NLTP - National Land Transport Programme

10-year financial forecast

Expenditure forecast

Input cost pressures have been significant over 2005 and 2006. However statistics show that in the December 2006 and March 2007 quarters pressures have eased considerably with there being a reduction in input prices in the December quarter compared to September 2006, and negligible movement from December to March 2007.

Table 3: Forecast expenditure by activity class 2007/08-2016/17

	07/08	08/09	09/10	10/11	11/12	12/13	13/14	14/15	15/16	16/17
	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
Maintenance of local roads
Local road Routine maintenance	172	186	200	210	216	224	233	245	254	263
Local road Emergency reinstatement	53	57	60	62	64	66	68	70	72	74
Renewal of local roads
Local road Periodic maintenance	190	205	219	228	238	247	257	267	278	289
Local road Preventive maintenance	5	5	6	6	6	7	7	7	7	8
Maintenance of state highways
State highway Routine maintenance	223	244	265	280	296	312	330	348	367	388
State highway Emergency reinstatement	32	34	36	37	39	40	41	42	43	45
Renewal of state highways
State highway Periodic maintenance	168	184	200	211	223	235	248	262	277	292
State highway Preventive maintenance	5	5	6	6	7	7	7	8	8	9
Improvement of local roads
Local road Improvement projects	178	176	143	109	137	155	155	170	177	172
Local road Minor improvements	34	37	40	41	43	45	46	48	50	52
Improvement of state highways
State highway Improvement projects	537	703	563	637	571	455	438	602	630	723
State highway Property	96	30	30	20	45	45	66	68	70	72
State highway Minor improvements	31	33	35	36	37	38	40	41	42	43
Regional development	20	0	0	0	0	0	0	0	0	0
Use of the land transport system
Studies	2	2	2	2	2	2	3	3	3	3
Travel demand management	1	1	1	1	1	1	1	1	1	1
Community focused activities	17	18	18	19	20	20	21	21	22	23
Rail freight and sea freight	2	2	2	2	2	2	2	2	2	2
Walking and cycling	14	18	19	20	22	23	25	26	26	28
Passenger transport
Passenger transport services	165	183	200	211	223	236	249	263	277	293
New passenger transport infrastructure	98	159	184	65	44	42	37	26	16	17
Administration
State highway	49	53	56	58	59	61	63	65	67	69
Regional	9	10	11	11	11	12	12	12	13	13
Territoral	17	18	18	17	19	20	20	21	22	23
Activities in the NLTP that are approved by the Minister
Research, education and training	26	26	28	29	29	30	31	32	33	34
Road policing	259	270	286	297	309	322	335	348	362	377
Unallocated expenditure
Unallocated expenditure	0	0	0	0	150	260	175	0	0	0
Total	2,403	2,659	2,628	2,615	2,813	2,907	2,910	2,998	3,119	3,313

While input price increases over 2006/07 may fall from the 8–10 percent levels experienced in 2005/06 to 4–5 percent an allowance has been made for increased input price increases over the next two years before the trend settles back to the levels experienced before 2005/06.

Maintenance of the state highway and local road networks

Road maintenance continues to be a significant portion of the NLTP. The allocation to maintenance activities has been increased compared to last year’s forecast, which reflects increasing cost pressures within the industry and increased demand for maintenance due to heavy vehicle traffic growth and increasing use of asphaltic concrete surfacing rather than chip seal.

Forward allocations include an allowance of 1 percent per annum increase in activity level for local roads and 2.5 percent per annum for state highway road maintenance. This reflects the need to increase activity levels on networks with high traffic growth but also an expectation that there will be no increase in activity on networks with little change in demand and where infrastructure is in good condition.

The allocations for state highway maintenance are lower than those sought by Transit. Should Transit not be able to find and implement efficiencies, there is a risk that levels of service may be compromised.

State highway and local road emergency work

A higher allocation has been made to emergency works to reflect the growing call on these funds following extreme weather events.

Local road construction

The allocation for local road construction is based on the forecast demand from land transport programmes submitted by approved organisations for the 2007/08 NLTP. The allocations are above the levels in the 2006/07 NLTP. A greater number of projects will be funded from R funds than has occurred in the past to ensure that regionally distributed funds are fully spent by 2015 when the revenue ceases.

