The National Land Transport Programme (NLTP) contains all the land transport activities, such as public transport services and road construction and maintenance, which are expected to receive funding from Waka Kotahi NZ Transport Agency. Waka Kotahi is responsible for allocating funding to land transport.
The 2008/09 NLTP sets out the significant transport issues facing land transport and lists the transport activities that have been given funding from the National Land Transport Fund and also those that may be funded during 2008/09. It sets out forecasts of anticipated expenditure and revenue over 10 years.
Funding from block maintenance allocations cover works required to ensure the preservation of the existing land transport asset base, to deliver a consistent and safe level of service and for network operations that are responsive to road user needs.
The preventive maintenance category provides for non-routine work required to protect the serviceability of the road network and to minimise the threat of road closure. Local authorities and the SH operational unit of the NZTA apply for financial assistance at monthly NLTP reviews, from an allocation set aside in the NLTP for this purpose each year. Apart from commitments for work already underway, no allocations have been made to specific projects within this activity.
There is an allocation of $10 million for 2008/09 comprising $5 million for local roads and $5 million for State highways.
Emergency work provides for the repair and restoration of the road asset following adverse events such as earthquakes and rainstorms. Local authorities the SH operational unit of the NZTA make an application, as and when damage occurs, for financial assistance from an allocation set aside in the NLTP for this purpose each year. An enhanced financial assistance rate applies to territorial authorities to ease the financial burden of this unexpected expenditure demand. From 2008/09, an enhanced FAR applies for the purposes of providing additional assistance to territorial authorities who experience successive emergency events.
Prior to 2003/04, annual expenditure was around $30 million. However, in the past few years, expenditure has been much higher as a result of floods in the lower North Island, the Bay of Plenty and Northland.
For 2008/09 there is an allocation of $91 million – $57 million for local roads and $34 million for State highways. This includes some residual work from events in previous years.
Maintenance allocations have been approved for all road controlling authorities. Maintenance funding allocation provides for a mix of management and physical work activities. These allocations relate to operational traffic management (4%), routine asset maintenance (38%), network and asset management (10%) and asset renewal work (48%). Minor level of service improvements associated with some renewal work has also been funded.
The total allocation for local roads, including those roads designated as special purpose roads, (but excluding preventive and emergency work) is $390 million. This is a 7.7 percent increase from the 2007/08 allocation. The allocation represents the outcomes of an assessment of submitted information, performance indicators and cost trends, a comparison of forecast and actual budgets and activity levels, findings from field inspections and negotiations between staff from approved organisations and Land Transport NZ regional offices. This analysis resulted in some low priority and unjustified items not being supported for funding. Approved organisations are increasingly using construction methods that require less frequent repair in response to increased traffic volumes. The increased cost of these methods is offset by the savings from less frequent traffic disruption.
Cost escalation is a primary consideration in the development of road maintenance programmes. While cost escalation eased over 2006/07 it has increased since mid 2007. Costs are 21 percent higher now than they were in mid 2002. Approved organisations have to meet the cumulative effects of indexed price increases over long term contracts. The cost of sealed road resurfacing, which accounts for approximately 22% of the road maintenance operations and renewals expenditure has increased dramatically. Funding approvals for 2008/09 have typically been made including an allowance of 3% for cost escalation, because the volatility in oil prices and exchange rates makes it difficult to predict future costs. A contingency allocation has been held to allow Land Transport NZ to respond to price movements at higher than budgeted inflation rates.
The increase in allocations is also driven by an increase in the amount of road assets, which causes an increase in routine repairs and periodic renewal works. The asset based has increased as a result of new subdivisions and roading improvements such as: safety initiatives, retaining walls, seal extensions on previously unsealed roads and more extensive traffic management infrastructure. The asset base and associated costs are increasing most in regions with rapid growth including Auckland, Bay of Plenty, Nelson/Tasman and Central Otago.
Traffic, measured as total vehicle kilometres travelled in a year, has grown an average of +2.7% per year for the last five years. If this were a uniform national increase there would be little direct impact on demand for corridor maintenance or on the deterioration of roads, but some areas, such as Carterton, Horowhenua, Tauranga, Nelson, Queenstown Lakes, Selwyn and Waitakere are experiencing significant annual growth.
Asset management planning establishes a link between desired levels of service, demand on assets and financial forecasting. A robust plan sets the framework for approved organisations to make informed decisions when developing land transport programmes. During 2007/08 Land Transport NZ completed a review of all local authorities’ roading asset management plans. The review concluded that there were some weaknesses in formal asset management processes within local authorities. Further work has now started to compare network performance against these planning processes. From 2009/10, an enhanced FAR will apply to encourage more robust asset management planning.
Land Transport NZ monitors network performance measures. These show an improving national roading network, and therefore enhanced levels of service being delivered to road users. Funding requests for works increasing an already good level of service have not been supported.
For state highways, the allocation (including property management) is $430 million. This increase of 10.3 percent from the 2007/08 allocation has been approved to fund the costs of enhanced network operations capability, changing network demands, additional renewal work focused on addressing pavement issues and a cost escalation adjustment.
Traffic management operational costs (traffic demand management, traveller information, network surveillance) are increasing faster than other maintenance costs. Network operational costs are expected to continue increasing in response to increased expectations of network performance and travel time reliability and arising from new network management infrastructure. An estimated $3 million has been added to the allocation in this area.
Due to the rapid rise in fuel prices over the last two years growth in light vehicle travel on state highways has slowed for a second year, whereas heavy vehicle travel has been largely unaffected and has continued to grow at 4-5% per year. We expect the growth rate of heavy vehicle travel to slow in response to the downturn in economic conditions.
Heavy vehicles cause greater pavement and structures damage than private cars. Continued growth in heavy vehicle travel leads to increasingly frequent pavement repairs, and the need to increase pavement strength and a shift to more robust surfacings. As is the trend on local roads, Transit annually increases the length of two coat chip seals and asphaltic surfacings. Most of the state highway and local road network is still surfaced with a chip seal (approx. 90%). The shift to asphaltic surfacings occurs mainly on high stress areas, commercial/industrial zones and heavily trafficked routes.
Structural renewals over the past few years have been mainly focused on improving surface skid resistance through an extensive resurfacing programme. This has resulted in a drop in the pavement replacement rate. Although the network condition indicators are above target levels of service there is a risk that that any continued decline in pavement rehabilitation rates may result in more frequent and expensive pavement work being required in the future. A rebalance in renewal work and an additional $13 million has been added to the state highway allocation for work in this area. It is anticipated that this trend can be positively influenced in the short to medium-term.
As with local authorities, cost escalation has been a significant programme driver. Future cost escalation trends are difficult to predict. The maintenance, professional services and resurfacing cost escalation factors all impact on cost indexing as allowed within long term contracts. The state highway maintenance allocation includes an allowance for price increases in existing contracts and expected increases in contracts being tendered during 2008/09.
As the SH operational unit of the NZTA develops its long term planning processes, it has been working to develop an interim asset management plan. This work will provide more clarity around the relationship between longer term funding needs and targeted level of service. Once completed the plan will be used as the basis for decision-making in the development of a multi-year asset maintenance, operations and renewal programmes. The 2008/09 allocation includes approximately $2 million in additional professional services funding to facilitate this work.
Page updated: 30 June 2008
