Hon Paul Swain
Minister of Transport

12 December 2003

Package for transport, growth and development

The government is proposing a significant new package of measures to address decades of under-funding of transport infrastructure, and streamline the decision-making processes.

The proposed package is the result of work by central and local government agencies on the Joint Officials Group, established by ministers and mayors in May 2003.

Addressing infrastructure constraints is a key element of the government's Growth and Innovation Framework.

Effective land transport which meets the needs of industry helps attract investment into areas with potential for growth.

Already the government has put significant new funding into transport, with the $227 million Moving Forward package in 2002.

Today's proposed package recognises the strategic economic importance of further transport investment to New Zealand.

The Minister of Transport Paul Swain says "it strikes a balance between the need for a "catch-up" for Auckland and the need for the rest of the country to further develop its own infrastructure."

"While New Zealand as a whole will benefit from the momentum created by Auckland's growth, regional New Zealand's transport network must also be upgraded because of the demands of a growing economy."

Auckland is the country's major economic gateway.

Its port and airport handle almost three-quarters of New Zealand's imports and forty per cent of exports, and extra funding for transport is needed.

Auckland is also the first experience of New Zealand for almost three-quarters of the country's two million-plus international visitors.

Transport spending by this government has resulted in projects like Spaghetti Junction, Grafton Gully and the Greenhithe deviation getting underway in Auckland, while in regions like the East Coast and Northland, it is resulting in a better road network to develop the forestry industry.

In addition, the government has purchased the rail tracks in Auckland for $87 million and passenger transport funding for the region has almost doubled to $60 million for the current financial year.

Paul Swain said that funding alone could not solve Auckland's transport problems, and that there was a need for both better quality decision-making and a transport entity with a clear mandate to act and be accountable for its decisions.

The proposed funding package for Auckland local authorities requires Auckland support for governance and regulatory improvements.

The proposed funding package includes: -

1. Fuel excise will be increased by 5 cents per litre (excl GST) from April 2005.
2. There will be an equivalent increase in road user charges for light diesel vehicles.
3. It is estimated the petrol excise and RUC changes will raise approximately $207 million per annum, exclusive of GST. ($165 million from petrol, $42 million from RUC)
4. This revenue will be distributed proportionately for land transport spending, with 35 per cent allocated to Auckland, and 65 per cent allocated regionally for the next 10 years.
5. A government contribution of $900 million to Auckland over 10 years, on top of existing transport funding. It is proposed this funding will be made available by reducing the amount of petrol excise diverted into the Crown Account. This will be effective from July 2005.
6. This new funding amounts to approximately $1.62 billion extra over 10 years for Auckland, and approximately $1.35 billion over 10 years for the regions.
7. Tolling will be able to be introduced on new roads, with the roads likely to be financed by some borrowing and the toll revenue used to service the debt.
8. The Land Transport Management Act will be used as the basis for assessing projects for funding.
9. The additional funding for Auckland will be focused on an accelerated programme of key strategic roads, within identified constraints on their buildability, as well as public transport, especially rail, and transport demand management.
10. Further work is being done on the issue of infrastructure bonds.
11. Further work will be done on the feasibility and desirability of pricing existing roads, taking into account the social, economic and environmental impacts, and on other potential revenue sources such as parking levies.

The next steps include: -

18 December 2003 - the government will formally signal its financial contribution in its December Budget Policy Statement.
30 January 2004 - Auckland authorities will respond to the package as a whole.
March 2004 - Officials will report to Ministers on outstanding funding, governance and regulatory issues.
April 2004 - Legislation will be introduced to give effect to the governance changes.

Region Approx. additional funding from proposed petrol and RUC
increase based on population estimates $m over 10 years (Ex GST)
Northland 81
Waikato 162
Bay of Planety 121
Gisborne 14
Hawke's Bay 54
Taranaki 41
Manawatu-Wanganui 108
Wellington 202
Nelson-Marlborough 41
Canterbury 337
West Coast 14
Otago 121
Southland 54
Total $1,350

ENDS

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