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Planning and funding
What is the Land Transport Management Act 2003 (LTMA) and what is its purpose?
The LTMA legislation is the planning and funding framework that channels around $3 billion of central government funding into roading construction and maintenance and public transport.
Specifically the legislation:
- establishes the hypothecated (dedicated) National Land Transport Fund (NLTF) that funds the Crown and local government to deliver land transport projects and services
- sets out the central and local government transport planning and prioritisation processes that must be followed in order to allocate NLTF funds to projects and services (there are five transport planning documents in the LTMA)
- establishes the NZ Transport Agency (NZTA), which is responsible for allocating the NLTF, which includes co-funding local road and public transport activities, and for State highway operation
- sets out approval regimes for tolling new roads and for concession agreements (PPP arrangements involving leases of roads)
- sets out provisions enabling regional fuel taxes.
Why does the LTMA need to be amended?
The LTMA needs to be made simpler, more streamlined and less prescriptive to help reduce red tape and compliance costs.
The LTMA can be improved by removing convoluted decision making processes, reducing the number of planning documents, simplifying consultation requirements and improving the way central government priorities drive planning and investment.
Provisions intended to facilitate the use of tolling to pay for new roads and public private partnerships (PPPs) are confusing, convoluted and largely unnecessary. The LTMA also includes a provision for regional fuel taxes that needs to be repealed following a previous Cabinet decision. Such taxes would add to costs for road users and be ineffective and costly to collect.
What changes are being proposed to the Act?
Proposals to change the LTMA to make land transport planning and funding simpler, more streamlined and less prescriptive comprise:
- put in place a clearer, more straightforward, statutory purpose for the LTMA to drive better decision-making
- significantly reduce the number of assessment criteria used throughout the LTMA
- rationalise national level strategic documents and clarify their relationships with lower level documents, to allow for clearer national guidance
- extend the role of the Regional Land Transport Programmes so they identify the outcomes, objectives and interventions proposed for at least 10 years, and remove the requirement to produce a separate Regional Land Transport Strategy
- provide more flexible, less prescriptive consultation requirements
- enable Regional Transport Committees (RTCs) to be smaller and more focused by removing the requirement to have appointed members to represent various transport objectives. RTCs can still use external advisers if they wish but this will not be prescribed by the legislation
- create more flexibility in the LTMA to use borrowing to support land transport investment should future circumstances make this desirable
- improve the tolling and public private partnership (PPP) provisions in the LTMA to reduce barriers to their use
- repeal the provision for regional fuel taxes.
What will the proposed LTMA changes achieve?
Changes will result in a simpler, more straightforward and less prescriptive piece of legislation. Central government will have a greater ability to guide the sector and regions will have more flexibility with their transport planning and clearer processes to follow.
Creating improved processes in the LTMA will also ensure greater value for money and lower compliance costs - assisting the government to achieve its goal for transport to contribute to New Zealand’s economic productivity.
Will communities still have a say on how money is spent on land transport?
Yes, they will. These changes are about making consultation more effective by allowing consultation processes to be tailored to the circumstances.
Under the LTMA, communities will continue to be consulted on Regional Land Transport Programmes. In addition, local government will continue to consult their communities under the Local Government Act. Road controlling authorities will also continue to talk to communities about projects that affect them, for example, to help them satisfy the requirements of the Resource Management Act.
Why change the purpose of the Act?
The current purpose is: to contribute to the aim of achieving an affordable, integrated, safe, responsive, and sustainable land transport system.
In addition, there are five criteria of assisting economic development, assisting safety and personal security, improving access and mobility, protecting and promoting public health, and ensuring environmental sustainability.
The proposed purpose is: to contribute to an effective, efficient and safe land transport system to support New Zealand’s economic, social, cultural and environmental wellbeing.
The proposal to change the purpose of the LTMA is intended to make it simpler, clearer and easier to understand and interpret. The five criteria will no longer be necessary with the new clearer and simpler purpose statement.
The new purpose will make it clear that funding allocated under the LTMA should contribute to an efficient, effective and safe land transport system to support New Zealand’s welfare. Purpose statements set the context for the decision making that takes place under Acts of Parliament.
The proposed change to the LTMA’s purpose will contribute to a reduction in decision-making criteria and tests scattered throughout the LTMA - reducing compliance costs and simplifying processes.
