Message from the Chief Executive

Peter Mersi, Chief Executive

Peter Mersi,
Chief Executive

It is an exciting time to be part of the Ministry of Transport, as the transport sector is on the cusp of extraordinary changes. While new technology may create major shifts in when, where or how people and goods travel, the fundamental role of transport will not change any time soon.
Transport is a great social and economic enabler – and the Government will continue to need a high-performing Ministry, capable of guiding and coordinating the wider transport sector. That is why the Ministry values bold and collaborative leadership, where staff and stakeholders are invested in our work, and the Ministry as a whole enables New Zealanders to flourish.

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Our contribution towards the Minister’s priorities for transport

Supporting regional development and urban growth

Transport plays a strong role in encouraging regional development, and the Ministry continues to oversee a sizable Crown investment in strengthening regional transport connections. Our work in negotiating international air service agreements and managing joint venture regional airports also helps to expand the range of opportunities that are available for tourist operators and exporters.
Meanwhile, infrastructure in high-growth urban areas – particularly Auckland – is under increasing pressure. In addition to working on the next Government Policy Statement, which will guide transport funding for the decade to 2028, we were a key partner in the Auckland Transport Alignment Project, which saw central and local government agree an approach to tackle Auckland’s transport challenges.


The 2016/17 year has also seen substantial damage to transport networks caused by the Kaikoura earthquakes, and it will take some time for this infrastructure to be fully reinstated.

The Ministry helped deliver urgent legislation that allowed a quick start to recovery work around Kaikoura, and is examining how New Zealand might best prepare for – and respond to – future natural disasters.


New technologies are transforming how people and products travel. In the years ahead, electric vehicles will become more common, while transport systems as a whole will become smarter, safer, and increasingly autonomous. 

Businesses continue to develop new models for ride-sharing and vehicle-sharing, and everything is becoming capable of connecting digitally and sharing data – however New Zealand’s transport future will largely depend on our regulatory and funding decisions. The Ministry has continued to focus on delivering the Intelligent Transport Systems Technology Action Plan, which sets out how Government can best encourage the uptake of beneficial new technologies.

Improving performance and leadership of the transport sector

As the lead agency for transport policy, regulation and investment, this past year has also seen significant internal change, as we examined our systems and processes, and considered what will be required of us in the years ahead.

The Ministry has been implementing recommendations made in a number of reviews, commissioned after the discovery of fraud by a former senior manager. During 2016/17, the Serious Fraud Office has successfully prosecuted this case.

In August 2016 the Ministry moved to share Wellington accommodation with Statistics NZ, at 1 The Boulevard. This building was significantly damaged in the November 2016 earthquakes and it is not known when, or if, staff will be able to return. For the six weeks following the earthquake, Ministry staff were accommodated across Wellington by the NZ Transport Agency, Civil Aviation Authority, Maritime NZ, Datacom, the Automobile Association, Ministry of Business, Innovation and Employment and Airways. We are grateful for their hospitality. The Ministry is now located in medium-term accommodation while decisions are made on the longterm future of 1 The Boulevard.

I aim to ensure we continue delivering the quality of policy advice that Ministers demand and the public expects. I am also highly interested in the way the Ministry works with our counterparts across government – including the transport Crown entities – as well as our engagement with non-Government organisations and private sector stakeholders. This will help us take a systemic approach, in line with our responsibility for overseeing the whole transport network.

2016/17 has seen the Ministry manage some unique challenges, and I am confident we are emerging as a stronger organisation, looking to apply best practice, and determined to continue leading the transport sector through the years ahead.

Peter Mersi

Secretary for Transport

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Our contribution towards the Minister’s priorities for transport

The Government’s transport specific objectives include supporting economic growth and productivity, value for money, and safety and security. These objectives reflect the wider priorities that the Government has set out in the Business Growth Agenda and the Better Public Services programme.
The Business Growth Agenda includes a specific goal to raise exports from 30 to 40 percent of GDP by 2025. The transport system has an important supporting role in ensuring that the additional exports (and their associated input goods) are able to be moved efficiently and effectively around the country and internationally. The Government also has a focus on investing in modern infrastructure.
The Minister of Transport has set seven specific areas of focus for work to support the Government’s objectives:

  • delivering the Government’s transport commitments
  • taking a multi-modal approach to deliver transport solutions
  • Auckland initiatives
  • transport for the regions
  • transport and technology
  • supporting the export economy
  • safety.

The following sections provide a summary of our key projects to support these priorities.

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Government Policy Statement on land transport

The Government Policy Statement on land transport (the GPS) sets out the Government’s investment strategy for the land transport system. It includes the Government’s 10-year strategic direction for land transport, as well as the funding needed to achieve it. The current GPS came into effect on 1 July 2015. It allocates $10.5 billion of land transport funding over the first three years and a total of $38.7 billion over its full 10-year life (2015/16 – 2024/25).

