Core Strategy - Chapter Two - Key Challenges

Last updated on 15/06/2009 3:47 p.m. 

Chapter 1 set out the vision and targets for transport up to 2040. The ability to achieve this vision will be affected by a range of factors – both domestic and international. Understanding these key challenges is essential if appropriate responses are to be developed.

2.1 Context

2.1.1 HISTORIC CONTEXT AND TRANSPORT TRENDS IN NEW ZEALAND

New Zealand is a recently settled country. Settlement patterns over the past 100 years have been heavily influenced by the increasing availability of motor vehicles. Despite traditionally being a pastoral economy, New Zealand has experienced a strong population drift from rural to urban areas throughout this time and is now a highly urbanised society. Almost three-quarters of New Zealanders live in the 16 largest urban areas14 and over 86 percent of New Zealanders live in towns and cities with a population of 1,000 or more.

For much of the last 30 years, greater prosperity has led to an increased need to travel, resulting in rapid growth of car ownership and use. Transport policies have focused on meeting this demand. Businesses have also sought better access to markets in an ever more competitive global economy. Because of this, road traffic has steadily grown. New Zealand’s transport system is now highly dependent on roads which are, for example, used to move approximately two-thirds of domestic freight. There has also been a rapid increase in domestic and international air traffic.

Despite this growth in demand, until recently New Zealand’s investment in transport infrastructure has been relatively low as a proportion of GDP compared to other OECD countries. This situation is compounded by New Zealand’s often difficult terrain and comparatively low population. Consequently, the country is behind many of its competitors in the basic provision of transport infrastructure and there is a need to ‘catch up'15. In the last five years the levels of investment, particularly in State highways, have grown significantly. If New Zealand is to keep up with global competitors, the level of investment in transport will need to be maintained.

The following table sets out some of the key trends and statistics relating to the New Zealand transport sector16. Sources of data are available from the Ministry of Transport.

TABLE 2: KEY TRENDS AND STATISTICS RELATING TO THE TRANSPORT SECTOR

This table sets out a number of transport statistics and trends that illustrate some of the challenges facing the sector in achieving the targets
Emission levels 
  • Greenhouse gas emissions from transport increased by 64 percent in the period 1990 - 2006 and currently make up 18 percent of New Zealand’s total emissions.
  • Harmful vehicle emissions in New Zealand have been estimated to contribute to the premature mortality of approximately 500 people per year. 
  • In Auckland, each year, around 45 percent of all PM10 emissions, 85 percent of all CO2 emissions, 80 percent of all NOx emissions and 65 percent of all SO2 emissions come from transport17
Personal land
based transport
  • New Zealand has one of the highest levels of per capita vehicle ownership in the world, with over 700 vehicles per 1000 people
  • Overall travel distance (for cars, buses and bicycles) on roads per household has increased
  • by 14 percent between 1997/8 and 2003-6, an average increase of 1.8 percent per year
  • The New Zealand population incrased by seven percent during this period
  • The predominant users of roads, accounting for about 80 percent of road traffic, are people
  • in cars. About 90 percent of people travelling to work in cars do so alone
  • Road congestion in Auckland is occurring outside traditional peak periods and is estimated
  • to cost the economy approximately $750 to $900 million per annum
  • Bus boardings have increased around 30 percent since 2000/1, from 68 to 90 million
  • It is estimated that in Auckland approximately 5.7 million passengers travelled on the city’s rail network in the year ending June 2007. This is an increase from 2.3 million passengers in the year 2000
  • Between the years 1990 and 1998, there was a decrease of 39 percent in the number of cycling trips as a form of household travel. The decline in cycling trips is most apparent among the young
Freight
  • Road freight tonne-kilometres has increased by 34 percent since 2000.
  • Rail currently moves 18 percent of freight (in tonne-kilometres) within New Zealand. Coastal shipping moves 15 percent of inter-regional freight (in tonne-kilometres).
  • New Zealand has experienced a trend towards fewer, but larger ships in the sea freight sector. Between 2002 and 2007, the average number of vessels arriving in ports each month reduced from approximately 600 to below 500.  However, in the same period, the total gross tonnage of freight increased from approximately 2.2 to 4.2 million tonnes.
  • In the period 2000 – 2007, there was 14 percent growth in value of New Zealand exports carried by air and eight percent growth in value of imports
Aviation – passengers
  • In 2000 (on average each week) 119,000 people flew within, or to and from, New Zealand on 840 flights. This increased in 2007 to 172,000 people on 1,130 flights
Safety
  • The number of deaths on the roads each year has halved since the early 1970s and there has been a steady decline since the late 1980s. However, this decline in the past five years has slowed and may have levelled out at around 400 deaths per year. Hospital admissions from road crashes have started to increase in the last few years.
  • Deaths in the rail, maritime and aviation sectors are fewer than on roads with an average of 18, 24 and 12 deaths per annum respectively

