An open cheque book to Fulton Hogan
Jeanette released yesterday an OIA that shows that the Government has secretly adopted a new method of funding roads, a method which is probably not legal and is biased in favour of new state highways. They used this method with their extra $1.5 billion road spendup in the last budget.
The new method is that Transit is invited to put up a wish list of state highways they want to build in a five year “business plan”. LTNZ must then base their Land Transport Programme on this list. The Ministers then decide the size of the activity class “state highways” in the Statement of Intent and guarantee to fund those projects. They commit to further funding in the future if there are cost overruns.
LTNZ is supposed to have statutory independence to decide how best to fund transport - finding the best balance between new state highways, public transport, walking, cycling, demand management, safety improvements and road maintenance - working within the cap imposed by the budget. But now Transit will decide the state highway building programme, LTNZ will include them in their Programme, the Cabinet will agree to fund those state highways and will guarantee that the funding will be found for those roading projects regardless of the impact on the rest of the LTNZ budget and the cost overruns.
This means that roading gets funding priority over all else. As one official put it “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.” No kidding.
This also means that the independence of LTNZ has been overturned and we now have a road construction sector in New Zealand that has no budgetary constraint on cost overruns. For once I find myself in agreement with Treasury (from the OIA Jeanette released yesterday):
Committing the Government to funding a package regardless of cost represents a significant fiscal risk for Government… 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.
This is an open cheque book to the road builders like Fulton Hogan to escalate their costs and is yet another example of why this government doesn’t understand the first thing about sustainability.
March 21st, 2007 at 12:14 pm
Must buy some shares in Fulton Hogan! and upgrade to a car!
March 21st, 2007 at 2:10 pm
From the main posting at the top of this blog, and from recent history - are we to think that government Ministers:
- loudly trumpeted the provision for sustainability in the wonderful new Land Transport Management Act and the NZ Transport Strategy a few years ago - pleasing the Greens at the time to keep them happy
- then ignored said sustainability wording/ignored the Act/ignored the Strategy/used some vagueness in the wording to ignore it?
If so, this is Machiavellian politics - Greens beware of being taken in!
Don’t believe that you have achieved anything until you have hard numbers on the table. These days, prettily and vaguely worded government Strategies abound - I am not sure to what extent they are worth the paper they are written on.
March 21st, 2007 at 2:43 pm
How many times will the Greens let themselves be conned by this corrupt Labour Govt?
Having said that I applaud more money being spent on our roads, we desperately need more of them and the ones we already have need to be maintained in the highest possible order.
March 21st, 2007 at 3:00 pm
Big bruv - are you nuts? You think it’s good to guarantee funding for a whole bunch of motorways even if they go over budget. Don’t you realise that this will push up the price of construction and provides no incentive to complete projects within budget. That’s putting aside the fact that it is clearly really stupid to prioritise the building of roads if your objective is to cut greenhouse gas emissions. Why can’t Auckland have a civilised public transport system like other cities around the world instead of being treated like a bunch of petrol heads who like to sit in traffic? Why does our government think it’s fine to break the law in order to fund more motorways?
Molly
March 21st, 2007 at 3:23 pm
Sounds like the governement broke the law in order to BUILD MORE MOTORWAYS. Is this really the act of a government aiming for carbon neutrality? Are they trying to beat their last per capita greenhouse gas score or something? Have they not figured out that more roads leads to more cars leads to more emissions? They treat investing in public transport as if it were a communist plot.
Ned
March 21st, 2007 at 3:43 pm
Does it mean that they are prioritising building new roads over maintaining existing ones or making safety improvements to existing roads to get the road toll down?
“Sorry we can’t afford to maintain existing roads - we’ve blown all our money on building new ones”
March 21st, 2007 at 3:46 pm
Big bruv:
why do you think we need more roads? Don’t you realise that roads cost money, money comes from taxes, and that taxes are BAD and THEFT and something or other about PROPERTY RIGHTS…
no, really, I’m interested, if you were deciding the mix of land transport funding, where would it go? What criteria would you use to decide this mix?
Tom
March 21st, 2007 at 3:50 pm
Molly
First of all this corrupt govt does not care if it breaks the law, if it does then it simply passes legislation to validate their actions.
Incidentally the Greens supported this lot in passing that law so I would lay off the outrage if I were you, the Greens either support breaking the law or they are against it, you cannot have it both ways.
March 21st, 2007 at 3:58 pm
Tom
Roads can be funded by the fuel tax theft, if we do away with all the silly Maori consultation rubbish then we can get more roads for our money.
My mix of land transport funding would be almost exclusively directed to roads, we desperately need the completion of the Auckland motorway system and Wellington’s Transmission gully motorway is well overdue.
The by pass of Taupo and south Waikato is also top priority.
March 21st, 2007 at 4:17 pm
Big Bruv
Interesting first para - light the fuse and duck.
Would you tax cycles and pavaments as well or anyone who would use your magnificent panoramic asphaltic highways?
March 21st, 2007 at 4:19 pm
Without knowing the details of the LTM Act and the relevant background to it in Parliament, I imagine that the government would probably argue that it is well within the law, and that it is acting “sustainably” because it is now throwing a few more crumbs than before at walking and cycling.
March 21st, 2007 at 4:21 pm
Michaelangelo
Not at all, need I remind you of the ridiculous waste of money spent on the Mercer taniwha or whatever it is called.
That was nothing but a rort and the tax payer ended up funding it.
You should know that cycles are not allowed on motorways.
March 21st, 2007 at 4:29 pm
big bruv
Oh that’s why I get strange looks - as I said earlier I must upgrade to a car!
Would you pave them in concrete - like Germany and some of the other European highways or import the tar products?