This new purpose is also more consistent with the purpose of the Local Government Act that guides local government decision making.
Why reduce the number of assessment criteria?
The current LTMA contains many assessment criteria designed to influence the content of national and regional planning documents and the types of activities funded and delivered. However, repetition, inconsistency and ambiguity in the application of these criteria create uncertainty and encourage bureaucracy.
Reducing assessment criteria will remove this inconsistency and ambiguity while continuing to ensure robust decision making.
It will also allow regions to tailor their Regional Land Transport Programmes according to their own circumstances. Regions will not need to develop and produce complex transport planning documents just to “tick all the boxes”.
How is the number of assessment criteria proposed to be reduced?
A clearer statutory purpose will allow a number of secondary criteria to be removed from the LTMA.
For example, this will remove the need for the five transport objectives which are used widely in the LTMA as high level tests. There is particular confusion around these objectives as they are difficult to interpret and use when evaluating the merit of individual projects. In addition to these tests, and the requirement to contribute to the Act’s purpose, there are a number of other overlapping tests. These will be removed or simplified where possible.
These will be replaced with a focus on effectiveness, efficiency and safety as illustrated in the table below.
|Current decision-making criteria||Proposed new streamlined decision-making criteria|
Assist economic development
Assist safety and personal security
Improve access and mobility
Protect and promote public health
Ensure environmental sustainability
To align with the LTMA’s new purpose, the NZTA will simplify its funding approval processes by focusing on value for money when considering the statutory tests that it must apply to funding approvals.
How will transport planning be improved?
It is proposed to strengthen central government’s ability to guide the sector and enable more cohesive regional planning to take place by:
- modifying the existing national level planning arrangements by providing for a single national plan that sets out central government’s policy goals for the land transport sector, as well as the investment strategy for the National Land Transport Fund. The new document would be called the Government Policy Statement on Land Transport.
- extending the role of Regional Land Transport Programmes so that separate Regional Land Transport Strategies will no longer be required.
How will this work in practice?
At the national level, it is proposed that:
- the Government Policy Statement on Land Transport would be issued by the Minister of Transport at least once every six years. The plan’s investment strategy would be reviewed at least once every three years.
At the regional level, it is proposed that:
- Regional Land Transport Strategies and Regional Land Transport Programmes be replaced with a modified Regional Land Transport Programme. The Programme would be issued every six years, and reviewed every 3 years
- The Regional Land Transport Programme would be developed by Regional Transport Committees
- Minor State highway activities will no longer need to be prioritised at regional level moving the emphasis of Regional Land Transport Programmes to more significant activities.
- In Auckland, the Board of Auckland Transport will form the Regional Transport Committee and be responsible for preparing the Auckland Regional Land Transport Programme. The Auckland Council will provide guidance to Auckland Transport through the Long-Term Plan, the Statement of Intent and any other strategy or plan nominated by the Council, which could include Auckland’s Spatial Plan or funding agreements with Auckland Transport.
Bringing decisions together in a single document should ensure better integration between outcomes and objectives with projects and interventions. This consolidation of documents should also encourage alignment of expenditure proposals with available revenues.
A single regional transport planning document, with a focus on larger activities, will also provide a better basis for community engagement on regional transport policy, reduce the opportunity for re-litigation and ultimately allow regions the flexibility to deal with their different strategic questions as they see fit. It will also simplify the involved process needed to vary the document when minor activities change following the completion of the plan.
The new arrangements would also allow transport planning to flow more easily from the higher-level spatial planning process now being adopted in a number of regions. Further work on spatial plans is the subject of the RMAII process currently being led by the Ministry for the Environment.
What would the new Government Policy Statement on Land Transport look like?
The Government Policy Statement on Land Transport would:
- set out central government’s outcomes and objectives for the land transport sector for at least 10 years
- set out the impacts that central government wishes to achieve from the allocation of the National Land Transport Fund (NLTF) for a 10-year period
- be issued every six years, with a review of the investment strategy every three years (as is now)
- need to be given effect to by the NZTA
The Minister of Transport will have regard to the views of Local Government New Zealand and representative groups of land transport users and providers when preparing or reviewing the Government Policy Statement on Land Transport.
How will the Government Policy Statement on Land Transport allow for clearer national guidance?