2.1.2 FUTURE DRIVERS OF CHANGE

The use and development of the transport system in the future will be strongly influenced by a number of factors – drivers of change – over which New Zealand has only limited control. These drivers of change will affect demand for transport and shape the options available to manage that demand. Six key drivers of change for New Zealand’s transport system have been identified: demographics, economic performance, rising demand for transport, climate change, energy security and cost, and technological change. Further information on each key driver is outlined below.

New Zealand’s population is projected to grow from 4.2 million today to about 5.3 million in 204118. This population growth is expected to continue to be concentrated in the North Island with two-thirds of the growth likely to be in Auckland. The Bay of Plenty, Waikato and Nelson-Tasman regions are also expected to experience strong population growth. By 2031, 38 percent of New Zealanders could be living in Auckland and by 2050, Auckland is expected to be home to two million people.

New Zealand is also experiencing a demographic shift. The population is ageing due to falling birth rates and increasing life expectancy. In 2001, 12 percent of New Zealanders were aged 65 and over, and that figure is projected to reach 24 percent in 2041.

ECONOMIC PERFORMANCE

New Zealand is a trading nation whose economic future is closely linked to the international economy. New Zealand’s network of trading partners is changing with increased globalisation and the rise of China and India as major economies. The greater number and diversity of potential trading partners will provide New Zealand with increased resilience to disturbances in different parts of the global economy.

Transport-dependent industries such as agriculture and forestry are likely to remain the mainstay of New Zealand’s exports for some time to come. Tourism is one of the world’s fastest-growing industries and is also an important part of the New Zealand economy. New Zealand’s international visitor arrivals for the year ending March 2008 were 2.5 million and are expected to reach 3.4 million annually by 201519.

The Treasury long-term GDP forecasts are that the economy will grow by 36 percent in real terms between now and 2020. Growth is then forecast to slow to half this rate for each of the two decades after that20. This lower rate reflects the further ageing of the population. Despite this slowdown, economic growth is likely to result in higher transport demand in the future.

RISING DEMAND FOR TRANSPORT

Rising population and growth in the economy are predicted to lead to a significant increase in transport demand in the future. At current rates, the total number of kilometres travelled by vehicles on roads in New Zealand is expected to increase by approximately 42 percent by 204021. Growth in freight transport is projected to be even higher – with the freight task22 expected to more than double by 2040. Similar growth could occur with other scenarios. Such growth in demand will place significant burdens on the transport network and could harm economic competitiveness as a result of congestion. It may also adversely affect the social and environmental wellbeing of New Zealanders because of safety, noise, air pollution and other effects.

CLIMATE CHANGE

There is now much greater awareness of the implications of climate change and the contribution that increasing travel demand has made to New Zealand’s greenhouse gas emissions. Transport accounts for around one-fifth of New Zealand’s total emissions. New Zealand has made clear its intention to play its part in the global response to climate change, in particular by meeting its Kyoto Protocol commitments. The need to reduce emissions from transport therefore represents a major driver of change. New Zealand’s response to climate change will both inform and be informed by international policy developments in this area.

ENERGY SECURITY AND COST

As set out in the New Zealand Energy Strategy, supplies of conventional (cheap) oil are finite, and global demand is growing due to rapidly increasing consumption in developing countries such as China and India. The International Energy Agency (IEA) expects demand for oil to grow by 41 percent by 2030. In its 2006 Medium Term Oil Report23, the IEA states that world oil markets may come under increasing pressure due to supply constraints within the next five years and prices are likely to rise. While this may stimulate extraction of oil from currently uneconomic sources, there may be disruptions in supply and ongoing cost increases in the future.

