Achieving the short to medium term impacts - Government Policy Statement

36. The GPS contributes to achieving the short to medium term impacts through:
• setting funding ranges for activity classes
• providing guidance about the factors the NZTA should take into account when planning and evaluating strategies, programmes and packages and making funding decisions on specific activities.

Funding ranges for activity classes

37. Funding in the National Land Transport Programme is allocated to activity classes. The GPS establishes these activity classes.  The amount of funding for these activity classes influences land transport outcomes by determining how much can be spent on different areas of land transport activity.  The allocation of funding to these activity classes recognises how each activity class can contribute to achieving the short to medium-term impacts, whilst taking into account existing commitments, financial constraints, and the need to keep transport affordable.

38. The following activity classes will be used for the 2009 – 2012 National Land Transport Programme: 
• New and improved infrastructure for State highways
• Renewal of State highways
• Maintenance and operation of State highways
• New and improved infrastructure for local roads
• Renewal of local roads
• Maintenance and operation of local roads
• Road policing
• Public transport services
• Public transport infrastructure
• Demand management and community programmes
• Walking and cycling facilities
• Sector training and research
• Domestic sea freight development
• Rail and sea freight
• Transport planning
• Management of the funding allocation system (including performance monitoring).

39. A definition of each activity class is provided in Appendix Two.

Activity class funding ranges

40. Table 1 overleaf sets out funding ranges for each activity class for every year through to 2018/19.

41. The NZTA is required to allocate funding to activity classes within the funding ranges set out in Table 1 and within the overall funding constraints set out in section D of this GPS.

42. By specifying the funding allocations as a range, the NZTA has some flexibility in responding to requests for funding set out in Regional Land Transport Programmes and actual funding applications received, and in managing overall expenditure under the National Land Transport Programme.

TABLE 1: ACTIVITY CLASS FUNDING RANGES 2009/10 – 2018/19

Description of funding allocations to activity classes

43. Table 2 below provides the indicative funding allocations over the first three years of the GPS for each activity class identified in Table 1.  Actual expenditure must be within the funding ranges in Table 1.  

TABLE 2: INDICATIVE THREE YEAR ACTIVITY CLASS FUNDING ALLOCATIONS FOR THE PERIOD 2009/10 – 2011/12 

Funding Policy - guidance on land transport planning and evaluation

44. The other key means through which the GPS contributes to achieving the short and medium-term impacts is by providing guidance on land transport planning and evaluation processes.

45. Developing a land transport system that will achieve the short to medium-term impacts set out in this GPS will require planning and evaluation processes that take account of the following factors:
• The government’s priority to support national economic growth and productivity, which includes the national roading priorities set out in the list of Roads of National Significance.
• Considering networks from a national perspective.
• Achieving value for money.
• Encouraging integrated planning.
• Making best use of existing networks and infrastructure.
• Implementing and fostering a co-ordinated approach.
• Considering the impact of volatile fuel prices.

46. These factors need to apply to the planning undertaken by local government and the NZTA, as well as to the evaluation of strategies, programmes, packages and activities by the NZTA.   Many of these factors are already being applied in developing land transport strategies and packages of activities.

Supporting national economic growth and productivity

47. To achieve national economic growth and productivity, Regional Transport Committees and the NZTA should give priority to transport initiatives that:
• improve the provision of infrastructure and services that enhance transport efficiency and lower the cost of transportation to New Zealanders through
o improvements to journey time reliability
o easing severe congestion
o more efficient freight supply chains
• provide better access to markets, employment and areas that contribute to economic growth.

48. In preparing land transport programmes, Regional Transport Committees and the NZTA should ensure that investment in nationally important infrastructure and corridors is given priority because of its particular contribution to national economic growth and productivity.  This should encompass networks that support national economic growth and productivity, as well as contributing to regional outcomes. 

49. In particular, consideration should be given to how projects funded through the National Land Transport Programme can support the delivery of the Roads of National Significance and the National Infrastructure Plan, and how the National Land Transport Fund can contribute to these.

