transport infrastructure for some time, so it is pleasing to see Government is responding,” said NRC GM Policy & Advocacy James Smith.

“We continue to ask for road transport infrastructure to be removed from the three-year political cycle, which has been shown to lead to a stop-start approach that benefits no one.

“A 50-year roading infrastructure plan is desperately needed to ensure New Zealanders have a safe, productive, and resilient networking that will be fit for purpose into the future,” he said.

“Shoring up our long-term infrastructure investment and maintenance plan is critical if we are to protect the network from further damage. The cold hard facts are this will take money, and a decent amount of it.”

Smith said the additional $5 billion boost is hugely welcomed.

“But money alone will not deliver the outcomes New Zealand needs. We also need to be smart about how we spend, where we spend it and what we get for it. Results matter if we are to get our roading infrastructure back up to scratch.”

Civil Contractors NZ

Civil Contractors NZ said it welcomes the focus on consistency, resilience and maintenance in the GPS, but caution there is a long road ahead to resolve historic underfunding and build resilience into the country’s transport network.

“It’s good to finally see what the government’s transport priorities are after months of waiting. Our decision makers don’t seem to be poles apart, and an increasing focus on priority projects, maintenance and resilience is encouraging, given recent severe weather events,’ said Civil Contractors New Zealand chief executive Alan Pollard.

He said many of the priority projects proposed were sorely needed. Contractors were likely to support the Policy Statement’s strategic priorities, which focussed on maintenance, resilience, safety, emissions reduction, urban development and integrated freight.

“A significant increase in maintenance funding would keep the country’s transport network in a safe condition for road users and help resolve the degradation in pavements that had led to a plague of potholes over the past decade.”

Parties hit out at plan

National’s Transport spokesperson Simeon Brown said Labour’s decision to hike petrol tax while Kiwis “continue to be slammed” by inflation cannot be justified.

“These fuel tax hikes aren’t necessary. Instead of being innovative and harnessing investment from places like superannuation and Kiwisaver funds, Labour is lumping motorists with big fuel tax hikes to fund their full suite of ideological projects.

And the Green Party said prioritising roads over climate is “simply irresponsible”.

“Aotearoa deserves a balanced transport network with rapid transit connecting more people where they want to go, not more urban motorways,” said Green Party transport spokesperson Julie Anne Genter.

“We’re pleased to see some rail, and recognition of necessary safety improvements, but the focus is still too much on new roads, and not low-carbon alternatives,” she said.

“Funnelling billions into building more roads, instead of investing in low-carbon transport options like regional rail, shows Labour are not serious about climate change.”