TECHNOLOGICAL CHANGE

Transport technologies will continue to evolve, with vehicles becoming more fuel efficient and producing fewer greenhouse gas and other harmful emissions. New technologies, such as electric cars and alternative fuels, are currently under development. Some of these are expected to go into commercial production over the next five to ten years. Significant uptake of many of these technologies will require investment in new infrastructure such as distribution networks for biofuels and charging networks for electric vehicles. The decisions of exporting countries, especially Japan, to shift the manufacture of cars to new technologies will be important for New Zealand as an importer of new and second-hand vehicles.

Developments in aviation technology are also important, given the growing concern about the impacts of greenhouse gas emissions from air travel and the limited prospects of developing alternative propulsion technologies for aircraft. The development of alternative liquid aviation fuels, such as sustainable biofuels, is therefore highly desirable.

Technological innovation will also drive improvement in other areas, eg more widespread use of global positioning systems for improving the efficiency of freight movement.

2.2 Key challenges 

The analysis of the historical context for the New Zealand transport system, the likely future drivers of change and feedback from stakeholders have led to the identification of the following seven key challenges for the transport sector in the next 30 years: 

  • responding to climate change
  • energy security and cost
  • funding of investment in infrastructure and services while keeping transport affordable
  • increases in the environmental and social impacts of transport
  • changing demands arising from the ageing of the population
  • land-use development and its impact on transport demand
  • global terrorism

2.2.1 RESPONDING TO CLIMATE CHANGE

The government has made the decision to halve per capita emissions from domestic transport by 2040. Although demand for transport is increasing, particularly in the freight sector, this target is achievable through a combination of technological and behavioural change. However, some stakeholders in the development of this Strategy expressed concerns about the effects this might have on economic performance, accessibility and the affordability of the transport system. The challenge in moving to a low-carbon transport system is to ensure adverse effects on other objectives are minimised.

The transport system will also need to adapt to the effects of climate change, eg the frequency and severity of extreme weather events such as storms and floods, and sea level rises in the longer term.

2.2.2  ENERGY SECURITY AND COST

New Zealand, as elsewhere, is highly dependent on fossil fuels such as petrol and diesel for transport. As such, the nation is vulnerable to potential fuel supply disruptions and future cost increases. If oil shortages or high costs occur before alternatives can be found, they would have an adverse impact on the New Zealand economy. This may lead to decreased funding available for transport services and investment in transport infrastructure. High oil costs may increase the price of commodities that require a lot of energy to produce such as concrete and steel, as well as products made from oil such as bitumen. This would, in turn, increase costs for the transport sector. The costs of public transport services that use fossil fuels would also increase. Equally, high oil prices would have major implications for tourism, business, the price of goods that need to be transported and the ability of New Zealanders to get around. Those on low incomes are particularly vulnerable.

The challenge for New Zealand is to decrease energy use in the transport sector, while moving to sources of energy that are not based on fossil fuels, and are less vulnerable to changing international prices and availability. Although this is a key challenge, New Zealand is relatively well placed to do this because of its potential to generate renewable electricity and, in the future, to produce sustainable biofuels.

2.2.3  FUNDING OF INVESTMENT IN INFRASTRUCTURE AND SERVICES WHILE KEEPING TRANSPORT AFFORDABLE

Growth in travel demand, particularly for moving freight, will place increasing strain on the transport system, potentially requiring additional funding for maintenance and the development of new transport capacity. If travel demand continues to grow, it will be difficult to meet these costs in the future while also ensuring that transport remains affordable. Although increasing, New Zealand’s population is ageing. This will result in relatively fewer ‘economically active’ people in the workforce and a greater proportion of people reliant on retirement incomes. In addition, the growth rate for the economy is predicted to slow from 2020 onwards.

The challenge will be to maintain the investment in the transport system necessary to support New Zealand’s global competitiveness while ensuring that it remains affordable for its users. This challenge will also increase the focus on achieving value for money in every investment made and on the role of travel demand management to reduce the need for new infrastructure.

