Aus & NZ: New Zealand open to PPPs for transport projects

04 April 2018 - 12:00 am UTC

The New Zealand government will consider PPPs and issuing infrastructure bonds to pay for large transport projects, according to its new transport policy.

The government proposed on Tuesday (3 April) spending NZD 4bn (USD 2.9bn) over a decade on rapid transit in a plan that shifts spending away from big motorway projects, but increases it for public transport and smaller road upgrades.

A new tram from the centre of Auckland out to the airport as well as unspecified “transitional rail” in urban areas are among the projects the rapid transit money will fund.

The government’s draft Government Policy Statement on Land Transport proposes an overall increase in the money available in the National Land Transport Fund – the main source of government money for transport projects – to NZD 4.2bn in 2027/28 from NZD 3.7bn in the 2018/19 financial year ending 31 March.

The 13.5% rise over the next decade would be funded by an increase in fuel excise duty, of between NZ 9 cents and NZ 12 cents a litre over the next three years.

Overall, government funds available for public transport over 2018/19-2027/28 will increase 46% compared to the last plan, which covered 2015/16-2024/25. Meanwhile, funds available for walking and cycling paths will rise 248% with a 95% hike for regional road improvements over the same period. At the same time, state highway improvements will get 11% less funding. 

The government said the NZD 4bn to be allocated to rapid transit decreases towards the end of the ten-year period, but it is intended that funding will still increase. “The intention is to continue with more investment, however, the details of what and how it would be funded are not decided yet,” the draft policy said.

A spokesperson for the Minister for Transport, Phil Twyford, said the “government would consider public private partnerships for large-scale infrastructure on a case-by-case basis”.

Local government levies and vehicle licensing fees will supplement the central government funds, but the policy document says the government will consider alternative funding options including other user charges and “value capture” levies on those that benefit from new infrastructure such as property developers and other land owners.

It said these could be used to pay for alternative financing such as PPPs and government issued infrastructure bonds.

“In addition to the primary central government and local government funding sources, it is possible to access alternative government financing through a Crown loan, or from private financing, for example through public private partnerships,” the policy document said.

“It may also be possible to issue infrastructure bonds. These bonds would be repaid through revenue raised from the alternative funding sources.”

It said any “alternative financing proposal” will require a business case. “Because adopting the proposal may foreclose other options, it must represent the best course of action for the land transport system.”

Business cases for alternative financing would need to be approved by Cabinet. They will need to demonstrate how the project can realise benefits early. The willingness and extent to which co-funders commit to funding opportunities for value capture and/or to realising the value to communities of land use changes that can be leveraged by land transport investment must also be detailed.

The deadline for submissions on the plan is 2 May.

New Zealand