Between 2009/10 and 2011/12 forecast allocations for local roading improvement projects are constrained by available funds and impacted by increases in the cost of road maintenance and emergency services, and by peak demands in passenger transport improvement activities.

State highway construction

The allocations for state highway construction are at the level required to fund the programme of works agreed with government over 2006/07–2010/11. Over this period the funding levels continue at the level shown in the 2006/07 NLTP adjusted for the transfer of the Kapiti western link and East Taupo arterial projects to the local road improvement programme.

The regionally funded Prebensen Drive project in the Hawkes Bay has been added to the state highway construction programme.

The Waterview connection project and associated works have been removed from the main programme in the NLTP and shown as reserve projects. This status is used to show projects that may be funded subject to a funding plan being agreed and implemented. At this stage there is no confirmed funding plan because Transit has decided not to pursue tolling at this stage. Transit is seeking funding for the project from alternative sources.

The cost guarantee for the state highway construction programme will provide additional funding if costs increase above the level shown in the NLTP over 2006/07–2010/11. An allowance has been made in the NLTP for cost increases beyond the guarantee period. This allowance is funded from the anticipated revenue shown in this NLTP.

Minor safety projects

Minor safety project allocations for state highways and local roads continue at the increased level of 8 percent of the total maintenance allocation.

Use of the land transport system

Allocations for community focused activities, including travel behaviour change projects and local authority led community projects, allow a similar level of activity to 2007/08 over the 10 forecast years.

The allocations for walking and cycling have a 20 percent increase in activity levels between 2006/07 and 2007/08 with a further 50 percent increase over the following nine years reflecting the priority given this activity by Land Transport NZ and by transport organisations who are proposing increased programmes of work.

Passenger transport

The allocation for 2007/08 is at the level agreed with regional councils and supported by their local share funding. Future allocations include an allowance for input price inflation and an expansion in service levels of 20 percent over the following nine years. The government’s announcement of a regional fuel tax may be used by some regional councils to increase service levels. This may lead to a change in allocations.

Other factors which may affect allocations and service levels include the outcomes of the current review of legislation, possible changes to contracting procedures and revenues from fares.

Allocations for infrastructure have changed from those shown in the 2006/07 NLTP. They reflect reducing expenditure on the Northern busway project as it is completed, changes to the timing of infrastructure projects in Wellington, particularly the purchase of new rolling stock, and the under expenditure of the 2006/07 allocation.

Regional development

The annual allocation for regional development funding in 2007/08 is $20 million to assist the development of roads in the forestry industry in Northland and Tairawhiti. The forecast shows that regional development funding will cease in 2007/08 consistent with the date shown in previous NLTPs, as it is expected that the high priority projects will be completed and R funds will be available for regional development projects thereafter.

Administration and project control

Within the forecast it is anticipated that administration will increase as expenditure on other items increase. Forecast allocations are provided for Transit, local and regional government.

Research education and training

In line with the requirements of the Land Transport Management Act, research is shown as an activity in the NLTP. It is shown at the level of funding expected to be approved by the Minister of Transport.

Provision for the road policing programme

Funding for this activity is provided directly from the National Land Transport Fund. The provision for this activity is shown here to reflect the balance of anticipated expenditure on road policing compared to other activities within the NLTP.

Assumptions

When making forecasts of anticipated revenue and expenditure, Land Transport NZ has relied on certain assumptions. It has relied on forecasts of revenue provided by the Ministry of Transport led revenue forecasting group whose membership also includes Transit and Land Transport NZ with assistance from the Treasury. It has relied on economic circumstances being as forecast by that group, its advisors and Treasury. It has also relied on forecasts of the exchange rate provided by the Treasury and an assumption that while the international fuel prices may be volatile over the period of the NLTP, no circumstances will arise which cause a fundamental change in supply and price. It has expected there will be no change to the funding guarantees and their implementation.

It has assumed that the land transport programmes of approved organisations will remain in keeping with their current LTCCPs and that the way in which they interpret and implement their plans will not change.

Land Transport NZ has anticipated that it will receive revenue from full hypothecation of petrol excise duty and that this revenue will grow to the full amount as current Crown funding programmes are completed.

Page created: 26 June 2007