The current relationships between the LTMA’s multiple planning documents is complicated and results in a confused hierarchy. A clearer and simpler long term planning hierarchy, with national priorities well articulated, will increase certainty for regional and national planning.
How are consultation requirements proposed to be changed?
The current LTMA requires that each of the different national and regional planning documents has some form of engagement at each stage of the planning process.
These processes are in addition to Councils which also consult the public over their proposed land transport activities through Long-Term Plans that Councils prepare under the Local Government Act.
The LTMA’s requirements will be made less prescriptive by:
- moving to a six-yearly consultation process for Regional Land Transport Programmes
- reducing to a minimum the extent to which the LTMA modifies Local Government Act 2002 processes
- making the use of the Local Government Act special consultative procedure discretionary
- removing other specific requirements
This will allow more effective engagement as the process will be able to be tailored to specific situations rather than require the same approach across all regions.
Will these LTMA proposals be affected by Phase 2 of the Resource Management Reforms (RMII)?
The government has been consulting on possible changes to the Resource Management Act 1991 as part of its RMII process. There is a close relationship between land use planning and transport planning. Consequently, the LTMA proposals have been developed so that they would complement any potential changes resulting from the RMII process.
How will work on spatial planning be affected by changes to the LTMA?
The relationship between the LTMA and spatial planning will be considered as part of the RMII process.
How will Regional Transport Committees be affected?
It is proposed to streamline regional decision-making processes by reducing the size of Regional Transport Committees.
Regional Transport Committees are currently required to have a range of representatives from councils, the NZTA, and appointed members. Five of the six appointed members represent the five transport objectives and one represents cultural interests. This membership structure makes these committees too big - often resulting in cumbersome processes. Appointed members have different voting rights to other members, which is appropriate as they do not represent elected councils. However, this adds to the confusion.
Smaller Regional Transport Committees should improve discussion and the ability to make decisions. They also confirm the principle of elected representatives making decisions after consulting with stakeholders.
The proposed membership make up is:
- 2 nominees of the relevant regional council
- 1 nominee of each of the territorial authorities in the region
- 1 NZTA nominee
For unitary councils, excluding Auckland, the proposed membership is:
- 4 nominees of the unitary authority
- 1 NZTA nominee
Why remove the appointed members from Regional Transport Committees?
It is better to give Regional Transport Committees the flexibility to decide who they need to hear from rather than their decision being predetermined by the legislation. The Local Government Act already requires councils to give consideration to the views and preferences of persons likely to be affected by or to have an interest in, a decision.
Will the LTMA proposals affect the new governance arrangements for local government in the Auckland region, including the Auckland Transport Agency?
Auckland Transport will continue to be responsible for developing the Auckland Regional Land Transport Programme. Its Board will be the Regional Transport Committee for Auckland with power to approve the Programme. Auckland Transport will have to give effect to Auckland Council’s Long-Term Plan and its Statement of Intent, and must act in a way that is consistent with any other strategy or plan as determined by Auckland Council, including Auckland’s Spatial Plan or any funding agreement.
Why is it proposed to create more flexibility around borrowing in the LTMA?
In its current form, the LTMA allows the Crown or the NZTA to borrow for the National Land Transport Programme only for cashflow management. This limits the ability of the government to manage National Land Transport Programme expenditure by utilising borrowing where there is a good case and it is prudent.
It is proposed to amend the LTMA to allow borrowing for a wider range of purposes.
What would borrowing be used for?
The LTMA currently only allows borrowing to be used to manage cash flow. The LTMA should be flexible enough to allow borrowing for other purposes should future circumstances suggest borrowing is prudent.
Borrowing would still be subject to strong ministerial oversight through the Crown Entities Act.
Tolling and PPPs
How is tolling and the use of public private partnerships (PPPs) in roading covered in the LTMA?
The LTMA provides for tolling to pay for new roads and for roading concession agreements that impact on public private partnership proposals. These provisions set out the processes and conditions for using these tools. There are problems with these tools that need to be addressed.
Why does the government propose to amend the tolling provisions in the LTMA?
The current tolling provisions in the LTMA contain a number of confusing and complicated assessment and consultation requirements that must be met before the Minister of Transport can approve a tolling scheme.
A review of these provisions has shown that making these more straight forward can reduce potential barriers to their use without compromising the need for robust approval processes.
What are the proposed amendments to the LTMA tolling and PPP provisions?
