Roading network taking its toll
Another major step forward towards economic recovery was taken this week, with the Official Cash Rate reducing another 50 basis points. This follows last week’s positive news where we saw business leader optimism hit the highest point since 2016 (NZ Herald) and the ANZ survey showing business confidence has risen another 10 points in September, on top of the highest level in a decade in August. These are important green shoots. Confidence is everything in business, planning begins again, and spending follows. Spending and increasing cash liquidity in the system is going to take time, but we can now safely say the journey to recovery is underway.
This week NRC provided submissions on three road projects being proposed for tolling by NZTA :
· Ō2NL highway, Ōtaki to north of Levin
· Takitimu North Link, near Tauranga
· Te Ahu a Turanga: Manawatū Tararua Highway, near Palmerston North
Talk to our members and there is a broad spread of views. Some are happy to pay if they get better productivity and roads, others think Road User Charges (RUC) and Fuel Excise Duty (FED) should cover it. Here is where NRC stands.
Firstly, it is important to understand the landscape we find ourselves.
- We have a roading infrastructure shortage both in new roads and a deficit in maintenance.
- We are not covering the costs of what the national land transport fund is required to deliver from existing RUC & FED.
- Some members don’t want to pay for tolls but want better roads.
These three statements cannot co-exist together. Something needs to give. Either New Zealanders pay more for roads, or we have to live with the roading network we have.
At a time when many transport operators are suffering a cash liquidity problem, the fact that we are here sticks in the throat. I feel the same way, but none of that changes the fact that we find ourselves in this particular cul-de-sac, and are faced with difficult choices to get out.
And yes, roading revenue needs to be spent on roads. Clear signals on this are being sent from Wellington to NZTA and local councils on this. Repeatedly. But it doesn’t change the fact there is a short fall to begin with.
This is where tolling of roads is one of the tools that needs to come into play. NRC’s position is straight forward – we want a roading network that enables high productivity, and tolling is a legitimate tool to pay for the infrastructure we need, when applied appropriately. So what does that mean?
Tolled roads must
- Deliver enhancements – a new road altogether, extra lanes, or structural such as tunnels and bridges that deliver improved productivity (reduced trip time, greater load capacity etc)
- Have safe viable alternative routes for those who don’t want to pay
- Be well telegraphed so that transport operators can bake the costs of tolls into their contracts well ahead of time with customers
We are not calling for road freight users to be exempt, because this fails the fairness test. Roads need building and fixing, everyone needs to contribute fairly. Exempting transport operators from paying for new, much needed infrastructure is actually exempting a massive part of the economy (effectively all freight customers) and asking other parts of the economy to take up the slack. This is not politically acceptable to New Zealanders.
NRC have spoken to the Minister and outlined what we want to see with regard to tolls. The industry is prepared to do its bit, especially where new roads deliver major efficiency gains. But we want to see a structured plan, outlining how and when tolls will be used, which projects, what the principles are, how the revenue will be gathered and how it will be spent back into roading infrastructure.
We also expect to see the wasteful spending that erodes the fund removed. Fast tracking the consent process, locking in a pipeline of work that spreads back office and capital costs over multiple projects, separating non-core parts of the project such as art works or nonstandard design elements and no expensive ribbon cutting opening celebrations.
Tolls are coming, and transport operators need to prepare for this. NRC’s advice is treat tolls simply as another government cost that should be passed through directly to customers. Fuel price changes & RUC are passed on to customers as separate line items, often using tools such as the Fuel Adjustment Factor. Road tolls are costs to the total economy, and should not to be bourn by the transport sector alone.
Road tolls is another example of a major change underway where being informed and having an opinion matters. If you missed it last week, check out our Full Throttle news brief sections where you can keep up to date with all of the transport-related issues affecting your business.
Let us know what you think – on tolls, and our new Full Throttle.
