20 March 2007

New road funding system undermines carbon neutrality goal

Green Party Co-Leader Jeanette Fitzsimons today released Cabinet papers and other documents obtained under the Official Information Act that reveal how the Government circumvented the Land Transport Management Act 2003 legislation with its $1.5 billion roading package announced in last year's Budget.

"The papers are disturbing in that they show Michael Cullen, Helen Clark and Pete Hodgson effectively invited Transit NZ to compile a wish list of roading projects, with little or no constraint on subsequent cost blow-outs. The Government then issued a virtual blank cheque to fund the 5 year package of state highway projects Transit had been invited to "mock up" regardess of cost escalation.

"The Government has, to all intents, created a new funding system for road construction in this country that is of dubious legality, is inflationary, and gives priority to state highways over other land transport spending.

"While the statutory independence of Land Transport New Zealand is cited in the Cabinet papers, related advice is given on how Ministers might exert control over the additional funding allocations. At one point, the papers say : 'Any govt publicity [for the Budget] must not be seen to constrain this independence.' (Emphasis added.) Some officials still felt disquiet. Other agencies besides Treasury, one briefing note says, 'may still have some discomfort with the proposal as developed.'

"The Government was aware of the dangers. 'Committing the Government to funding a package regardless of cost represents a significant fiscal risk for Government,' Treasury says on page eight of the central Cabinet paper. In similar vein, Treasury says on page seven, 'Committing the Government to funding projects regardless of cost or changes in priority makes it much harder to achieve value for money...which is an important goal of government, and a focus for the transport sector. If project proponents consider funding for a project is certain, they will have no incentive to adjust the project to meet budget constraints...[and] this removal of financial discipline could also extend to other activities.'

" Officials at least, recognised public transport could be one of the prime losers. As a briefing note of a meeting with Transport Minister Pete Hodgson states 'Singling out the activity class of State Highway construction for Crown guarantee would signal a preference for funding state highways over all other forms of transport. This may be perceived as being inconsistent with the New Zealand Transport Strategy, the LTMA or integration of the transport sector...' All of which it is.

"Overall, the emphasis in these papers placed on funding state highways, regardless of cost tends to undermine the credibility of the Government's recently discovered goal of carbon neutrality. A genuine carbon neutral policy would prioritise public transport, cycling, walking and travel and management, rather than leaving them the crumbs," Ms Fitzsimons says.

ENDS

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