National Land Transport Programme management

This page relates to the 2021-24 National Land Transport Programme.

Introduction

This page sets out how we (Waka Kotahi NZ Transport Agency as investor) manage the National Land Transport Programme (NLTP) from adoption to achievement of outcomes, including regular processes such as forecasting of revenue and expenditure to ensure operation within National Land Transport Fund (NLTF) limits, and delivering against targets.

During the NLTP several processes are used to ensure that the programme delivers according to the published NLTP and within the actual funding constraints.

These include processes carried out regularly to update forecasts of NLTF revenue, monitor delivery progress (that is, expenditure) and model the balancing of expenditure with revenue.

Overview

We (Waka Kotahi as investor) are required to balance revenue coming into the NLTF with expenditure for land transport investments over time, while still delivering Government Policy Statement on land transport (GPS) requirements. To do so, we develop cashflow plans and targets, forecasts of revenue and expenditure, and manage NLTP cashflows to achieve NLTP targets.

Government Policy Statement on land transport(external link)

We have access to a short-term debt facility, effectively an overdraft, to assist the management of NLTP cashflows. The facility cannot be used as structural debt and its limit cannot be exceeded. The facility comprises two components:

1. a limit to manage regular seasonal cashflow cycles, where borrowing is expected to be repaid annually, and
2. an additional limit to manage unexpected and unavoidable cashflow variations relating to project timing variations, emergency works beyond normal levels and unanticipated increases in unit prices.

Forecasting expenditure is a critical part of cashflow management and requires coordinated and timely gathering, collating and analysing of forecasts from approved organisations and Waka Kotahi (for its own activities).

Update NLTF revenue forecasts

We develop short-term cashflow forecasts, showing the daily balance, aimed specifically at managing the NLTF and short-term debt facility. These forecasts use New Zealand Customs Service data on fuel import shipments, as well as short-term views of road user charges and motor vehicle registry fees, which inform our decisions to draw down and repay short-term debt relating to seasonal variation. However, the Ministry of Transport (MoT) exercises a statutory vote management role in approving draw-downs from the NLTF and attesting that any borrowing to cover a shortfall is within the agreed facility.

In addition, we develop longer-term forecasts – of up to 30 years – for the likely NLTF revenue. These longer-term forecasts use economic indicators plus scenarios of potential policy changes, and inform discussions with MoT, who have their own model, to produce a consensus view of future NLTF revenue. This is particularly important during the development of the following NLTP, when GPS activity class ranges are being determined, and the Waka Kotahi Board target spend per activity class is being recommended and adopted.

Monitor delivery progress

We require approved organisations and Waka Kotahi (for its own activities) to forecast their expected claims for funds from the NLTF. For approved organisations this data is collected and validated via the Transport Investment Online (TIO) programme monitor.

Transport Investment Online(external link)

For Waka Kotahi (for its own activities) forecast data is updated monthly in our project and portfolio management system.

Both approved organisations and Waka Kotahi (for its own activities) are required to manage their activities within their approved allocations as required by the investment claims and obligations policy.

National Land Transport Fund investment claims and obligations policy

These forecasts are compared against past delivery performance and current progress – (approved organisation claims and Waka Kotahi (for its own activities) spend to date – to reduce the effect of optimism bias.

Forecast NLTF balance

Our modelling of revenue and expenditure scenarios, with moderation and discussion amongst regional and national staff, inform the setting and consequent reviewing of our cashflow strategy. The strategy considers the desired positioning of the NLTF revenue–expenditure balance over time and any ongoing requirement of the short-term debt facility to manage cashflows. This ensures that:

• there are sufficient funds available to meet the demands on the NLTF for the current financial year; the current NLTP and for future NLTPs
• funding availability is considered as part of the funding approvals process
  Funding approvals, cost changes and transport programme updates

• maximise the use of the available funds by forecasting likely cashflows of projects and programmes, including both those that haven’t yet been approved and those that have been approved
• provide confidence to the Waka Kotahi Board, MoT and the Minister of Transport that we are maintaining expenditure within the appropriation and borrowing facility.

Actions to manage the NLTP delivery against revenue

Once each NLTP has been adopted, actions can be taken to ensure that the NLTP continues to deliver to the GPS objectives within the constraints of NLTF revenue and delivery progress. These include:

• monitoring key activities that significantly influence the spend against a particular activity class and, if delivered by Waka Kotahi (for its own activities), limiting spend per year or setting conditions on the release of funds
• recommending that the Waka Kotahi Board change the investment threshold for particular activity classes within the current NLTP to take account of developed business cases and updates to cost profiles. This may result in lower priority projects being deferred until the next NLTP or being required to seek alternative funding
• recommending that the Waka Kotahi Board change activity class targets within the GPS range, while ensuring that the overall spend matches the NLTF revenue forecast
• recommending that the Waka Kotahi Board applies to the Minister of Transport to change GPS ranges, especially where significant events have occurred that impact the assumptions that underlie the adopted NLTP.

Crown funding

To ensure that Crown funded activities, such as the Climate Emergency Response Fund (CERF), deliver according to the terms of the appropriation, the following actions should be considered:

• the objectives and scope should be clearly defined, including stating which organisations and work categories are eligible for funding
• the appropriation should state whether we (Waka Kotahi as investor) control the allocation of funds to activities, or whether ministerial approval is required to update the programme
• funding agreements must consider how cost overruns will be funded
• where there is the potential for the NLTF to fund any shortfall, or provide funds beyond the life of the appropriation, approved organisations and Waka Kotahi (for its own activities) should provide investment information to support any future NLTF funding request
• any funding agreements with approved organisations should clearly state the funding assistance rate or local contribution, and consider the impact on in-flight NLTF activities
• funding agreements should clearly state any reporting requirements and, for approved organisations, whether supporting information is required for making TIO claims.

Climate Emergency Response Fund (CERF) programme