Resources

Allocating funds to activities within activity classes

Listing activities in the NLTP

The NLTF can only be used to fund activities listed in the NLTP. The tables in the regional sections of the NLTP list:

• activities that have been given funding approval and represent committed funding
• activities that the NZTA anticipates may be given funding approval during 2009-2012 (category 2 activities). More activities are listed than will be funded because many do not progress as planned by those proposing them
• reserve activities that are expected to be funded beyond 2009-2012, but might be funded in 2009-2012 if circumstances justify it
• activities that are not expected to be funded because they have too low a priority to warrant funding.

Also shown for completeness are activities funded outside the NLTF. These are SuperGold card, regional development, and Canterbury transport projects, which are funded outside the NLTF but administered by the NZTA on behalf of the Ministry of Transport.

Activities considered for inclusion in the NLTP

The activities to be funded within each activity class in the NLTP are:

• selected from the regional land transport plans developed by 17 regions around the country, or
• national activities (excluding state highways) delivered or managed by the NZTA, or
• road policing activities proposed by New Zealand Police and recommended by the NZTA to the Minister of Transport.

The regional land transport programmes have been approved by 16 regional transport committees and ARTA. Each regional land transport programme sets out the transport activities the region proposes to be included in the NLTP and funded from the NLFT in 2009-2012, and automatically includes:

• road operations, maintenance, renewal and minor road improvement works delivered by local authorities, the Department of Conservation and the Waitangi Trust
• continuing public transport services delivered by local authorities.

Each regional land transport programme also includes, where the regional transport committee has chosen to include and prioritise them:

• road operation, maintenance, renewal and minor road improvement works on state highways that are delivered by the NZTA
• proposals to improve passenger transport services
• significant local road and state highway improvement projects, including those on RoNS.

The approach required in Auckland is different from those of the other regions. There, the ARTA Board developed and adopted a regional land transport programme that prioritised every activity.

The NZTA considers the proposals in regional land transport programme when deciding which activities to list in the NLTP. It considers:

• the priority given to each activity in the regional land transport programme, in the manner used in each region
• the proposed funding plan for each regional land transport programme, and the affordability of the proposed programme from both an NLTF perspective and a local share and supplementary funds perspective
• the proposed programming of activities
• the integration of activities in each regional land transport programme
• the eligibility of activities for funding.

The transport priorities in regional land transport programmes have a great degree of commonality with the NZTA's investment priorities and those stated in the GPS- so most activities listed in regional land transport programmes are candidates for inclusion in the NLTP. However, the NZTA has excluded from consideration activities with objectives that don't align with the NZTA's investment priorities, or where the type of work doesn't meet the NZTA's funding criteria.

Prioritising and programming activities

The NZTA prioritises candidate activities for inclusion in the NLTP so that it can direct the available funding to the highest-priority activities and obtain the best value for money from the funding available.

After prioritising all candidate activities, it considers which of the highest-priority activities are affordable and will be listed in the NLTP as likely to be funded in 2009-2012, and which have too little priority to warrant funding and might be programmed for funding beyond 2009-2012.

When prioritising and programming activities and allocating 'C' (Crown), 'R' (regionally distributed) and 'N' (nationally distributed) funds, the NZTA:

• considers the priority of activities in regional land transport programmes and the transport priorities for each region as described in each regional land transport programme
• proposals' priority order (established using the NZTA's framework)
• proposals' affordability in the 10-year period, considering the C, N and R funds available in each year
• the priority of related activities or packages
• the stage that proposals have reached in terms of investigation, design and construction, and the factors that could delay (or speed up) implementation
• the expected reliability of cost estimates.

The NZTA also considers whether to approve funding for projects that are ready for implementation. Where funding approval has been given, the projects are included with a 'funding approved' status in the regional and national activity tables. The remaining activities will be considered for funding approval during 2009-2012 when they are ready for implementation.

