Government Policy Statement (GPS) on Land Transport 2018/2019 – 2027/2028
The GPS outlines the Government’s plans for land transport investment over the next 10 years. This article focuses on the Government’s key priorities in regards to land transport, where it plans to invest its money, and what this might mean for you.
Shift in priorities
The previous Government’s GPS on land transport prioritised economic growth and productivity, and focused on putting the right infrastructure in place to support high growth urban areas and the regions, improving freight movement, and ensuring that the road network is resilient.
The current GPS shifts the focus of the Government’s investment, and prioritises access to transport and safety, supplemented by a focus on the environment and value for money.
The Government’s access priority to transport focuses on the ability of the transport system to provide increased economic and social opportunities, a larger range of transport choices, and a resilient system. Between $380 and $530 million is planned to be invested in public transport in 2018/19 (this compares to the previous Government’s plan of between $270 and $390 million) and between $40 and $95 million is planned to be invested in walking and cycling improvements in 2018/19 (this compares to the previous Government’s plan of between $15 and $38 million).
Safety is particularly relevant given the Easter road toll was the highest in eight years. The Government’s safety priority focuses on creating a safe system, free of deaths and serious injury.
The current land transport funding is around $3.7 billion, which is expected to increase to $4.7 billion in 2027/28. The majority of funding comes from fuel excise duties, road user charges, motor vehicle registration and licensing fees, and is supplemented by about $1.5 billion a year from local government. Controversially, the Government is currently considering increasing the fuel excise duty and road user charges (the draft GPS indicates an increase of 3 to 4 cents per litre per annum for three years, for both fuel excise duties and road user charges).
Transitional rail funding
With the increased focus on public transport and reducing the reliance on cars, the second stage GPS will consider the funding of alternative transport modes, such as rail.
In the meantime, a transitional rail activity class has been created to provide scope for the funding of key rail projects that cannot wait for the second stage GPS. This could allow the funding of the Auckland Light Rail, but the draft GPS indicates that funding for this activity class is very tight (between $20 and $55 million in 2018/19).
What does this mean for you?
- There is a focus on local and regional roads, not state highways. This is likely to lead to an increase in smaller roading contracts (particularly following the cancellation of the Auckland East-West Link) and opportunities for smaller contractors.
- The change to the new road safety strategy could increase the cost and duration of construction further. It remains to be seen if any existing roads will be upgraded in line with the new strategy – potentially those that are seen as “black spots” for accidents.
- The focus on funding through taxation may not be sufficient to meet the Government’s priorities. Alternative funding / financing proposals may be required to smooth the financial impact of the capital costs. Could this be an avenue for PPPs re-branded?
- There may be scope for a new walkway / cycle project given the additional funding – perhaps Auckland’s Skypath may yet happen?
This is only a draft GPS and is currently out for consultation until 2 May 2018. If you have any suggestions or comments you can submit them using the following form:
Want to know more?
If you have any questions about the draft GPS, please contact our specialist construction team.
PDF version: GPS on Land Transport