Thursday, June 20, 2024

$5 billion boost to transport funding

Transport Minister, David Parker, has today released the draft Government Policy Statement on land transport for consultation, which proposes an increase in transport funding to $20.8 billion over 2024-27.

“The funding – an increase of $5.3 billion, or 34%, on 2021-24 – is the highest by any Government,” said Prime Minister, Chris Hipkins.

“Funding under the new draft Government Policy Statement (GPS) 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.

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

Minister 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% per cent to between $5.4 and $8.1 billion over 2024-27.

“This additional investment will greatly strengthen the resilience of our roading network,” said Minister Parker.

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.

“The significant increase in funding for land transport responds to demand across New Zealand to fix our 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,” Mr Parker said.

“Some of the additional funding needed 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.”

The increase in the first year is proposed to be split into an initial two cent increase, with another 2-cents six months later. This is to be followed by a 4-cent annual increase in 2025 and again in 2026 – a total increase of 12 cents over three years.

A 2-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.

“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 our transport network,” said Mr Parker.

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.

This funding support is possible due to careful management of the Government’s books in recent years, with our debt position low compared to other countries. The additional funding means that the standard NLTF funding mechanism of Fuel Excise Duty and Road User Charges can support record road maintenance investment.

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 will be available after 1pm today at www.transport.govt.nz

Consultation on the draft GPS closes at 5pm on Friday 15th September 2023.

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