Outline 1. How road pricing works (includes comparisons) 2. NZTA Principles and existing GPS focus 3. Exploring the options 4. Suggested Local Govt. Aspirations/Principles 5. Key Questions for the Local Authority Sector to consider 1
How road pricing works (includes comparisons) 2
Road Cost Relationships Costs per km to provide $ The busier the road, the more it costs to build - but Costs per user The cheaper it is per vehicle Traffic 3
Funds Generated Across the Network Less funds Surplus than required funds generated The same vehicle overpays in one area and underpays elsewhere 4
Distributing Financial Assistance Total Funds required “Ability to Pay” by TLA per head adjustment TLA per head “Overall Rate” Deficit adjustment Deficit (Could be NZTA FA surplus) User Funds generated Trending Rural Urban/Metros 5
A direct comparison (David) > Typical city about $70 per head in rates FA Roads – often about 15-20% of the rates > Rural about $280 per head in rates for FA Roads – often about 40% of the rates Rates FA Total inc FAR New Diff Ratio % on Rds NZTA less 1% Rates Diff City $70.00 50% $140.00 49% $71.40 $1.40 1.00 2.00% Rural $280.00 60% $700.00 59% $287.00 $7.00 5.00 2.50% FAR Percentage changes generally impact more severely on rural authorities! 6
NZTA Principles and existing GPS focus 7
NZTA FAR Review Principles (Abbreviated) 1. Support optimal outcomes – right way/time/price 2. Facilitate appropriately consistent network 3. Appropriately split costs users/communities 4. Provide as much investment certainty as possible 5. Be efficient to apply 6. Based on accessible and reliable evidence and data 7. Ensure transparency in how FAR set and applied Nothing inconsistent with LA aspirations 8
Focus of 2012/13 - 2021/22 GPS 1. economic growth and productivity 2. value for money 3. road safety. There will be various opinions on whether the NZTA approach is consistent with these 9
Exploring the options 10
Key question Which, if any, of the proposals put forward will improve the allocation process? 11
“Ability to Pay” – current approach Calculates ability to pay based on How much you have to pay (Programme “P” ) How much money you have (Land Value “LV” ) P/LV is the key element of the current formula 12
A significant move from current approach Page 6 of discussion document > . . . we will take into account differences in local authorities’ ability to raise the local share of the costs . . . > . . . We are not proposing to take into account differences in costs between local authorities . . . Based on Transport outcomes NZTA has indicated they do not believe they have a legitimate reason to consider “P” as a component of ability to pay (Para 1.3) 13
Examples of Differences affecting “P” > Terrain, Climate, Foundations, etc. e.g. – Canterbury v Hauraki Plains These differences can make the same type of road 2 to 4 times more expensive in one area > State Highway Network e.g. – Rotorua v Gisborne or Nelson Q. Are these differences significant and, if so, will any of the proposals compensate for them? 14
1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2012/15 ROAD TRANSPORT UNIT COSTS 200,000 400,000 600,000 800,000 0 Mackenzie Waimate Clutha Southland Central Otago Hurunui Waitomo Stratford Ruapehu Tararua Central Hawke's Bay Buller South Wairarapa Opotiki Rangitikei Gore Ashburton Westland Kaipara cents/lane km Otorohanga Wairoa Carterton Kaikoura Waitaki Marlborough South Taranaki Grey Far North Timaru Selwyn Thames-Coromandel Gisborne Hauraki Manawatu Tasman Western Bay of… South Waikato Masterton cents/vkt Matamata-Piako Waimakariri Waikato Taupo Rotorua Waipa Horowhenua Whakatane vkt/lane km New Plymouth Queenstown-Lakes Dunedin Whangarei Wanganui Hastings Kawerau Invercargill Kapiti Coast Upper Hutt Palmerston North Napier Nelson Porirua Christchurch Wellington Lower Hutt Tauranga Hamilton Auckland Transport 15 0 2 4 6 8 10 12 14 16 18 20
If “P” is to be kept in the equation > Local Government will need to help NZTA find a logical reason to do so > One avenue may be asking the Minister to identify it as criteria he wants considered 16
5 Options – All involve “Bands” > Initially all councils are set at 50 and 53% overall > In each option the 25% of LAs identified as having the least ability to pay are banded into groups with 5% rate increases > As a result, in each option the remaining 75% of LAs drop to 49% and 52% overall > The 25% and/or bands could be increased – this would result in overall rates for the remaining councils dropping 17
Option 1 – using NZ index of deprivation (David) > Based on relative deprivation of local residents > No consistent direct link to expenditure difference > Doesn’t handle non resident ratepayer situation well > Mixed response to large pockets of non-rateable Crown Land 18
Option 2 Net equalized rateable capital value Number of rating assessments > Excludes non-rateable Land > Picks up non resident ratepayers > No consistent direct link to expenditure difference > Uses capital rather than land value > Recognition of local deprivation limited 19
Option 3 – combines Options 1 and 2 > Seeks to balance out the negative elements of the previous two options. > Currently modelled on 50:50 weighting > Opportunity to adjust weighting > Still no consistent direct link to expenditure difference 20
Option 4 Lane kilometres of local road Net equalized rateable capital value > A sort of “modified status quo” > Link to expenditure difference is weak but stronger than other options > Uses capital rather than land value > Eliminates non rateable land from consideration > Recognition of local deprivation limited 21
Option 5 – combines Options 1 and 4 > Seeks to add deprivation element to Option 4 > Currently modelled on 50:50 weighting > Opportunity to adjust weighting 22
The options – general observations > There are exceptions in every option > Generally in the urban/easier networks FAR goes up and the more rural networks FAR goes down 23
Emergency Management > Proposes continued recognition of Emergency Management as over and above base programme > Three proposals – Half way between FAR and 100% – Normal FAR +20% – Set EM rate of 70% > Questions whether definition is specific enough 24
Overall Range for Co-investment Rate > Has been averaging 53% > It appears that no real logic is in place for the current figure > NZTA suggests it shouldn’t be too high to make sure LA’s have “skin in the game” > Currently $M350+ pa generated on LA roads supports work on State Highways > Reducing overall rate may mean more work done at a lower FAR or vice-versa 25
Other Issues NZTA seeking feedback on > Enhanced funding assistance rates – Used to encourage expenditure on issues that may be more important from a national perspective or to road users than the local rate payers > Special purpose roads – should they continue to be treated separately? > Transitioning – At what rate should FAR rates change 26
Suggested Local Govt. Aspirations/Principles 27
Suggested Local Govt. Aspirations/Principles > Growth across all New Zealand is desirable – transport contributes to this > The public roads of New Zealand form a single network with open access > The network must be sustained at a level of service appropriate to its use > Local Government works together for the collective good of New Zealand 28
Key Questions for the Local Authority Sector to consider 29
Key Questions for LAs to Consider 1. Are suggested principles for LG appropriate? 2. Should current Overall Rate be 50% or 53%? 3. Is programme value “P” in or out? If in • Legitimate reason for NZTA to keep it? • What should change – same rates for all activities? Land to Capital Value? 4. If “P” is out what is the best option? 5. Is 25% the right number of LA’s to be assisted? Why not 33%, 50 % or a continuum? 30
Key Questions for LAs to Consider – Contd. 6. What is the right formula for Emergency management? 7. Is there a role for enhanced rates? 8. How should Special Purpose Roads be treated? 9. What should the transition rate be for those with significant changes 10. Are there any other issues? 31
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