The Government has promised 17 Roads of National Significance, but the brutal truth is that it cannot afford them.
So Transport Minister Simeon Brown yesterday announced that from now on, tolls and other user charges will be the way New Zealand pays for new roading infrastructure.
Tolls are likely to be accompanied by increases in Fuel Excise Duty (currently 70 cents a litre) and Road User Charges.
The immediate issue facing the New Zealand Transport Agency (NZTA) is that the gap between its spending on new roads and maintaining existing ones is expected to get to $6 billion by 2030.
Brown told Parliament’s Transport Committee yesterday that the Government had made it very clear that user fees and tolls would be critical to helping to fund and finance new roading infrastructure in New Zealand from now on.
“And we expect the New Zealand transport agency to assess that on new roads,” he said.
“The agency has consulted recently on a number of our potential toll roads.
“They have received public feedback, which has been provided to the Ministry of Transport.
“The ministry will then prepare advice for me, and then it will go to Cabinet.
“And Cabinet will ultimately make decisions in regard to those tolling proposals.”
The challenge is that the Land Transport Management Act requires that authorities carry out “adequate consultation” on the proposed tolling scheme.
And the record so far is that communities tend to oppose road tolling.
A recent poll from The Post/Freshwater Strategy has shown mixed public feelings on road tolling, with 49 percent of people preferring taxpayer funding over privately funded road projects.
However, ultimately, the decision whether to toll a road will be a political one, which might explain the widespread public agitation over the proposal to impose a $4.30 toll on light vehicles using the new Manawatū to Tararua highway, the replacement for the old Manawatu Gorge road destroyed in 2017 by slips.
The local Councils in the region have all opposed the toll.
Brown has relied on a somewhat unorthodox approach to measure public opinion on the proposed toll.
“There were local National Party members who turned up to all of those meetings,” he said.
He then revealed that Bay of Plenty National MP Tom Rutherford had also gone to one protest meeting.
“I believe even you turned up to one of those meetings as a member of this committee, but also as a colleague,” said Brown.
“And so, I have been engaging directly with people who have been at those meetings and hearing exactly what feedback on the ground has been.”
How much feedback from National Party members and a new backbench MP would reflect strong criticism of the Minister is possibly a moot point.
Brown said the decision was now up to Cabinet, but it was clear he was firmly in favour of tolls as a general funding device.
“There’s a range of views on this issue, as you can expect,” he said.
“But I think the point that we’ve been making as a government and which is reflected by a large portion of New Zealanders, is that they do expect to contribute when they use the infrastructure and the benefit from it because it’s significant time-saving benefits, safety benefits and efficiency benefits from the construction of this new infrastructure.
“And that’s what you see around the world when it comes to building major new infrastructure as tolling is put in place to help contribute towards maintenance operations and the capital cost of that infrastructure.
“It’s not a new thing.
“Yes, there are toll roads in New Zealand. We’re saying this is going to be a way for us to pay for new infrastructure going forward for New Zealand.”
However, Simon Bridges, the chair of NZTA, offered a broader range of funding tools to help close the $6 billion gap, which he said would be an issue over time.
“That’s why these questions of tolling, value capture, pricing, electronic road user charges (eRUC) reform are also pertinent.
“And of course, what’s also true is that really significant infrastructure projects and land transport under any government are crown injections of funding.
“In the meantime, we are funded to do the job.
“But we need to be thinking very carefully about our funding and financing for the future.
Another issue allied to tolling is the proposal for time-of-use, or congestion charging, intended particularly for urban roads to try to move vehicles off the roads during peak times and have them move at times of lesser use during the day.
Congestion charging is not intended to raise funds as much as to change behaviour.
In August, Brown promised that the Government would introduce a Bill before the end of the year to allow congestion charging.
But so far, there has been no sign of the Bill, and Green MP Julianne Genter took this up with Brown at the Select Committee.
Genter: “Could you give more specifics on the time frame?”
Brown: “Shortly”
Genter: “Shortly being three months, six months two years?”
Brown: “I think when we announce policy decisions.”
Genter: “Definitely next year, would you commit to that?”
Brown: “It’s currently being drafted, but the good people at the Parliamentary Counsel’s Office are very busy.”
There is a suspicion, which Genter’s questions seem to reflect, that the Government is stalling on getting congestion charging up and running in Auckland until after the 2026 election because it is worried about the electoral impact of Aucklanders suddenly having to pay to drive on motorways they have up till now been able to drive on for free.
Nevertheless, though Bridges says NZTA is fully funded until 2027, there is some urgency to get its revenue streams up and running.
Sara Lindsay, NZTA Group General Manager Commercial and Corporate told the Committee that notwithstanding Bridges’ comments around the three year period (to 2027) beyond that the revenue side of the picture needed to be addressed.
“The funding and financing tools that we’re investigating at the moment are part of the picture, but we must stay focused on the revenue,” she said.
“We’re in a position where Fuel Excise Duty (FED) and Road User Charges (RUC) have not been indexed for a long period.
“So in the interim, we have sought comfort from the government that if the forecast FED and RUC increases do not come through or if the position changes, the government will keep us whole and ensure that we don’t get to an imprudent level of debt.
“And we have other levers that we can pull, obviously a reduction in spending if we get into that position.
“But at the moment, we’ve got assurances that we won’t be in that position for the next few years.
“In addition to the increases in FED and RUC, the position that you’re seeing with the $6.1 billion gap over the ten year period reflects the fact that at the moment we have to have to forecast the repayment of the debt that we have.
“We’re working with both the Ministry and Treasury who are looking at different ways to be able to spread that debt and different ways to get certainty about what the revenue forecasts will be as well.”
The Government has been very vocal about restoring the roads of national significance programme but less so about the fact that users will have to pay for years to come if this is to happen.
In short, we are about to get the Bill for the new highways. But the Government might find that the Bill carries its own political cost.
