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Swain Speech to Local Govt NZ Transport Forum

Paul Swain Speech: The Land Transport Management Act In Practice Speech to Local Government NZ Transport Forum, Wgtn

Thank you for inviting me to speak to you today about the new Land Transport Management Act.

I am delighted to be able to speak to you about this important milestone in the evolution of transport policy in New Zealand.

This Act represents a new era for the planning, funding, and operation of New Zealand’s land transport infrastructure and services.

It could not have been achieved without the close working relationship built up with Local Government New Zealand and local government generally.

Let me recap.

In 1999, when this government was elected, the land transport system was in crisis.

It was under-funded and failing to cope with the demands of a modern economy.

The previous government had spent a decade wrestling with the problems, and it left power with its proposed solution, Better Transport Better Roads, roundly criticised.

It was dropped by the incoming Labour-Alliance government as had been promised in the run up to the election.

Mark Gosche, my predecessor, then quickly got out to ask the people at the coalface, local government in particular, about the issues facing them.

A series of policy discussion papers and government decisions quickly followed.

The artificial cap placed on public transport spending by the previous government was removed.

Since then, spending on public transport has more than doubled to some $90 million this year.

The government also introduced patronage funding for public transport.

This innovative approach to funding has been a remarkable success. Such measures have seen public transport use up some 25 per cent.

The government then moved to establish its funding priorities, and to increase overall funding.

This was announced in February 2002 in the government’s Moving Forward package.

Moving Forward involved a major boost of $227 million in funding for all modes of land transport, including $94 million for roads.

While many political parties have called for such increased funding, it was only the Green party that chose to support the necessary increase in petrol taxes to deliver increased funding while others opposed it.

The package also set out the government’s vision for the transport system that New Zealand will have an affordable, integrated, safe, responsive and sustainable transport system by 2010.

To achieve this vision, the five main objectives were also listed:

to assist economic development to assist safety and personal security to improve access and mobility to protect and promote public health and to ensure environmental sustainability.

Moving Forward also set out the government’s proposals for future change:

a land transport funding and management system with a broader focus, and with a long term view empowering regional councils to fund and operate public transport infrastructure and services using electronic means to collect road user charges allowing public private/partnerships allowing more tolling investigating congestion pricing encouraging alternatives to roads.

In December 2002, I was delighted to be able to release the New Zealand Transport Strategy and introduce the Land Transport Management Bill.

In large part, the Bill delivered on the proposals set out in Moving Forward. Electronic road user charges will be addressed in later legislation depending on the outcome of a business case.

By incorporating the New Zealand Transport Strategy vision into its purpose and the objectives of Transfund New Zealand and Transit New Zealand, the Bill set out to broaden the focus of the land transport system beyond just roads.

It represented a true multi-modal, integrated, approach to land transport.

The Bill also established a new framework for the funding of land transport, getting rid of much of the inflexibility and prescription of the previous Transit New Zealand Act.

The theme of integration was continued with the ability to fund approved public organisations and the removal of the prohibition on regional councils owning public transport infrastructure and services.

The Bill also provided for a generic regime for approving tolling projects and public private partnerships.

The Bill, of course, was not without flaws.

However I was heartened with the support that the principles underpinning the Bill received from submitters to the Transport and Industrial Relations Select Committee.

The Select Committee received many thoughtful and well considered submissions including many from local government and a very comprehensive submission from Local Government New Zealand.

Some thought that the decision-making framework set out in the Bill was too complex, while others were concerned about consultation.

Many submitters also called for more funding tools to be made available in addition to the Bill's tolling and public private partnership provisions, and others argued that these provisions were too restrictive.

The Committee made good use of these submissions and reported back a much better Bill.

Decision-making framework

Many submissions worried about the consistency of the decision-making framework and the lack of efficiency as an explicit criterion.

The Committee addressed both of these areas.

Decision-making criteria are much more consistent throughout the new Act whether it is Transfund approving funding for a bus way or the Minister making a decision on a tolling scheme.

Overlaps and duplications have been addressed.

I was personally very pleased to see the inclusion of efficiency in Transfund's criteria for approving funding, and I reinforced the Committee’s recommendations by adding efficiency to the Act’s purpose through an amendment in the Committee stages of the Bill.

I believe efficiency is implicit in the concept of sustainability, which is ingrained in the Bill's purpose and elsewhere, nonetheless, it is worthwhile stating explicitly.