Under the Land Transport Management Act 2003, the Crown’s land transport investment strategy must be reviewed at least once every three financial years. In 2016/17, the Ministry developed a draft of the next GPS
(GPS 2018). GPS 2018 included further enhancements to the structure to provide clearer investment signals linked to the results intended to be achieved through GPS investment. The draft GPS 2018 also strengthened the reporting requirements.

We carried out extensive, in-depth consultation with stakeholders as part of developing GPS 2018, including two rounds of engagement with local authorities, a user preference survey and an online forum for selected nongovernment stakeholders. A draft GPS 2018 was made publicly available for comment in February/March 2017.

The draft GPS 2018 is being revised following stakeholder feedback with a final GPS 2018 expected to be released in mid to late 2017/18.

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Auckland Smarter Transport Pricing Project

The Auckland Transport Alignment Project (ATAP), a joint Government and Auckland Council initiative, concluded that to achieve a step-change in the performance of Auckland’s transport system, we need a fundamental
shift to influencing travel demand through smarter transport pricing.

In June 2017, the Minister of Transport, Minister of Finance and Mayor of Auckland publicly announced the Auckland Smarter Transport Pricing Project, a multiagency project involving the Ministry, Auckland Council, Treasury, the NZ Transport Agency, Auckland Transport and State Services Commission.

The purpose of the project is to undertake a thorough investigation sufficient to support a decision on whether or not to proceed with introducing pricing for demand management purposes in Auckland.

We have made good progress on Phase I of the project, including a review of road pricing initiatives, the project’s communications strategy and evaluation approach for assessing pricing options. The work completed so far
provides a strong foundation for the project.

This is new ground for New Zealand. The review of road pricing initiatives highlights the challenges associated with Auckland’s geography and urban form and notes that no other city like Auckland, with dispersed trip
patterns and relatively low density of housing, has yet introduced congestion pricing or gone beyond studies considering it.

In 2017/18, we will complete a Phase I report and begin Phase II by developing and evaluating pricing options as well as ongoing stakeholder and public engagement. The project is intended to run until early to mid 2019.

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Establishing Auckland City Rail Link Limited

In December 2015, Cabinet authorised the Ministers of Finance and Transport to enter into negotiations with Auckland Council with a view to bringing forward the joint business plan and formalising the Government’s commitment to provide funding for the City Rail Link (CRL). Once completed, the CRL will double the capacity of Auckland’s rail network, provide two new stations to access the central city and reduce the travel times for commuters.

The CRL is, to date, the largest transport infrastructure project undertaken in New Zealand. The Ministry worked closely with Treasury to develop the governance and funding arrangements. We have had to expand our horizons, both in terms of expertise and commercial disciplines, to identify and address the Crown’s key risks.

On 30 June 2017, the Ministers of Finance and Transport signed contractual agreements with Auckland Council that formalised joint governance and funding for CRL. The project is now being delivered by City Rail Link Limited.

As one of the first 50:50 projects between central and local government, the funding and governance arrangements established for CRL could provide a blueprint for future collaboration.

In 2017/18, the Ministry will continue to work closely with Treasury and Auckland Council to monitor the ongoing progress of CRL.

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November 2016 earthquake recovery

The November 2016 earthquakes struck near Kaikoura just after midnight on 14 November 2016 causing widespread damage. State Highway 1 and the Main North rail line suffered extensive damage, cutting off access to thousands of people in the Kaikoura area, and severing a vital freight corridor. The earthquakes also caused significant damage to a number of buildings in Wellington, including the Ministry’s offices at 1 The Boulevard, which continues to be inaccessible.

Immediately following the earthquake, the Ministry coordinated the transport response team, to provide advice to the National Crisis Management Centre alongside the other emergency lifeline services. The Ministry acted swiftly to prepare special legislation to allow the NZ Transport Agency and KiwiRail to start work to restore these vital links as quickly as possible.

Since then, the Ministry has played a coordination role and hosts the independently chaired Oversight Group that monitors progress on the reinstatement project. A key focus is ensuring the project is delivered in line with Cabinet’s intentions.

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Land Transport Amendment Bill

The purpose of the Land Transport Amendment Bill is to improve safety, efficiency and regulation in the land transport sector.

The Bill proposes reform in five areas, most significantly in small passenger vehicle services and in mandating alcohol interlocks. The small passenger services policy opens up the possibility for New Zealanders to access different forms of transport. The Bill also develops a consistent approach to the use of alcohol interlocks for drivers convicted of drink-driving, mandating it for all recidivist or serious first time offenders.

