Road Funding
February 27th, 2006 at 11:14 am by David FarrarThe Road Transport Forum has pointed out that of the entire transport spend, only $4.7 billion is set aside over ten years for new roads.
$470 million a year isn’t a huge amount of money when you consider there are $14.4 billion of proposed roads with a benefit:cost ratio of at least 2:1.
Being a believer in user pays, something I’d like to see the Government do is:
1) Dedicate all petrol tax to the road fund. Public transport, where desirable, can be funded out of taxation as a public good.
2) Set a benefit:cost ratio over which you will fund projects. You could argue it should be 1:1 but I would be happy for 2:1
3) Automatically adjust petrol tax to cover the costs of all new roads (amortised over life-time of roads etc) which exceed that ratio. The petrol tax to be set annually based on each year’s approved road building exercise.
This might see petrol go up to over $1.50 a litre but if that is what the cost is of having a roading network which works, then I’m willing to pay for it.
Long-term I see charging being per car per road but until we have, or are willing to have, such technology the petrol tax is the closest thing to user pays. So why not set it at the level needed to get some new roads built?
No tag for this post.
February 27th, 2006 at 11:39 am
Agree, trouble is “ALL” past and present govts have used the petrol tax, road user charges, to prop up other public services.
Vote:I can’t see a Labour or National led govt changing anything, they know it’s a cash cow for who is ever in power. The problem is the NZ lack of foresight, or should I say not willing to act until the problem is out of control. It always seems the NZ answer is to apply another band aid, rather than plan ahead. Nothing will change! If you think so your dreaming!
February 27th, 2006 at 12:20 pm
Or we could borrow for the roads and use petrol tax to service the loans. We’d get the roads sooner, and get the benefit of them sooner.
Vote:February 27th, 2006 at 12:23 pm
I agree – most of NZ agrees; in fact I believe that was what one of the last 5c hikes was to do?
Problem is it never happens in terms of the petrol tax going into the roading. Until we can get defamation or breach of contract against the govt each petrol tax rise “for road fundig” wont go aywhere near…
Vote:February 27th, 2006 at 1:05 pm
The lazy sods always have a load of excuses.The Plan for Aucklands roads was set down in the 60s In the 70s the pollies were told the current gridlock would happen They ignored the advice.Its not helped by the flat earthers who just want to stop any progress.Sometimes i reckon the only way to get them to take us seriously is to stick some of their heads on spikes as a warning to the rest of the pillocks
Vote:February 27th, 2006 at 1:16 pm
OK, let’s imagine that all the money needed to build the roads was available. So how are you exactly going to build the roads? For a start there is a shortage of earthmoving, roading and structural contractors and engineers. That will slow things for a few years. Then you need to purchase land under the Public Works Act which causes considerable delay. And before all this, territorial and regional authorities together with Transit New Zealand are bound to slug it out for a while.
If you look at the roading funding pretty much all of the regional funding is preoccupied with linking the main centres while suffocating small town New Zealand through declaring everything a limited access road.
Good luck thinking that throwing a bit of money at the problem will make it go away.
Vote:February 27th, 2006 at 1:33 pm
You’d have to put up other taxes to pay for all the things that re currently being funded out of petrol tax.
Should all government spending be paid for by the user? I suppose you could tax pies and chips to pay for health, tax criminals to pay for police (this doesn’t seem to work well), tax employers to pay for the dole (actually this is quite common overseas).
How would you pay for defence? I don’t think we could levy a tax on potential enemies, but maybe the navy could take up piracy?
Anyway, petrol tax doesn’t fully equate to user pays – people in most rural areas use lots of petrol, but don’t need new roads, while driving from Birkenhead to Ponsonby every day clogs the roads to the max, but doesn’t use much gas.
A time based toll on the Auckland motorways would be a lot fairer and encourage people to use alternatives.
Vote:February 27th, 2006 at 1:44 pm
Wow. I agree with Cadmus! New Zealand does tend to ignore or band-aid a problem until it becomes huge. Then we end up in a situation where we have to pay over the odds (or suffer in other ways) when it becomes drastic. So, like Kiwi Bloke says, we’re now at the point where fixing this is going to be painful – there isn’t enough spare construction capacity to do this in a good way (i.e. without drawing capacity from elsewhere in the economy, or bringing in massive amounts of cheap foreign labour).
My feeling is that the reforms of the 1980′s were the same thing. By trying to stick to our old ways for too long, we made the crisis bigger than it had to be, and the solution that much more drastic and painful.
Vote:February 27th, 2006 at 1:52 pm
I was so stunned to agree with Cadmus that I wrote ‘Cadmus’ instead of my own name. Sorry!
Vote:February 27th, 2006 at 2:32 pm
I also think that tolling needs to be considered for new value-added projects, such as Transmission Gully and the ALPURT project north of Auckland.
