By Chris Olsen
CEO
Roading New Zealand
GPS. No, I’m not talking about the GPS you use on a grader to get the levels right. I’m talking about the Government’s policy statement (GPS) on transport.
This statement will be issued every three years and it will show the Government’s priorities and funding levels for transport over this time. Over recent months the Government has asked for input into its first GPS, through its Land Transport Funding Trends, Issues and Options discussion paper.
So how relevant is the GPS for contractors and what about the questions the discussion document asks?
To me, the GPS is going to be absolutely critical for contractors. It’s going to be a document that:
- Ensures there is enough funding to cope with construction and maintenance cost escalations;
- Provides funding certainty and smooth work programmes for contractors so they can invest in people and plant;
- Most importantly, it will show where future investment in transport is heading and how serious the Government is about sustainability.
What follows are the questions the discussion paper asked and Roading New Zealand’s responses to these questions.
How can funding best support achievement of the Updated New Zealand Transport Strategy (UNZTS) targets?
We found this question a little difficult to answer because (at this stage) there are few quantifiable targets contained in the UNZTS.
In our view every proposed activity should be able to demonstrate the contribution and support it makes to achieving these quantifiable targets. As well as demonstrating their contribution, activities should also be costed so an assessment of their value for money can be made, and this assessment used to establish trade offs when allocating funds.
This lack of targets and assessment tools is a worry for contractors because it gives no framework for providing funding certainty.
What transport activities should receive more funding over the next three years?
Notwithstanding the answer above, we believe that there are a number of relatively low risk and low cost activities that could be funded over the next three to 10 years to make quicker progress towards the UNZTS targets. These are included in Roading New Zealand’s submission on the UNZTS and include:
- Reducing travel times and traffic congestion by using alternative pavement materials (e.g. asphalt) to minimise delays caused by lengthy road works.
- Approved organisations should manage the public health effects (i.e. the health and safety of workers) of construction or maintenance work to acceptable international standards by using an approved health and safety management regime, such as the Operate Safe system.
- Approved organisations should manage local environmental impacts through an industry self governance model similar to Operate Safe. This would improve compliance and improve sustainability by the reuse, recycling and replacement of materials.
Essentially these activities would modify road construction and maintenance “business as usual” over the next three to 10 years to make quicker progress towards the UNZTS targets with little risk.
We also suggest that New Zealand continues to build roads using asphalt as opposed to concrete because asphalt emissions are around 25 percent of concrete.
The Government is in the unique position of being able to mandate these requirements in the transport sector through its procurement policies.
What trade offs should be made between activities?
It is very difficult to make subjective decisions on trade offs without knowing the consequences. This particularly applies to road maintenance levels, which are extremely important because of New Zealand’s low capital cost roading network.
We therefore suggest that trade offs are determined using the assessment/evaluation process referred to above and ‘willingness to pay’ surveys.
What areas are there for less funding?
Areas for less funding will become obvious after the activities have been evaluated and ‘willingness to pay’ surveys carried out. Those regions that contribute less to the achievement of the targets should receive less funding.
What should be the overall level of NLTP funding?
The level of NLTP funding should be set at a level consistent with the achievement of the targets. In these times of high global inflation it is extremely important that an accurate model be developed and applied across all activities for determining the NLTP’s 3 year inflation horizons.
What sources of additional funding are there?
Additional sources of funding to those already in use include a diesel tax and savings made in other government budget items, such as health and ACC from improved worker health and safety, and reduced medical costs through improved safety and environmental initiatives.
Sitting back I can see that there is still heaps of work to be done over the next couple of years with some thorny issues to deal with.
Deciding what the transport strategy’s targets should be and how well different projects contribute to these targets will certainly be a challenge. If we can overcome these challenges and make a difference then New Zealand will be better off and the journey worth it.
Contractor Vol.32 No.5 June 2008
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