March 21st, 2007 at 4:34 pm
There arent really that many motorways in the sth island those in chch can be easily avoided by using normal roads. Anyway when the oil runs out they will still be able to be used by electric vechiles, vege oil vechiles or horse and carts for that matter.
March 21st, 2007 at 4:35 pm
Once Bitten
Nice one!
March 21st, 2007 at 5:02 pm
Woops caught on the wrong blog lol
Put your money in housing though Michaelangelo as proposed equity sharing will ensure a better return by pushing up house prices.
Just as intoduction of kiwibank $100k loans with no deposit followed by Welcome Home Loan $280k with no deposit pushed up city house prices above these margins before hand.
Pity Cullen and Bollard don’t understand supply and demand eh.
March 21st, 2007 at 5:07 pm
Big bruv:
“Roads can be funded by the fuel tax theft, if we do away with all the silly Maori consultation rubbish then we can get more roads for our money.”
You’ve kept up your act for so long now, and so consistently, that I’m no longer sure that you’re just parodying…
which means that I’m getting even greater laughs than usual, only this time not laughing ‘with you’. Except for this subtle gem:
“You should know that cycles are not allowed on motorways.”
Cheers
Tom
However, really: what would be a good CRITERIA for funding transport? I understand you like roads, but can I gently suggest you like roads for their utilitarian value, rather than any intrinsic worth? In which case, if we could identify what characteristics that utility derives from, we could evaluate the value of other forms of transport too.
March 21st, 2007 at 5:24 pm
How about a distance based system. I know in some parts of the world - Aussi, Singapore, USA and Europe all “motor vehicles” (just a bit of clarification for BB in regard to cycles) have a electronic bar code thingy so that they get scanned as they pass certain parts. (like the old toll roads) Different roads have different values so that some shorter trips are more expensive and so on. In this way where public transport is working well - driving is more expensive. Where lacking - less so.
User pays - again! This would allow flexibility into the system as new public transport is put into service or roads are up OR downgraded (sorry BB)
Fee collection (call it mileage dollars) well I’ve done my bit I will leave it for someone else to work out pros and cons.
March 21st, 2007 at 5:34 pm
A blank cheque is never a good idea. However it’s great that the govt is investing in infrastructure, and this does come just a day after the announcement on the $200m Wellington rail renewal. IMHO all these things are both affordable and worthwhile- that rail money will likely result in a $1400m boost to GDP after all is said and done, not to mention the benefits of a modern commuter train service for the millions of passenger trips each year.
Heck at least this govt is not leaving it to the market to build roads- in the words of Ganesh Nana of BERL, we have a 20 year backlog of projects due to the ineffective reliance on the market to develop infrastructure. And the projects are happening! There is no doubt that the roads are better, the unemployment rate is lower, and economic growth is bumped up by this spending.
While the oil may run out eventually, this is not an excuse for inaction. It might be 30 years away, how many needless deaths could be prevented by improving the roads in that time. Oh and concrete motorways are good but very noisy and bumpy. The californian ones are awful to drive on!
IMHO There also needs to be an incentive to get cars off the roads- perhaps stricter WOF standards and emissions testing, higher fuel taxes (with the proceeds entirely spent on roads and public transport), compulsory 3rd party insurance etc. With several hundred thousand vehicles arriving here each year, no amount of road building is going to relieve that amount of congestion.
March 21st, 2007 at 5:40 pm
I’ve pointed out earlier, that if you put in a really new road it is also a “route” and things get built along that artery taking advantage of the access to new territory. The route is apt to be more permanent than the physical pavement.
Roman roads are still the base mapping for current roads in Europe.
Something like Transmission Gully will open up property and such an advantage adds value… it also becomes (should the ocean rise even 3 meters) the only viable path out of the Wellington Region. This is not to be sneezed at. The goat path that is optimistically named SH2 to the Wairarapa is not going to cut it. .
What I’d LIKE to see with TG is rail or an electrified express busway on the same route. This would be better than an extra lane for cars.
That makes it a more viable overall option. It is however, only one piece of the infrastructure puzzle.
respectfully
BJ
March 21st, 2007 at 5:44 pm
I personally think a fuel tax is a better way to go rather than electronic toll roads like they have in oz, to pay for roading. It also encourages use of more efficient vehicles and hybrids as well as regular tune-ups, but it should be added to the pump price of diesel as it’s too easy to disconnect a speedo and bypass the present mileage based system currently on these vehicles. I also notice that on the Wellington-Wairarapa line they are spending the money on new carriages rather than on electricification of the line.
March 21st, 2007 at 7:11 pm
# OnceBitten Says:
March 21st, 2007 at 4:34 pm
>There arent really that many motorways in the sth island those in chch can be easily avoided by using normal roads.
The Dunedin ones aren’t so easy to avoid, particularly the Southern Motorway between Burnside and Mosgiel. But then, maybe that’s just Karma coming back to haunt Dunedin’s south-western suburbs - the place that gave the country Fulton Hogan.
March 21st, 2007 at 7:28 pm
Tom
Perhaps we could pave these roads with Hemp?
Not sure what you mean with your next post, but if you are seriously suggesting that we need to consult with maori every time a new road is planned lest we disturb some mythical creature then I am afraid you have a rather different view of the world than I do.
And BTW, has Eredwen not told you that I do not understand big words?
March 21st, 2007 at 9:16 pm
Is there a town-planning blog?
jh
March 22nd, 2007 at 12:12 pm
JH, not sure if that was a serious question, but yes I have actually seen a couple of blogs on town planning from a sustainable living and peak-oil point-of-view. Can’t lay my hands on the links right now, but I’ll flick them your way soon as I do.
Cheers,
Z
March 22nd, 2007 at 9:41 pm
http://wellurban.blogspot.com/
is pretty good although it is only about Wellington town planning