Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


New transport funding tools needed to boost development

Media release
30 March 2012


New transport funding tools needed to boost economic development

"Weaknesses in our transport network demonstrated by road and rail closures around Gisborne and the Manawatu Gorge coupled with a multi-billion funding gap in Auckland and an unidentified capital need Canterbury all expose the huge challenge facing transport authorities nationwide. Transport investment remains insufficient to meet New Zealand's growth needs and will continue to constrain economic development aspirations unless we change our approach to funding major projects," says Stephen Selwood chief executive of the New Zealand Council for Infrastructure Development.

"The Government's roads of national significance represent a long overdue investment in critical transport infrastructure. With a payback of around $2 for every dollar invested, incorporating a discount rate of 8 per cent, the RONS projects are critical to removing barriers to business and improving safety on our state highway network.

"But it is not possible through conventional means to find the approximate $9 billion needed to construct the RONS when annual roading investment equates to little more than $3 billion per annum. And it certainly isn't possible to add demands from Auckland and Christchurch into that equation.

"Unless the outdated "pay-as-you-go" method of allocating funds when they become available is revisited, either local road and other state highway projects, like an upgrade to the now partially closed SH2 out of Gisborne, have to be deferred or the RONS have to be pushed out towards 2030. Current policy is directed towards the former with almost no new expenditure on maintenance and renewal of local roads and state highways planned until at least 2020.

"An alternative is to use either public or private sector debt to cover the large upfront costs of the RONS and then to repay the debt over a longer period, thereby freeing up funding for other improvements. Private funding makes sense when risk transfer and innovative whole of life delivery methods provide value in excess of the higher cost of funds. Such an approach to just the Wellington and Waikato RONS, for example, would release up to $4 billion over the next decade to spend on other critical transport projects, while delivering the benefits of these two major projects well ahead of current funding-constrained schedules.

"Delivering the RONS sooner allows benefits to be conferred sooner, while deferral carries an equivalent cost. We need to ask ourselves whether a pay-off of $2 for every dollar invested, plus an 8 per cent return per annum is something we should have now, or in another ten or twenty years. Deferral of economic transport investment is costing this country its competitiveness. It's time to look at alternative means to fund the much needed investment in our transport infrastructure," Selwood says.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Statistics: Business Research And Development Up 29 Percent

Computer services and machinery manufacturing firms led the way in an almost 30 percent lift in business spending on research and development (R&D) in 2016, Stats NZ said today. Businesses spent $1.6 billion on R&D in 2016, up $356 million (29 percent) from 2014. More>>

ALSO:

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news