The LTMA allows tolling of new roads when there is a feasible un-tolled alternative route available and limits the tolling of existing roads to those that are near and integral to the new road. These fundamental principles will remain, to prevent the use of tolling for general revenue collection.
However, there are a number of other statutory tests that have to be satisfied before tolling can be approved. Many of these are duplicated elsewhere in the LTMA. The proposed changes will streamline the tests as follows:
- remove requirements related to the purpose of the LTMA, the five transport objectives, a range of strategies and planning documents, the availability and consideration of land transport options and alternatives and the outcome of consultation (all referred to above)
- replace the above requirements with a high-level test requiring tolling proposals to be efficient and effective
- make the consideration of community support for a proposed tolling scheme more straightforward by requiring that the Minister of Transport be satisfied with the level of support for the tolling scheme from the community in the relevant region(s)
- remove the provision allowing a tolling Order in Council to require a public road controlling authority to prepare a demand management plan
- replace duplicative consultation requirements with a more straightforward requirement that the Minister of Transport be satisfied that adequate consultation was conducted
- remove the provision that enables the Minister of Transport to rely on any assessment done by the NZTA of the tolling scheme against the relevant criteria and not conduct a separate assessment
- enable tolling revenue to be included in the National Land Transport Fund by Ministerial approval on a case by case basis
- at the request of Tauranga City Council, enable the Route K toll road in Tauranga, currently subject to its own legislation (Tauranga District Council (Route K Toll) Empowering Act 2000), to be brought under the LTMA.
- remove the stand-alone concession agreement regime that requires Ministerial approval of leases, thereby making PPPs subject to the general LTMA procurement regime
- allow land (including formed roads) to be leased by road controlling authorities, with the Minister of Transport’s approval, for a period of up to 49 years for the purpose of enabling a private party to operate a road.
The provisions allowing road controlling powers to be delegated to private partners under contracts for the construction and operation of roads will be retained.
Existing safeguards in place for PPPs such as the requirement for Ministerial approval of any borrowing undertaken by the NZTA under the Crown Entities Act 2004 and the general safeguards on the use of public funds under the LTMA will also remain.
Will the proposed tolling changes affect the need for free alternative routes?
The requirement to have a feasible, untolled alternative route to a toll road will remain in the legislation.
The LTMA will continue to set out robust rules for tolling roads. The fundamental principles of the LTMA prevent the use of tolling for general revenue collection.
Why change the assessment criteria for tolling?
The assessment regime for tolling in the LTMA has been cited as a barrier to the use of tolling schemes.
The current LTMA sets out high-level criteria that must be met before a toll scheme can be approved. These are similar to the current requirements to secure funding from the NLTF. This is likely to cause duplication because projects funded by tolling schemes are also likely to require funding from the NLTF.
The tolling approval regime should be consistent with the proposed changes to the planning and funding regime, but should not duplicate it. Therefore it is proposed to replace these various assessment criteria with a more straightforward test requiring the tolling scheme to be efficient and effective.
How will community support for a scheme be considered ‘satisfactory’?
For projects to date, the NZTA and Transit New Zealand (the State highway agency prior to 2008) have assessed the level of community support for tolling schemes by carrying out a random sample survey. However, as required by the LTMA, this survey has only focussed on a subsection of the people likely to be affected by a given toll road - those living, working or studying in close proximity to the toll road.
The change will mean the entity applying for a tolling scheme will need to demonstrate satisfactory support for the tolling scheme from the wider region, rather than just those living, working or studying close to the toll road. The Minister of Transport will use this information to determine whether the level of support from the region is satisfactory.
How will consultation be considered adequate?
The LTMA requires that public road controlling authorities seeking approval for a tolling scheme must consult on the proposal unless they have already consulted on the scheme in the context of other consultation. Proposed tolling may come up in other planning processes under the LTMA where consultation is required.
However, in practice, it is difficult for those proposing schemes to determine whether previous consultation, which may have had a different focus, is enough to satisfy the consultation requirements. It is proposed to replace the existing requirement and instead enable the Minister of Transport, rather than the proposer, to determine if he or she is satisfied consultation on the proposed scheme has been adequate.
Why enable tolling revenue to be included in the National Land Transport Fund?
The LTMA requires all land transport revenue to be paid into the NLTF, except for revenue from tolling which is excluded from the definition of land transport revenue.