Key documents, such as land transport programmes and the national land transport programme have been explicitly linked with the Bill's purpose

This approach strengthens the relationship of these documents to the Act's strategic framework.

Programmes have also been combined with 10-year financial forecasts to ensure a long-term view.

The linkages are important and ensure the views of all relevant agencies are taken into account.

Regional Land Transport Strategies prepared by the regional land transport committees feed into the Land Transport Programmes prepared by local authorities.

The Land Transport Programmes prepared by Transit and local authorities are then pulled together by Transfund, which produces the National Land Transport Programme every year.

Transfund is also required to take into account the RLTS.

I acknowledge that there is a strong view among local government that the new Act should have addressed the regime around safety administration programmes.

The relevant provisions are largely carried over from the previous legislation.

When the Bill was put together we were keen not to bite off too much, however, I acknowledge that there is a need to review these provisions.

At the very least, it is inevitable that they be brought into line with the new decision-making framework based on the New Zealand Transport Strategy.

It is a question of watch this space.


There were concerns expressed that the original Bill's consultation requirements were too onerous.

It provided for consultation on land transport programmes, 10-year financial forecasts, and for tolling and concession agreements.

The Act expands the groups that should be consulted on land transport programmes, although it should be remembered that the existing Transit New Zealand Act provides for consultation on land transport programmes with many groups.

The decision to combine programmes with 10-year financial forecasts means that a whole layer of consultation has been removed.

There is also a closer link between the new Local Government Act 2002 and the Land Transport Management Act.

There was also some inconsistency between the lists of groups that should be consulted and these lists have been standardised.

The principles, and processes under that Act, have been brought into the Land Transport Management Act to give greater clarity about who should be consulted, and how they should be consulted.

In addition, it has been made clear that local government does not need to consult under the provisions of the new Act if it has already consulted on their long term Council Community Plan or Annual Plan.

Further, the tolling and concession agreements provisions provide that consultation is not required, if there has already been consultation under the Act (or any other enactment) on the proposal to toll or enter into a concession agreement.

Regional planning

Changes made to the Bill as introduced have also emphasised the strategic nature of regional land transport strategies.

These strategies identify the transport outcomes sought by the regions and the strategic options for obtaining those outcomes.

This ensures that the land transport programmes fit the strategic thinking behind the RLTS.

To underpin these changes, the composition of regional land transport committees will now need to reflect the objectives of the NZTS, as well as include representatives of local government, Transfund and the Land Transport Safety Authority.

The regional land transport committees must also take into account the views of network providers like Transit.

Regional land transport strategies will also need to contain a traffic demand management strategy.

Traffic demand management is becoming an increasingly important way of dealing with the pressure on our roading infrastructure.

It is simply not possible to build our way out of congestion.

Traffic demand management measures can range from better integration of traffic management systems to travel blending, which incorporates the use of more than one mode within a single journey.

Other examples include walking school buses, teleworking, and special public transport services for major events.

Regional councils

The Act makes it clear that regional councils can own public transport infrastructure and services.

This is a manifesto commitment by Labour.

However, the complicated approval process set out in the Bill has been removed so that the provisions of the Local Government Act 2002 can be utilised.

For example under s.16 of the Local Government Act, where a Regional Council proposes to undertake "significant new activities," it must advise all territorial local authorities within its region, and the Minister of Local Government, and include it in its draft long term council community plan.

Any disputes over such an acquisition would go to mediation, or failing that, to the Minister of Local Government.

Ministerial instructions

A number of submissions raised concerns about the proposed new power for the Minister to give instructions in relation to funding priorities.

This has gone and, instead, the Minister's power to issue general directions on government policy has been carried over from the existing Act.

This applied for instance to the instruction regarding regional development funding for the East Coast and the Far North.

Such directions must be published in the Gazette and presented to the House.

The Minister cannot give directions on individual projects.

Tolling and concession agreements

The Act puts in place a generic framework for approving tolling schemes and concession agreements.

At present, toll arrangements require specific legislation.

Tolling schemes require approval by Order in Council while concession agreements require Ministerial approval.

Many submitters supported the government's move to make these tools available as an alternative way of funding roading projects.

While some argued for strong conditions for such schemes, many felt that the provisions were too restrictive.

When dealing with roads, which are so critical to communities, a balance needs to be found between the need for public control and private sector investment.

A major issue that concerned many in local government and the private sector was the requirement for approval at a very late stage in the process.

There was concern that this would discourage investment because there would be an unwillingness to invest in developing projects if there was no certainty that approval would come.