New Zealanders are prepared to accept tolling if it means roading projects are finished more quickly, the road is safe, and there is a free alternative route.
Scott.
Vote:February 27th, 2006 at 2:36 pm
Kiwi Bloke I just hope we are never invaded We can always come up with reasons not to do something As to resources Good grief the Army has equipment for Africa plus trained engineers plus troops In the past its always been we cant take work away from the private sector Well lets supplement the private sector.As the old saying goes Where theres a will theres a way.Dont be fooled by the pollies and the public servants Ask what do they want as opposed to what the citizerns want.
As I say If we were invaded tommorrow the enemy would be asked kindly to delay things for a bit because we werent ready
Vote:February 27th, 2006 at 3:16 pm
It’s not the agreeing with Cadmus that’s amazing… it’s that Cadmus managed a post without either blaming or insulting Brash and Hide for NZ’s past, current and future roading problems!
Vote:February 27th, 2006 at 3:30 pm
As a proviso for your desire, I would like to see that all road user charges collected in which ever province, be spent on that area’s roads. Of course this will result in some anomolies, like paying diesel charges from head office or on the internet, but I’m sure overall the outcome will be fairer for all NZ, rather tha Auckocententric policies, which seem to be the desire currently.
Vote:The publec private partnerships regime needs to be developed, rather than fancifully bandied about, and then held on the never never. Didn’ Labour promise these relationships 2 elections ago, and how many projects are actually being built?
KiwiBloke, is right in his assertion that there is a shortage of labour for the road construction process. How did we sort these issues out in NZ’s past? Coolies and Prison labour were effective tools, which worked marvellously. It would also allow prisoners to pay their own way (ie remunerate them at the rate of $20ph, and then debit the earnings back against the cost of their keep). There are a number os institutions already in close proximity to desired projects (eg a Rimutaka 4 lane tunnel, the Taupo bypass).
February 27th, 2006 at 3:33 pm
As a proviso for your desire, I would like to see that all road user charges collected in which ever province, be spent on that area’s roads. Of course this will result in some anomolies, like paying diesel charges from head office or on the internet, but I’m sure overall the outcome will be fairer for all NZ, rather tha Auckocententric policies, which seem to be the desire currently.
Vote:The publec private partnerships regime needs to be developed, rather than fancifully bandied about, and then held on the never never. Didn’ Labour promise these relationships 2 elections ago, and how many projects are actually being built?
KiwiBloke, is right in his assertion that there is a shortage of labour for the road construction process. How did we sort these issues out in NZ’s past? Coolies and Prison labour were effective tools, which worked marvellously. It would also allow prisoners to pay their own way (ie remunerate them at the rate of $20ph, and then debit the earnings back against the cost of their keep). There are a number os institutions already in close proximity to desired projects (eg a Rimutaka 4 lane tunnel, the Taupo bypass).
February 27th, 2006 at 3:40 pm
Great idea pundito. We could also conscript the dole bludgers and beneficiaries to work in the road process.
Even better, we could get the yanks to send us some of the inmates from Guantanamo & Al Graib. I know they are bad, dangerous people, but if we had them in chain gangs and shot any recidivists I’m sure we could keep them under control.
And rather than using the army to actually build the roads, why not send them overseas to capture and bring prisoners from Iraq and Afghanistan – before long we could have all the mundane work in NZ done by captured terrorists and we could live a leisured existence.
Vote:February 27th, 2006 at 3:45 pm
Thanks pundito for being the brave one to mention the prisoners I didnt have the balls to say that as I knew some PC twat would jump up and down.By the way Did you know that the Yanks offered to build a 4 lane highway from Auckland to Wellington free of charge after the end of WW2 as they had the machinery and men and couldnt and didnt want to send them all back to the USA at once.Guess what our dimbulbs said No thanks It wont be necessary and anyway we dont want to be reliant on you lot.Nothing changes We still have the same old same old dimbulb thinking from these idiots.
Vote:February 27th, 2006 at 3:46 pm
Camryn, that’s ok, you will be even more stunned when your pen in the ballot box next election ticks NZ1! Your getting on the right wave length.
I can remember the late Auckland Mayor Sir Dove-Myer Robinson “Robbie” putting forward proposals for motorways & a light rail system similar to Sydney, back in the early 70′s. But in typical NZ fashion, with the aim of scoring cheap political points by saying the rates will increase, you will loss your land under the public works act. It could be your home! Robbie doesn’t know what he is talking about, of course common sense never played a part in the matter, just points scoring. Well thats the problem here in NZ, the oppostion of course has to object to any proposal even if it the only common sense answer.
