With moves to tackle New Zealand’s infrastructure deficit, including through fast-track consenting and the establishment of a National Infrastructure Agency, it’s the perfect time to consider the incorporation of user charging mechanisms to boost infrastructure delivery, Infrastructure New Zealand Chief Executive Nick Leggett says
Infrastructure New Zealand advocates for user charging as a sustainable tool to help fund infrastructure. We believe it ensures that those who use infrastructure (water networks, roads, etc.) directly contribute to its development, maintenance, and renewal. It also means that funding generated by user charges can be ring-fenced, protecting it from competition from more politically attractive projects.
In the transport area, at least, it seems that user charging is on the table. It has been announced that NZTA has begun work on the first seven new Roads of National Significance (RoNS) and that tolling is being seriously considered by officials as part of the funding mix. Infrastructure New Zealand is actively promoting tolling for new RoNS and I am encouraged by the transport minister’s public comments that if official advice recommends tolls, the Government will sign those off.
Four-lane, grade-separated highways are essential for the safe and efficient movement of people and freight around New Zealand; however, they are expensive to construct and maintain. While other funding and financing methods, such as PPPs, will also be in the mix, tolling can make an important contribution. Unfortunately, tolling, like congestion charging, has always been a bit controversial in New Zealand, but both are common features of transport systems overseas and while some people may not yet accept the need for them, the reality is if we want modern first-world transport infrastructure and reduced traffic congestion, we must find ways to help pay for that.
In any user charges system, whether it be for transport or utilities, careful design and the consideration of lower-income communities is critical. Not only does this ensure equity but also helps the scheme gain overall public acceptance. There are various ways you can design user charging systems to limit the burden on lower-income or fixed-income households, including through discounts and subsidies, the gradual phasing in of charging, tiered pricing, and revenue recycling.
I note over the last month both the New Zealand Initiative and the Helen Clark Foundation in partnership with WSP have made important contributions to the conversation around user charging. I was particularly pleased to see analysis done on ‘Smart Road User Charges’ as a replacement for fuel excise duty and how charging vehicles based on distance travelled, time of day and location, as well as vehicle type and weight can help manage congestion and deliver ongoing road maintenance funding.
For New Zealand to do infrastructure better we need to learn from the experiences of others and visit the places and people who are further along in addressing common infrastructure challenges. In this context, the two delegations Infrastructure New Zealand recently led to Europe and the UK are invaluable. During the European Delegation where we visited Ireland, North Ireland, and Denmark, I was particularly impressed by the commitment to climate adaptation and resilience, including to protect communities and transport infrastructure. The non-partisan approach to transport infrastructure was also a big takeaway. The wider focus on the long term that was visible in all countries, with far less deviation from the strategies set, was impressive. In places like Copenhagen, public transport, walking, and cycling infrastructure go together with the development of newer, safer roads. Imagine if we could gain the same broad political agreement for that here!
The UK delegation focused on learning lessons from our UK partners on city and regional deals, transport, and the funding and provision of water services. The history and politics of city and regional deals were fascinating, and it was extremely insightful to hear from ex-CE of Wellington City Council Kevin Lavery and others on different deal structures and what is likely to work in the New Zealand context.
Listening and learning together as infrastructure leaders is an important part of what we do. I expect we will see some of the knowledge we gained picked up and translated into industry best practice and public policy.