It is proposed to allow toll revenue to be considered land transport revenue and paid into the NLTF if the Minister of Transport agrees. For example, rather than borrowing to fund a project, the project could be initially funded from the NLTF, with the cost repaid by toll revenue.
This will enable tolling schemes to be implemented with a wider variety of funding arrangements.
Will allowing toll revenue to be paid into the NLTF allow tolling to be used for general revenue raising?
Tolling revenue will only be able to be included in the NLTF if there is an appropriate mechanism to tie the toll revenue to the new road.
Why is Route K included in this proposed amendment?
It is proposed to provide the flexibility to allow Route K to be brought under the LTMA’s tolling regime. This would mean that Route K could be tolled under the same regime as other toll roads. Tauranga City Council has requested that the Route K toll road in Tauranga be eventually brought under the tolling regime in the LTMA for consistency with the Tauranga Eastern Link toll road.
Route K was established by the Tauranga District Council (Route K Toll) Empowering Act 2000 (Route K Act). This legislation created a unique regime for determining toll collection technology and changing toll rates for that road. The new Tauranga Eastern Link will be tolled under the LTMA. This could create inconsistencies with the way tolls are collected on two toll roads in the same region. Further, the Route K Act is less flexible than the regime in the LTMA.
The Tauranga City Council would still be responsible for operating Route K and for the associated debt.
Why remove the stand-alone concession agreement regime that requires Ministerial approval of leases for PPPs?
The concession agreement regime focuses ministerial oversight on the leasing of roads. Using leases as the defining characteristic of a PPP is of limited use because a PPP arrangement may not necessarily involve a lease.
Instead, proposed PPPs will be dealt with under the general procurement regime of the LTMA. Under this regime, the safeguards for public expenditure (consultation requirements, and statutory planning, and funding and borrowing approval processes) will still apply to any PPP arrangements.
Why allow land (including formed roads) to be leased by road controlling authorities for up to 49 years?
Under the LTMA restricts the length of concession agreements to 35 years but they can also be extended by 10 years, making a maximum of 45 years. These requirements will be simplified by introducing a single requirement for a maximum lease term of 49 years. This will help road controlling authorities and potential investors to be clear about the rules.
Does amending this legislation mean that there will be more tolling on New Zealand’s roads?
Tolling schemes will still need to go through robust approval processes. Amending legislation will help to ensure that onerous approval processes do not stop tolling where it is sensible to do so.
In addition, the fundamental principles of the LTMA prevent the use of tolling for general revenue collection.
When is tolling a good idea?
Under the LTMA, road tolling allows road users the choice of paying a toll to use a new road or using an alternative route that is free from a toll. In some cases, toll revenue can make a useful contribution towards the cost of high volume roading infrastructure projects. Tolling could be considered for a number of projects that are programmed in the near future, and it is important that the LTMA does not pose unnecessary barriers to the implementation of such schemes.
How many tolling schemes and concession agreement regimes have been approved in New Zealand so far?
Two tolling schemes have received approval orders under the LTMA since the Act came into effect in 2003. These are:
- the Northern Gateway tolling scheme in Auckland
- the Tauranga Bridge tolling scheme although the bridge duplication was subsequently funded from grants rather than by tolls.
Cabinet has also agreed that Tauranga Eastern Link will be tolled.
However, an approval order under the LTMA is yet to be made.
No concession agreements have been approved.
What is the timeframe for amending the LTMA?
It is expected amending legislation will be introduced to Parliament in the second half of 2011 or early 2012.
Will these proposals affect regional funding?
The proposals will not affect the policy on regionally distributed funding (R-funding).
Who have these proposed changes been discussed with?
The Ministry of Transport had preliminary discussions with stakeholders, including Local Government New Zealand, the Automobile Association of New Zealand (AA) and the Road Transport Forum. The Ministry has also had informal discussions with regional councils in Auckland, Wellington, Waikato, Bay of Plenty and Canterbury.
What else does the LTMA amendment Bill address?
- Recast the Secretary of Transport’s power, under section 101 of the LTMA, to review specified activities and procedures of the New Zealand Transport Agency as a discretionary power.
- Remove the option to establish a Regional Fuel Tax from the LTMA to reflect earlier Cabinet decisions.
- The NZTA will become directly responsible for monitoring the road policing programme (rather than under designation).