New GPS creates opportunities to bring forward work says Peter Silcock.
The recently-released draft Government Policy Statement on Land Transport (GPS) creates some great opportunities but also some major challenges for local government. The draft signals a major increase in central government investment in local and regional projects where local government is required to fund a share.
The GPS guides the expenditure of about $4 billion through the National Land Transport Fund (NLTF) each year.
Over the next three years (2018/19 to 2020/21) the proposed upper funding levels in the following activity classes increase by $300 million or 25 percent overall.
A breakdown of these figures shows an increase of 96 percent for local road improvements from $230 million to $450 million. For regional road improvements, there is an increase of 50 percent from $140 million to $210 million. Although, for local road maintenance there is a two percent decrease from $720 million to $710 million.
If we hit those maximum levels and add in the historical 50 percent local government funding, we will see an additional $600 million spent on our local and regional roads.
With debt caps and resistance to rates rises, the big question is where will local government get its additional $300 million share?
The issue of Funding Assistance Rates which are set by the NZ Transport Agency (not by the GPS) is mentioned in the GPS Q&A sheet. It states there that the new priorities “create an expectation for greater expenditure from activities where local government is required to provide a share”.
It goes on to say “the NZTA is considering how to support the government’s new priorities”.
Adjusting the Funding Assistance Rate is one option. But the GPS also flags that the new Provincial Growth Fund (PGF) can be used to:
• provide a top-up of local share for projects that will receive funding from the NLTF, but where local councils are financially constrained;
• bring forward projects which are not priorities for NLTF investment, but are strategically important to a region’s productivity potential; and
• fund projects outside of the scope for NLTF investment, but which contribute to the objectives sought through the PGF and are aligned with the region’s transport strategy.
“WE URGENTLY NEED SOME CONSTRUCTION-READY JOBS TO BE BROUGHT FORWARD.”
Importantly, any transport project needs to be referenced in a Regional Land Transport Plan (RLTP) for it to be considered for funding from either the NLTF and / or the PGF.
Councils are due to submit their RLTPs to the Transport Agency by June 30, 2018, so that these can be considered for inclusion in the National Land Transport Plan (NLTP). With the new funding availability signalled in the GPS and the PGF opening its doors, it doesn’t leave much time for councils to fully scope and plan the expanded programme of work.
I hope that in the rush to meet these tight deadlines, engagement with the local contracting community is not overlooked.
Contractors are certainly nervous about the construction gap created by the new government’s change of direction. No new programmes of any size, except for the Manawatu Gorge replacement, have progressed over the past eight months.
And it takes years for any new project to navigate the maze of funding, financing, engineering, public consultation, land acquisitions, consenting and procurement.
We urgently need some construction-ready jobs to be brought forward to fill the gap so that we can retain our construction capacity and capability to deliver our future infrastructure programme.
I find encouraging statements in the Q&A section of the GPS. “Transport Agency’s regional teams will work closely with their local government partners to understand how the changes will affect their communities and explore the opportunities the draft GPS presents to bring forward other programmes of work for 2018-21 NLTP funding, particularly public transport, and cycling and walking.”
This article was first published in the May 2018 issue of NZ Local Government Magazine.