Until the pollies cut the points scoring B/S and work together for a common sense solution nothing will change. But knowing that is beyond the pollies, I will repeat…Nothing will change, get used to another band aid as a stop gap measure!
Vote:February 27th, 2006 at 3:48 pm
Sorry gd. but the army didn’t make too hot a job of the bridge they built for the Berrymens./ The Macquarrie Bank are ready and waiting to finance and build any of our roads, just as they do around the world. Sure they will expect a dividend, and that is not synergistic with Labour ideology. Progress will be made at the same speed as always and lawyers as always will reap their harvest from the circumlocution of Resource Management Act.
Vote:February 27th, 2006 at 4:33 pm
The skills shortage is real and don’t blame the reform of the 80s. New Zealand did train enough engineers, it’s just that they have buggered off overseas.
I have over a dozen friends who are civil engineers working on infrastructure projects around London including the Wembly Stadium, Kings Cross Thames Tunnel link, Heathrow terminal 5 and the A38 deviation. Other locations include the Three Gorges Dam, Lap Kok Hong Kong Disneyland stabilisation project, Kansei Airport second runway exclamation, San Francisco Bay Bridge and various bridging and motorway projects in Japan and China. These guys graduated university and then buggered off. There just wasn’t the work or the pay and you can blame the Government, Transit, Meridien Energy (over the Project Aqua Project) and the RMA for that.
And as for the Army? Yeah right! They need upskilling and that will take time as well.
Vote:February 27th, 2006 at 5:26 pm
More roads would be built if the shiny arses ( bureaucrats ) took their heads out of the trough. It is estimated that for every $1 spent on Auckland roads 33c is sucked up by chair warmmers, if the actual money was spent on roads many would have been completed years ago, nothing is going to change any time soon.
Vote:February 27th, 2006 at 9:32 pm
The reason only a ‘small’ amount is spent on new roads, is the existing ones suck up money on maintenance and widening. Without this money there would be an even bigger mess. A main road only has a life of 20 years and then it must be dug up and replaced. This is a fact of life!.
Vote:All the flat earthers bleating about wasted money are fools.
A few facts which show the stupid policies of national through the 90′s have led to much of Aucklands problems. Until labour came to power and changed the funding formula of the ‘cost benefit formula’ is everthing, Auckland got about 19% of the funding , this in spite of having 30% of the population and 35%plus of the petrol tax revnue. So there were the lost years of the 90′s where construction costs were low, and the linking of the various motorways could have been done. Now were are trying to catch up
February 27th, 2006 at 9:55 pm
David has got it largely right.
With the addition of borrowing to spread the cost of capital over the life of the asset.
Labour has boosted road spending enormously, it is now well over double what it was under National, and it takes a lot for the construction sector to gear up to manage it – the problem right now is that the growth has outstripped capacity and the price of projects is going through the roof to pay for that capacity. Labour has effectively spent half of the Crown petrol tax component through specific Crown funding for transport – all that is needed is for the other half to be shifted over, taking about three years to do so. Then Transit and the local authorities need to budget – and that means some projects need downsizing (like a cutting instead of a tunnel at ALPURT, and a trench instead of a tunnel for Avondale).
Public transport funding then needs to be capped, and once existing commitments on capital funding for Auckland and Wellington rail are concluded – reduce PT subsidies to that which is economically efficient.
PPPs could be used for one or two large projects, but this will be few and far between, and tolls are virtually useless when there is a free alternative. However, new lanes on motorways could be tolled – such as a second Mangere Bridge.
David, you’re also right that a benefit/cost ratio of 2 should be set as the funding threshold, and everything above it is eligible (although there may be flexibility to avoid gameplaying around the margins).
Petrol tax in itself is only half the equation, road user charges are the rest. Don’t forget as of this year petrol tax and lighter RUC both start increasing according to inflation. I wouldn’t increase petrol tax – the extra $300 million a year pumped into the system from shifting all of the petrol tax over is enough, when combined with cutting waste from projects and capping spending on public transport. Enough, at least, until road pricing is introduced.
Vote:February 28th, 2006 at 7:47 am
Yes I have to agree with Cadmus as well, NZ just doesnt think ahead. Auckland is a big mess and needs to be fixed. It will take time and money, and most of the changes that are happening now are a case of too little too late.
As kiwibloke pointed out, the loss of engineers overseas during the early 90s really crippled this country’s ability to get through the work needed. I worked with one guy who was the only civil engineering graduate to get a job from his class (~150-200), so the rest went into other careers or left to go overseas. When I started in 2001 there was a noticeable gap between graduates and seniors, the 30-somethings were few and far between, and plenty of scope to take on as much responsibility as you could.
The situation in power engineering is a whole lot worse – the average age of power engineers in NZ is about 55. Imagine when they all retire and take their experience with them. We’re royally screwed then.
Vote: