More than ‘quarter of trillion dollars’ on land transport over next two decades, priority questions for Government

As the Herald reported at the time, Bishop said the Government remained committed to the roads, but “not everyone is going to get what they want, exactly when they want it” and “some roads won’t be starting for many years”.

Bishop said the Government would set out a pipeline of projects alongside a “realistic funding track”.

During the 2023 election campaign, National promised 13 new Rons. The Government has expanded this to 17, including SH1 Whangārei to Port Marsden, the East-West Link in Auckland, Hamilton Southern Links, Ōtaki to north of Levin, the SH1 Second Mt Victoria Tunnel and Basin Reserve upgrades, and the Hope Bypass.

The party said work would begin on these roads within one to 10 years of taking office. Investment cases have been endorsed by the New Zealand Transport Agency (NZTA) board for all of them, while construction is underway on some, such as Takitimu North Link Stage 1.

The August paper said the $56b Rons programme was the “most complex and expensive infrastructure programme in New Zealand’s recent history”.

But there are also other transport costs, including $163b to be spent over the next 20 years from the National Land Transport Fund (NTLF) towards repaying debt, maintaining existing service levels and delivering standard improvements. Other major transport projects were also planned, including the second Waitematā Harbour crossing.

This meant that over the next two decades, “over a quarter of a trillion dollars” would be invested into land transport, the ministry said.

Officials said the “relative value of the Rons programme will need to be assessed against other major capital transport investments planned” and “the ministry recommends all proposed projects and programmes be considered and prioritised through the development” of the general policy statement on land transport next year.

The benefit-to-cost ratio for the Rons were “medium to low”, the ministry said.

The NTLF, which consists of revenue from the likes of fuel excise duties (FED) and road user charges (RUC), is already “massively subscribed” as the minister put it last year.

The Ministry of Transport said this means there is “limited opportunity” to reprioritise money from the fund to delivering new Rons.

After highlighting the expected costs of other transport projects, such as the Waitematā Harbour connections, the ministry said Bishop would “need to prioritise, not just within the Rons programme, but across all transport capital investments”.

The Ministry of Transport and the NZTA “independently prioritised the Rons programme” with different delivery and investment options. However, the tables showing these were redacted in the document.

When asked for comment on the paper, Bishop pointed the Herald back to his speech from November, noting the Government’s commitment to the Rons but saying “delivering them all tomorrow is not realistic”.

“It also isn’t an option for the construction sector. We are building a major transport projects pipeline and will have more to say in due course.”

He did not say when that would be.

As Bishop explained in his speech, the issue for delivering the roads is, for the most part, unsurprisingly, the cost.

There are three groups of possible revenue tools for the Rons, the ministry said. Those are project-specific user-charges, such as road tolling, general user charges, like Fed or Ruc, and direct funding from the Crown.

“All revenue tools are constrained by New Zealanders’ willingness and ability to pay, and ultimately revenue raised will come from the same broad set of people: New Zealand households,” officials said in their paper.

“Using multiple funding sources is therefore unlikely to materially mitigate cost-of-living concerns, although it may shift costs between different kinds of households.

“The ministry recommends prioritising project-specific charges as they ensure the closest possible connection between the revenue and the users or beneficiaries of a project.”

Various scenarios for how these tools could be used and possible rates of increase were included in the document but redacted.

But in his speech, Bishop said to fund the Rons programme entirely from FED and RUC would require a one-off 70% increase – equivalent to a 49 cent per litre increase in the petrol tax. This would be on top of the increases the Government is already planning from 2027 onwards.

“This 49 cent per litre increase, would only allow the Rons to be delivered. It would not provide any funding for other major transport projects such as the Second Waitematā Harbour Crossing, or the North West Busway.”

Any contributions from the Crown would need to “compete with every other important priority the Government has to fund”.

“Every dollar of extra Crown capital we put into roading is a dollar that can’t go into health, or education, or defence, or any of the other calls on capital the Crown has.”

Additionally, Bishop said tolls were “useful but they don’t fully fund roads”, while infrastructure levies only provide “extra revenue on the margins”.

Jamie Ensor is the NZ Herald’s Chief Political Reporter, based in the Press Gallery at Parliament. He was previously a TV reporter and digital producer in the Newshub Press Gallery office. He was a finalist this year for Political Journalist of the Year at the Voyager Media Awards.