In 2016/17, Cabinet agreed to the proposed Bill. It proceeded through its first and second readings, and is expected to receive its Royal Assent in August 2017. Once passed, we will support the implementation of the Act.

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Providing an information base: the New Zealand Transport Outlook

In June 2017, the Associate Minister of Transport released the New Zealand Transport Outlook: Current
State report – this is the first time the Ministry has published a comprehensive set of information on
the state of the transport system across all modes. Information included in the report ranges from public
transport patronage, freight volumes through ports, passenger numbers through airports, transport deaths and injuries, composition of the vehicle fleet, and the use of different travel modes for work, education, and personal business. The Ministry intends to update this report annually.

The Transport Outlook project aims to provide an information base for the public, businesses, transport
planners, investors, and policy-makers on the current and future state of the transport system. The above report is the first product from this project.

The next publication, the New Zealand Transport Outlook: Future State report is now being finalised and
is scheduled for release in November 2017. This report projects transport demand over the next 25 years and will be supported by an online data and indicator set and detailed modelling results.

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Electric vehicles

In 2016/17 New Zealand made great steps forward in progressing electric vehicle uptake. The Ministry supported this progress in a number of ways.

We worked very closely with the Ministry of Business, Innovation and Employment (MBIE) to support the Energy Innovation (Electric Vehicles and Other Matters) Bill through the House, specifically leading work relating to transport legislation to implement the electric vehicles in special lanes policy and the road user charges (RUC) exemption for heavy electric vehicles.

The Ministry is the chair of, and provides secretariat support to, the Electric Vehicles Programme Leadership Group, and has worked closely with stakeholders to promote electric vehicle uptake.

The Ministry has an oversight role of the work being carried out by various Government agencies, and leads engagement and reporting to the Minister of Transport on the Electric Vehicles Programme and electric vehicle uptake generally. We have supported other agencies in their Electric Vehicle Programme initiatives, including:

  • the Energy Efficiency and Conservation Authority (EECA) contestable fund and information campaign
  • MBIE Procurement – pilot tranche to aggregate public/private sector demand for electric vehicles
  • WorkSafe – ensuring that electric vehicle charging infrastructure is safe
  • the NZ Transport Agency – supporting its work on public charging infrastructure, changes to the Motor Vehicle Register to better record electric vehicles, and its work on allowing electric vehicles into special vehicle lanes.
  • The Ministry will continue to support the target of approximately 64,000 electric vehicles on New Zealand

roads by the end of 2021 by continuing the work described above, monitoring the market to identify
potential requirement for new policy interventions, and promoting market growth for electric vehicles.

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Intelligent Transport Systems

During 2016/17, the Ministry supported the development of New Zealand’s agreement with Australia to undertake a two-year world-leading trial of current and nextgeneration satellite-based augmentation systems.

We have focused on increasing our collaboration across the sector, including:

  • establishing the first transport cross-Government Working Group for technology testing
  • partnering with Business New Zealand to explore
  • economic opportunities from technology
  • development for New Zealand
  • liaising with and supporting the sector across a multi-modal programme of technology trials,including the testing of the first fully autonomous vehicle in Christchurch, an award-winning trial of Bluetooth safety messaging for rental car drivers, and the deployment of world-leading commercial delivery trials using unmanned aerial vehicles.

In 2016/17 we also supported New Zealand’s mission to the 2016 ITS World Congress in Melbourne, which included the largest ever New Zealand delegation from the private and public sector (over 120 attendees) and the first New Zealand Inc stand in the Congress Exhibition Hall.

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Improving safety on our roads

The Ministry worked to implement the Safer Journeys Action Plan 2016-2020 that was released in June 2016. Over the past year, we have been working with our road safety partners to ensure focused and collaborative work across the sector on this Action Plan.

The Ministry has particularly been looking into the value of mandating vehicle technologies, and taking a keen interest in the development of new technologies that provide information to drivers so they can make smart and safe choices.

In 2017/18, we will also be investigating the motorcycle licensing system – carrying out a review and making sure it is fit for purpose.

Heavy vehicle differential pricing

The Ministry worked to develop advice on heavy vehicle differential pricing, including working towards live
trials of variable road user charges to influence driver behaviour, and investigating the financial, legislative and institutional arrangements required to replace Fuel Excise Duty (FED) and Road User Charges (RUC) with electronic road user charging.

This project was initiated in 2016/17 to look at reducing congestion from heavy vehicles. We have reported to the Government on the feasibility of a range of specific trials, including pricing heavy vehicles for their contribution towards congestion. We completed this trial and found there were not any practical outcomes.

We have now expanded the terms of reference of the project and are looking to run further trials in 2017/18.