50. While focusing on economic growth and productivity, improvements to the transport system should also seek to minimise any external costs associated with transport such as traffic accidents, noise and environmental impacts.

Considering networks from a national perspective

51. As part of developing regional priorities, Regional Transport Committees should consider the national aspect of some networks.  In preparing the National Land Transport Programme, the NZTA should ensure proposed activities will not compromise the functioning of the national State highway and national rail networks.

52. Proposed improvements on inter-regional links will be coordinated across regional boundaries, and activities elsewhere on the transport network will not compromise the functioning of the nationally important networks.

Achieving value for money

53. Making best use of resources by achieving value for money in the land transport sector is a key objective.  To achieve value for money three main concepts will need to guide the NZTA, local government and the sector when planning, assessing, and implementing strategies and activities.  The three main concepts are effectiveness, economic efficiency and economy.

54. Effectiveness means selecting activities which together make the greatest contribution to the government’s medium / long-term priorities, as well as the more immediate impacts sought in this GPS.  Economic efficiency is about maximising the value of what is produced with the resources available.  Economy means ensuring that quality inputs are purchased at the lowest price over the whole life of the asset or intervention.

55. There will be an increased focus on economic efficiency.  The NZTA’s evaluation processes will be adjusted to give projects with high benefit cost ratios (BCR) higher funding and programming priority and to give projects with low BCRs more scrutiny (high BCR is greater than four; low BCR is less than two). This change will place the onus on the organisations seeking funding from the NZTA to give priority to higher BCR projects unless there is good reason to do otherwise.

56. The use of BCR will need to be complemented by other evaluation factors.  The government expects the NZTA to consider the broader benefits and costs of proposed investments that cannot easily be captured in a benefit cost analysis, especially as they relate to economic activity.

57. In addition, the government considers that value for money can also be achieved through simplifying the process for allocating the National Land Transport Fund.  The current process for allocating funds is highly complex and demanding on resources.  The Ministry of Transport and the NZTA will consider options for simplifying this process that will generate savings and make the process for allocating funds more transparent. 

Ensuring integrated planning

58. Integrated planning is important to ensure that decisions made in relation to land use, transport and urban design collectively contribute to the efficient use of public funds and achieve the government’s objectives for transport and New Zealand.  To achieve integration, transport strategies and packages of activities should be developed alongside, and be clearly connected to, land use strategies and implementation plans.

59. The government is particularly concerned to see that better integration of land use, transport planning and urban design activity contribute to national economic growth and productivity.  In particular, land use and transport planning processes should ensure that:
• the transport needs of future growth are considered in planning and developing the transport system
• future transport corridors are safeguarded from other development
• the long term sustainability of land transport funding is secured through ensuring that urban growth meets the costs of the infrastructural impact that such growth generates for the wider transport network
• opportunities are created for better integration within and between transport modes.

Making best use of existing networks and infrastructure
 
60. Regional Transport Committees and the NZTA should ensure that cost-effective measures to improve the efficiency of existing networks are considered as well as investment in new infrastructure.

61. However, careful consideration should also be given to the sequencing of development so that small iterative investments in existing infrastructure do not take place when more significant investment in redeveloping the same infrastructure is shortly planned to commence.

Implementing and fostering a co-ordinated approach

62. Most transport problems require the involvement of many government agencies and private sector stakeholders to develop solutions. For instance, improvements in road safety can require coordination between road controlling authorities, regional councils, the Police, the Accident Compensation Corporation, the Ministry of Health, district health boards, community groups and transport funders.  All transport entities are expected to participate in a collaborative way with other agencies to reach coordinated solutions.

Considering the impact of volatile fuel prices

63. Recent experience has emphasised the volatility of oil prices, and the effects this can have on transport users.  In times of high oil prices, the availability of transport choice, such as public transport, helps to mitigate the effects on households, and public transport use tends to increase.  It is expected that the NZTA and local government will take these factors into account when developing strategies and evaluating proposed activities.

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