Early, conditional approval can now be given after the Minister has considered core criteria such as whether the project would contribute to the purpose of the Act, the outcome of any public consultation, alternative routes, and consistency with the LTMA.

Conditional approval can then be issued.

This means approval can come before tenders are issued and the successful tender can know with certainty what preconditions they need to meet before beginning tolling or entering into a concession agreement.

The consultation test that applies to tolling centres around documents like the National Land Transport Programme and the regional Land Transport Strategies.

Generally, a project that is already part of a RLTS will have a smoother ride. If a project is already part of the NLTP it won't need a high level of community support, however if it is not in the NLTP, it will need high level support from the community.

The Alpurt project could be the first example of the LTMA in action – the Rodney District Council and Transit are already talking about options.

Funding is still to be confirmed but Transit says the project could start in late 2004 – two years early.

It could be the first test of public willingness on tolls under the new Act.


Decision-making criteria for tolling and concession agreements has been made as consistent as possible.

There are, however, some unique features of such arrangements that need to be considered.

The Bill as introduced made it clear that tolling could only be used for new roads.

Existing roads could only be included if there was an engineering reason for them to be included.

Many submitters argued that tolling should be possible on existing roads and some went so far as to say that widespread tolling should be allowed such as the cordon toiling scheme in place in London or, even, that there should be regional petrol taxes.

However, the Committee concluded that allowing such schemes would go well beyond the policy of the Bill as introduced.

The Act gives some additional flexibility to include existing roads where the existing road is physically or operationally integral to the new road.

The toll revenue, though, must still be used for the new road.

The government, of course, has sympathy for the argument that there should be more funding tools made available.

Such mechanisms raise broad policy issues that need to be carefully thought through.

To this end, the government is working with the Auckland region to investigate such approaches and would look to include any new mechanisms in future legislation, if required.

There are national implications and Local Government NZ is involved with that work.

Concession agreements

There was also concern that that the original Bill was too inflexible in how it treated risk allocation between the parties.

For example, the public sector was precluded from compensating the private sector if traffic forecasts were not met.

Such issues are normally matters for commercial negotiation between the parties.

This restriction has been removed.

However, there has been a broader provision included that will not deter future options of sustainable transport solutions.

The Act also allows for roads to be leased.

Leasing is a more familiar instrument for investors so this change will give them greater certainty.

The Bill as introduced allowed only licence agreements.

The successful Melbourne City Link project uses leasing.

Some submitters argued that the proposed term of 35 years should be extended.

The Committee was satisfied that a term of this length was suitable for most purposes.

It has, however, recommended that the term can be extended for 10 years if there are exceptional circumstances two-thirds of the way through the concession agreement's term.

In summary, the changes recommended to these particular provisions strike a good balance between the interests of the public and those who might invest in new roads.

Further Funding Issues

One area of vital importance to both local and central government is road safety.

Our Road Safety to 2010 Strategy released last month reinforces the importance of the "Three Es" approach – targeting engineering, education, and enforcement. I want to thank local government for the supportive comments that greeted the first announcement under this strategy last month.

The government announced funding for small scale safety works on accident blackspots would more than double, with an extra $47 million over two years.

This is in addition to the estimated $300 million spent annually on major construction and maintenance projects, that is regarded as safety related spending.

The extra funding is available to both Transit for State Highway work, and local authorities for spending on local roads. Tied into this funding is the issue of the Financial Assistance Rate policy of Transfund, which is looking at various options for adjusting the funding formula.

This work is ongoing and I know Transfund will brief this Forum later this morning on progress to date.

The Auckland region work that we are doing will also have nationwide funding implications, with a whole range of options being considered such as borrowing, petrol tax, a Crown contribution, road pricing, and traffic demand management.

And at another level the thinking that is being put into governance will impact on transport – with transport funding being rationalised under the LTMA, there is now pressure to rationalise the governance and institutions as well.


The New Zealand Transport Strategy forms the cornerstone of transport policy for the next decade.

Over that time, the Land Transport Management Act will form the basis of the funding and management system for land transport.

There is always more that can be done.

More funding is necessary, and the work in Auckland will give further insight into the ways that the funding shortage can be addressed, when announcements are made on December 12.

I look forward to continuing the strong partnership we have developed.

We have set ourselves a difficult target of achieving a sustainable transport system for New Zealand by 2010.

With the strong start we have made, I am confident it can be done.

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