Transport Strategy Welcome But Needs Improvement

"The government's top priority goal is to return New Zealand's per capita income to the top half of the OECD. It is pleasing that the government's Transport Strategy and the Land Transport Management Bill recognise the importance of an efficient transport system in contributing to that objective", the executive director of the New Zealand Business Roundtable said today.

The Bill improves upon the current legislative framework by allowing wider scope for private sector participation in road provision and greater use of tolling.

"These developments are welcome but much will depend on the relevant detail", Mr Kerr said. "It is important that private sector participation is achieved by open, competitive tenders based on clear rules that are not subject to subsequent political manipulation. Otherwise taxpayers will be exposed and costs will be inflated as tenderers seek to protect themselves against risks and uncertainties."

Mr Kerr said that, in contrast to these advances, a major concern was that the Bill removed the priority accorded to economic efficiency in the present legislation. The regulatory impact statement acknowledges that allocating funding to particular types of transport in the ways proposed may result in less economically efficient expenditure. These changes are not consistent with the primacy the government is giving to improving economic growth.

"Other valid objectives such as good safety and environmental outcomes are advanced by having an efficient transport system with efficient prices", Mr Kerr said. "For example, congested roads indicate inefficient investment or pricing decisions. They inconvenience users, waste fuel, exacerbate air pollution and may reduce safety. The pursuit of energy efficiency as an independent objective is inconsistent with economic efficiency and could undermine both safety and environmental objectives, as could the stated intention to favour rail over road wherever possible.

"For these reasons economic efficiency should be restored as the key policy objective", Mr Kerr said.

Mr Kerr said the New Zealand Transport Strategy was wrong to argue that transport decision making has not been coordinated. The basic choice is between coordination through competition between modes on the basis of proper pricing and open markets on the one hand, and central planning on the other.

"A major concern is that the Strategy appears to represent an unwelcome return to the days of a more politicised transport system with reduced accountability as a result of multiple, conflicting objectives. There seems to be no clarity as to how priorities will be determined, or how central and local governments are going to handle the conflicts between their interests as owners, funders and regulators of the transport system.

Mr Kerr said there were other points of concern in the documents:

• Regional councils are to be allowed to own and operate public transport infrastructure in competition with the private sector. Public operation is generally less efficient, and conflicts with the role of regional councils as regulatory authorities. • No provision is made for congestion pricing on existing roads, which would have both economic and environmental benefits.

• Contrary to some interpretations, there is no new provision for borrowing by Transit New Zealand to fund capital expenditure.

• Special consultative provisions for Maori do not seem justified.

• There is a risk that tolls will be used to tax motorists for the benefit of non-motorists.

"The Business Roundtable has argued that land transport policy should move in a more commercial direction with greater private sector involvement and neutral treatment of different modes", Mr Kerr concluded. "The government's support for public-private partnerships and tolling is in line with our thinking, but the moves towards greater central and political control are not.

"In making submissions on the Bill, we shall be advocating improvements to make the policy directions more consistent, and to give primacy to economic efficiency and growth in line with the government's commitment to restoring New Zealand to a high place in the OECD income rankings."

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