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Air services liberalisation

The Ministry leads the New Zealand teams negotiating the international air services agreements that increase New Zealand’s connectivity with the rest of the world. 

New Zealand’s approach to air services liberalisation is set out in the International Air Transport Policy Statement, issued in August 2012.

In 2016/17, the Ministry negotiated seven new air services arrangements, and amended two existing
arrangements. A particular focus was expanding New Zealand’s connectivity with the Americas. Provisions
were also made to enable airlines to better serve the important China market.

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SuperGold card

The SuperGold Card free off-peak public transport scheme enables SuperGold cardholders to travel for free on scheduled urban public transport between 9 am and 3 pm and after 6.30 pm Monday to Friday, and all day on Saturday and Sunday.

A moratorium on the number of services participating in the SuperGold Card scheme was lifted in 2015.
Since then, ten more services have joined the scheme, providing card holders with greater opportunities to use public transport, particularly in rural areas.

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Review of passenger rail

In 2016/17, the Ministry began to look at the funding and operating models for passenger rail in Auckland
and Wellington. We are working with Auckland Council, Auckland Transport, Greater Wellington Regional Council, the NZ Transport Agency, Treasury, and KiwiRail.

The review has four workstreams:

  • regional councils and funding – responsibilities
  • the City Rail Link – future responsibility and ownership
  • options for procurement of metropolitan rail services,
  • including the merits and drawbacks of greater/ vertical integration.
  • policy boundaries and definitions for what should be charged on a cost recovery basis, and what remains commercial.

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Maritime Transport Amendment Bill

In 2016/17, the Ministry worked on the Bill to amend the Maritime Transport Act 1994. This has now been
considered by Select Committee and is currently awaiting its second reading. A key feature of the Bill is
the introduction of measures to manage risks associated with drug and alcohol use in the maritime sector. These include requirements for commercial maritime operators to develop Drug and Alcohol Management Plans and implement random drug and alcohol testing for staff in safety sensitive roles. Similar measures are proposed in the Civil Aviation Reform Bill.

The Bill also contains provisions that will implement an international convention that significantly increases the amount of compensation available for oil pollution damage in the event of a major oil spill from a tanker. In addition, the Bill proposes easing the restriction on the use of foreign-registered vessels to carry freight between the Chatham Islands and other offshore islands and includes a range of minor, technical amendments.

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Civil Aviation Reform Bill

In the past few years, the Ministry has reviewed the Civil Aviation Act 1990 and the Airport Authority Act 1966.

In 2016/17, the Ministry provided advice to Cabinet for relevant amendments to the Acts; these have now been approved. The Parliamentary Counsel Office is now drafting the Civil Aviation Reform Bill.

The Bill will be ready for introduction into the House in 2017/18.

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Financial assurance for offshore installations

Operators of offshore oil and gas installations are liable for oil spill response and clean-up costs and pollution damage incurred by third parties. Operators must hold financial assurance to ensure they are able to meet such costs.

The Ministry publicly consulted on options for increasing the level of assurance that offshore operators are required to maintain. Following Cabinet consideration of the options in July 2017, public consultation will be undertaken on a draft marine protection rule to increase the level of assurance.

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Alternative funding project

Mainstream funding assumes that transport projects provide benefits back to users – however transport projects often also provide benefits to others.

This project asks if we can identify and attribute benefits to other parties, and if so, to determine if it is possible to elicit contributions from them towards the project, in recognition of the benefits they receive or the cost they create.

This piece of work aims to provide advice to Ministers by the end of 2017.

In 2016/17, we looked at the range of alternative funding options and narrowed our focus to value capture mechanisms. In 2017/18 we will, in conjunction with the NZ Transport Agency and Treasury, complete a number of case studies to help us understand how the tools can be applied in the New Zealand context.

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Regulatory reform programme

The Ministry has a stewardship obligation to ensure we have a regulatory system that is fit for purpose, therefore we annually produce a regulatory reform programme. This programme includes an environmental scan and the development of a Four Year Regulatory Plan (the Plan). Key components of the Plan are the rules development programme, legislative programme and approach to monitoring and evaluation.

In 2016/17, the Ministry updated the regulatory strategy. We worked with transport agencies to form an opinion on the status of the sectors, assessing if their regulations are fit for purpose. We have concluded that this is largely the case.

The Ministry has brought increased rigour into the rules process to ensure only matters that genuinely require a rule change are included in its rules programme. The rules programme is a rolling two year programme and in each financial year there will be new rules undergoing initial development, as well as other rules progressing through public consultation and completion. A number of projects in the 2016/17 programme have been delivered, or are in the final stages of being delivered, including two notable examples – the Small Passenger Services review and the Vehicle Dimensions and Mass review.

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