Infrastructure Policy Priorities for New Zealand
• The problem • Transport investment – international comparisons • Funding gap • Solutions: – Debt financing: Infrastructure Bonds, PPPs – Tax Increment Financing – TIF – Asset sales – Network access charge proposal
• Congestion key issue – Auckland’s congestion worse than much larger Australian cities • Underdeveloped public transport networks • Freight load expected to double over the next two decades • High inbound & outbound shipping costs • Poor safety margins across state highway network – Yet tourism No 1 export earner
42 million hours per annum of lost productive time on Auckland’s motorways and state highways... GDP/ hr worked = $43 (leisure $21.50 / hr) 1.00 Assuming 50% trips work related: • Productivity loss = $900m per annum 0.90 Average delay in minutes per kilometre • Lost leisure time = $450m per annum 0.80 • Total cost of delay = $1,350m 0.70 2004 0.60 2005 2006 0.50 2007 2008 0.40 2009 0.30 2010 2011 0.20 0.10 0.00 Morning Peak Inter Peak Evening Peak Day Average Times of the day Source:http://monitorauckland.arc.govt.nz/transport/transport-patterns/average-delay-per-kilometre.cfm
Length of Motorway Network Comparative OECD Nations 1990 - 2006 Data Source: 1600 OECD Fact Book 2008 2006 - 2010 1400 Ireland extends Mways by 740km 1200 1000 2010-2016 800 SH1-SH20 4.5km Hobsonville 9.0km Waterview 4.5km 600 ChCh Southern Mway 10.5km 400 200 2006-2010 Greenhithe 5.0km 0 Alpurt B2 7.5km 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Mt Roskill 4.0km Denmark Finland Ireland New Zealand Norway
Ernst Young calculated the total economic contribution of Sydney’s toll road network to the NSW economy was a net economic present value of $22.7 billion… Ernst Young, July 2008
• Bangladesh, China, India, Indonesia, Israel, Japan, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand, United Arab Emirates, South Africa, Morocco, Croatia, France, Italy, Ireland, The Netherlands, Norway, Poland, Portugal, Russia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, North and South America, Brazil, Canada, Colombia, Ecuador, Mexico, Panama, United States, Australia, New Zealand (sort of)
$ million Puhoi Wellsford 2,300 Northern Busway Extension 600 Waitemata Harbour Crossing 5,300 City Rail Link 2,200 Avondale Southdown Rail 1,000 South Western East Tamaki 1,250 Corridor AMETI 1,500 3 rd Freight Line Papakura to 700 Port Airport road access & rail loop 1,890 Improved port access 1,000 City Centre Transport 520 Improvements Arterial Upgrades for freight 2,000 and public transport State highway pinch points 1,200 Busway to Botany Flat Bush 90 Rail to Albany 6,000 Total 27,550
Project Funding gap $m Western Ring Route by 2015 0 Inner City Rail Loop by 2020 (subject to viable transport land development plan) $2,200 AMETI and SH20 to 1 east west connection by 2025 $2,600 Additional Waitemata Harbour Crossing by 2030 $5,200 (subject to viable transport land development plan) Total funding deficit $10,000 Borrowed over 30 years @ 6% = annual repayments of $700m per annum Circa: 50% increase in council rates, or 40 cents regional fuel tax
2,000.00 New & improved infrastructure for State highways 1,800.00 Maintenance & operation of State highways 1,600.00 Maintenance & operation of local 1,400.00 roads Renewal of local roads 1,200.00 Renewal of State highways 1,000.00 Public Transport Infrastructure Public transport services only $36m per annum on average 800.00 & non State Highway spending New & improved infrastructure for 600.00 declining in real terms local roads 400.00 Public transport infrastructure 200.00 Walking & cycling facilities - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Need to increase land 1,600,000 transport revenue Smaller state highway projects being squeezed – 1,400,000 Not sustainable 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 Total Other Programmes Total Commitments Waikato Expressway WRR Tauranga Eastern Christchurch Motorways Foxton to Wellington Puhoi to Wellsford Uncommitted Non RoNS Indicative Funding available from NLTF+tolls Source: NZTA
• Council or government • All forms of debt debt • Allow time payment • Infrastructure Bonds • Intergenerational equity • Public Private Partnerships • But… • Where does the money come from to repay the debt?
• Increase rates – up to 50% • Regional Fuel Tax – up to 50 cents per litre • National fuel tax incl RUC – 16 cents per litre • Parking Charges Partial funding • Tax Increment Finance (TIF) contribution • Asset Sales • Network tolls
Source: Sinclair Knight Mertz
• ACIL manages total investment assets currently worth $1.195 billion ($881 million net) • Returns for Port of Auckland: Ports of Auckland Parent 2010 2011 Return on Assets 6.5% 3.1% Return on Equity 11.8% 5.7% • Potentially $400m assuming 49% partial sell down? • Retain land and sell port Kota Jaya , under a Hong Kong flag) in the Port of Auckland, operations?
• $9 billion supplemented by other • Revenue: revenue streams could fund • 915,000 cars / day join the major transport projects motorway system • Funding source for PPPs etc • “Average” $2.00 per car = $1.8m / day • = $ 668 m per annum • NPV $668m per annum over 30 years @ 6% = $9 billion • Equivalent to… 50% increase in rates or 40 cents per litre regional fuel tax
• Number plate recognition • $6.00 daily cap • Cost of collection 20% • Potential for real time pricing
Total Funding Envelope Excise Tax GPS based real time charging Real $$$ Road User Charges & Tolls Road charging revenue 2010 2020 2030 2040 Fuel Efficiency and Alternative Powered Vehicles
1. 10 year Capital Intentions Plan 2. Demand management & pricing 3. Improve access to information esp whole of life asset management 4. Performance indicators and annual stock-take 5. Spatial and regional infrastructure planning 6. Scenario modelling 7. Resilience incl lessons from Christchurch earthquakes 8. Explore alternative funding • Improved partnerships and research programme • Evolution towards more detailed project specific plan on 2014
• Auckland transport system requires significant investment to support regional growth • Current funding methods are insufficient on their own – both nationally and regionally • Debt can be used to enable early progress but where does the revenue come from to service the debt? • TIF, asset sales and parking charges have potential to part fund new investment • Network pricing is means to achieve a step change in transport funding and delivering transport network efficiency
People support network pricing... More More buses trains More time with my son Greater efficiency More More fares More deliveries jobs done More cycle tracks More transport choices Faster More trips sales Lower We car rates pool
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