Waka Kotahi NZTA warns it only has about half the funding it needs

NZTA says its work programme needs to reflect funding and capacity constraints. Photo / Alex Cairns

Waka Kotahi NZ Transport Agency (NZTA) warns it will need to spend about twice as much as it expects to receive in revenue over the next decade.

In a briefing to the new transport minister Simeon Brown, the Crown entity said much of its planned future investment in roads, rail, public transport, walking and cycling was “under or unfunded”.

The funding shortfall it identified was worth several billion dollars a year.

Graph from Waka Kotahi NZ Transport Agency's briefing to the incoming transport minister.

NZTA said funding the transport system in a way that delivers what’s needed is an “imminent challenge that needs to be addressed both to meet the existing demand of maintaining our networks and services, while also meeting future needs”.

NZTA gets most of its funding from road user chargers and fuel excise duties. It also borrows money and is sporadically allocated money by the Government to deliver specified projects.

“The existing networks and services have grown and are ageing, with many of the existing land transport networks and assets reaching replacement age,” NZTA said.

“The condition of the transport network has also been affected by increasing weather events in recent years which we expect will continue to escalate in frequency and impact.

“This, coupled with an increasing demand on the network due to growth in population and volume of freight on the network means that investment in a sustainable transport network is increasingly important.”

NZTA also noted its roles and responsibilities had expanded at a time when costs were rising rapidly, there were supply chain issues, and it faced uncertainty around how it would continue to generate revenue if fewer people drove cars in the future.

NZTA said it would support and “accelerate” implementation of Government policies aimed at increasing its revenue.

The Government wants to diversify NZTA’s revenue sources.

In principle, the Government is supportive of value capture (charging the beneficiaries of new or improved infrastructure), congestion charging, tolling and the use of public-private partnerships.

“Each has their own purpose, benefits, constraints and operational complexity,” NZTA said.

It told Brown it would need an assurance the Crown would underwrite any debt it took out if it couldn’t generate enough revenue.

Projects to be deferred or delayed

NZTA warned it wasn’t going to be able to deliver on what it said it would in its 2021-24 National Land Transport Plan.

It said its output would be “well below” what was planned, “with many projects deferred or delayed”.

“In this challenging and evolving operating environment, we need to establish a deliverable work programme that reflects the funding and capacity constraints.”

Capacity constraints are front of mind for the Treasury.

In a briefing to the new infrastructure minister Chris Bishop, the Treasury noted more money had been allocated to infrastructure generally (not just land transport infrastructure overseen by NZTA) than could physically be spent.

“Significant levels of capital funding have been allocated in recent years and this has led to an investment pipeline larger than agencies and the market can deliver, leading to cost increases and project delays,” the Treasury said.

“Market conditions continue to be challenging.

“Delivery of large-scale investments is dependent on large Tier 1 firms, which dominate the market and are currently at capacity.”

Jenee Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.