Because the NZTA prioritises activities on a national basis, drawing on activities from many regional land transport programmes, there is some divergence between regional and national prioritisations. And, as there are more activities listed in regional land transport programmes than can be funded from the NLTP in each activity class, not all of them can be funded.

Many activities are in the early stages of development and their final priority cannot be determined when the NLTP is prepared. They are listed with an indicative priority. The NZTA has also allowed for some activities not going ahead as proposed. For this reason, more activities are listed in the NLTP than can be funded.

Multi-year funding for activities

Funds are generally allocated in three ways:

• as a three-year amount, with annual budgets, for ongoing activities such as road maintenance and public transport services
• as a three-year amount, with annual budgets, for groups of small activities such as minor improvement works and routine road improvement works
• as a lump sum amount for a stand-alone project, with annual budgets for the duration of the project.

Delivery of programmes within allocation

Expenditure is expected to match the annual budgets and be within the total approved funding amount.

The NZTA expects those best able to control cost risks to manage them. This means it takes responsibility for managing cost risks for the state highway programme, and expects local authorities to manage the risks for their programmes.

Funding allocations and approvals are not indexed against inflation. We do not expect to vary funding approvals to fund cost increases except in special circumstances. Organisations are expected to ensure that expenditure for ongoing activities such as road maintenance and public transport services are delivered within the allocations set out in the NLTP, and that the scope of activities is well managed so that activity costs remain affordable.

Programme managers are expected to control projects' scope so that costs don't change from those given funding approval. Note that approved funding is not indexed against inflation because the NZTA has little scope to do this; instead, programme managers are expected to deliver activities within the funding provided.

Funding for groups of activities

This NLTP introduces the concept of a funding allocation for groups of activities. Groups of activities are introduced to simplify administration of funding for routine road works. An allocation of funds is made for groups of similar activities delivered in one region by an organisation. The allocation represents the amount of funding set aside in the NLTP for those activities in order that the organisation can be confident about the level of funding it can expect over three years. The tables in the regional sections of the NLTP show which individual activities are expected to be funded through each group allocation. The funding approval for individual activities is generally managed between the NZTA's regional office and the relevant organisation. The funding allocated to groups of activities can be varied when the circumstances warrant through the normal NLTP review process.

Allocating funds to improvement activities

When allocating funds to improvement activities (new and improved infrastructure for local road and state highways, walking and cycling facilities and public transport infrastructure), the NZTA allocates the available funds to the highest-priority activities that will be implemented during 2009-2012 to ensure that it obtains maximum value for money from all the funds available.

It uses three stages to allocate the available funds:

• 'C' funds are allocated to activities in accordance with their purpose as set out in schedule 2 clause 14 of the Land Transport Management Amendment Act 2008.
• 'R' funds are then allocated to proposed activities judged to have the highest priority in each region. In this way they effectively set a minimum improvement programme level in each region.
• 'N' funds are then allocated to the highest-priority activities in each activity class not funded by C or R funds. N funds are allocated to activities on the basis of national priority order until the funding available to each activity class is fully allocated.

R funds are generally allocated at the rate they are expected to be available.

The funding source for category 2 projects is indicative only. This is because the projects have not been finally prioritised as their development is incomplete.

When allocating funds to activities, the NZTA considers the likelihood of activities proceeding, and the possibility that category 2 activities may have higher or lower profiles than the indicative priorities listed in the regional tables.

Large projects are sometimes funded from several funding sources.

In the past, 'C' funds were provided as separate funding for the NLTP. This ceased when all fuel excise duty and road user charges funding was dedicated to the NLTF.

The NZTA must now ensure that it provides funding for activities once funded by C funds, and by the times specified in the LTMA. It will continue to nominate a funding source as 'C' to indicate how this is achieved on a project-by-project basis.

Regional allocations and programme details

Allocations for each region for all activity classes, including road policing activities, are shown in the tables in each separate regional NLTP document. All amounts exclude GST.

Last updated: 6 October 2009