Smart investment in the transport system requires knowing what you’re trying to achieve (outcomes), how to assess and deliver the best mix of options (value for money), and managing revenue streams (affordability)
To achieve its purpose of creating transport solutions for a thriving New Zealand, the NZ Transport Agency is a planner, investor, regulator and builder. We plan and invest in the land transport system – one of the country’s largest national assets - to ensure it’s effective, efficient, safe and responsible, and resilient. The Transport Agency works with 78 councils, the Police and a wide range of stakeholders and transport users to achieve this function.
How the transport sector is funded
Dave Brash, group manager of the Transport Agency’s Planning and Investment group says the Transport Agency has a unique investment model. “Firstly, we have a fully hypothecated fund called the National Land transport Fund (NLTF). The NLTF is made up of fuel excise duty from petrol, road user charges from diesel vehicle distance licenses, a portion of the annual vehicle license (rego), and income from the sale and lease of state highway property – about $3 billion per year. Secondly, we have a Government Policy Statement which sets out priorities and the range of funding allocations for each type of transport activity. Thirdly, the Transport Agency is charged with making individual investment decisions at arms’ length from Government within this framework,” said Dave.
How the Transport Agency makes investment decisions
Dave explains how investing in transport is changing: “We’ve moved away from providing subsidies to councils to a co-investment model. We work with partners to develop a business case before any new investment is made. This helps ensure the right issue(s), supported by evidence, are identified, and that appropriately timed and scaled solutions are promoted. We take a one-network, multi-modal, and customer journey approach to select the right interventions. We agree which activities we can invest in together and if councils are chasing other outcomes, then they pay for them.”
All business cases are assessed against a multi-criteria analysis. The three factors are:
“I believe our investment and procurement practices are up there with the best in the world,” said Dave. “However, one of our biggest challenges is maximising returns on our maintenance and operations investment, whereas maximising returns on capital programmes is the more traditional focus.”
Investing for levels of service
“In partnership with local government, we’re developing a One Network Road Classification system which will move us towards investing for particular customer levels of service,” said Dave.
The road classification initiative aims to drive efficiencies into the approximately $1billion per year investment (35% of the NLTF) into the maintenance and operations of existing roads, as well as identify gaps where required levels of service are not being achieved.
“In practice, this means investing to achieve different outcomes on different parts of the network. Councils are in the process of classifying their roads into five classes, broadly based on traffic volumes and the purpose of the road. Customer levels of service have been set for each class of road and their respective technical performance measures are being developed. Effectively, performance measures will translate into aspects such as the acceptable level of delay and safety, and the type of road surface we’ll invest in to achieve and maintain for each class of road. Then, if a council wants a higher level of service over and above a particular road’s classification, they’ll pay for it themselves,” said Dave.
More information about how the Transport Agency invests the NLTF is available here(external link).