2.2.4  INCREASES IN THE ENVIRONMENTAL AND SOCIAL IMPACTS OF TRANSPORT

Growth in travel demand over recent years has resulted in undesirable environmental and social effects including road congestion, air pollution, carbon emissions and noise. Even road safety, which has for years been improving, appears to have reached a plateau. As noted above, travel demand is expected to increase considerably in the future and this has the potential to significantly worsen these trends. Although technological change such as vehicle improvements will help address some of these impacts, other solutions such as safety improvements or noise walls24 are expensive. The challenge will be to better understand these social and environmental impacts of transport, and to develop fair and cost-effective solutions.

2.2.5  CHANGING DEMANDS ARISING FROM THE AGEING OF THE POPULATION

In the future, owing to demographic changes, there will be a larger number and proportion of older people in the population. This will have an impact on the type of transport needed to enable these people to continue to participate in society and access essential services, particularly if they are unable to drive. A major challenge in the future will be to ensure that the mobility and access needs of older people (and also people with disabilities and those who are transport disadvantaged25 in other ways) can continue to be met in both rural and urban areas. An increase in the number of elderly drivers and pedestrians may also present challenges for the road safety targets. 

2.2.6 LAND-USE DEVELOPMENT AND ITS IMPACT ON TRANSPORT DEMAND

One of the strong messages from stakeholder feedback was the need for more emphasis on integration of land-use and transport planning. New Zealand has relatively low-density communities compared to many other developed countries. Residential areas are often physically remote from the facilities and services people need. This has created a high demand for transport and a reliance on cars to meet daily needs. Once development has taken place, its impacts on transport demand are long term.

The need for better links between housing and the facilities and services people need represents a significant challenge for transport because of predicted increases in population and economic growth. It is essential that future urban growth does not cause unnecessary increases in travel demand or place excessive costs on the transport sector.

2.2.7  GLOBAL TERRORISM

Global terrorism and the security of New Zealand’s international transport links are an increasingly important challenge for transport. Transport systems have long been the target of terrorist activities because of their relative accessibility and the potential for casualties on a large scale. New Zealand’s international trade and tourism dependon secure and efficient global maritime and aviation transport systems. Since 11 September 2001, many new international security measures have been introduced to increase aviation and maritime security. These measures, though necessary, can impose considerable costs on the transport sector, transport users and governments. Individual governments are also imposing new security measures at short notice.


Footnotes:

  1. At 30 June 2006, Statistics New Zealand
  2. A World Economic Forum report in 2007 placed New Zealand at 20th out of 30 OECD countries on the state of its ground infrastructure (the quality of roads, railroads and ports, as well as the extent to which the national transport network offers efficient, accessible transportation to key business centres and tourist attractions)
  3. View further information on the Transport Monitoring Indicators Framework here
  4. PM10 – particulates with a diameter of around 10 microns (a harmful component of vehicle pollution, particularly from diesel vehicles) CO2 – carbon dioxide. NOx – various oxides of nitrogen which are harmful pollutants. SO2  – sulpur dioxide, another harmful pollutant
  5. Medium Term Population Projection, Statistics New Zealand
  6. New Zealand Tourism Strategy 2015
  7. 19 percent GDP growth is forecast for 2020 -2030 and 18 percent for 2030 -2040
  8. Based on modelling using the Ministry of Economic Development 2008 ‘Net Positions’ analysis, ie:
    • oil at US$100 a barrel until 2040
    • New Zealand currency dropping to NZ$1 = US$0.60 by 2012
    • the Emissions Trading Scheme in place
    • GDP growth as per Treasury long-term forecast ie 19 percent over 2020-2030 and 18 percent over 2030-2040
  9. The amount of freight that needs to be transported
  10. IEA World Energy Outlook 2006, Paris
  11. Physical barriers sometimes erected alongside roads to reduce noise levels in nearby properties
  12. Based on modelling using the Ministry of Economic Development 2008 ‘Net Positions’ analysis, ie:
    • oil at US$100 a barrel until 2040
    • New Zealand currency dropping to NZ$1 = US$0.60 by 2012
    • the Emissions Trading Scheme in place
    • GDP growth as per Treasury long-term forecast ie 19 percent over 2020-2030 and 18 percent over 2030-2040

 

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