By Michelle McCormick, Policy Director, Infrastructure New Zealand

The National Land Transport Programme 2024–27 was released by the New Zealand Transport Agency Waka Kotahi at the end of August. But with infrastructure demands increasing and financial pressures rising, funding solutions are more critical than ever. 

The National Land Transport Programme (NLTP) is our largest-ever transport program, with nearly $33 billion allocated to various capital projects and operations over the next three years. But as the weeks pass and councils have a chance to digest the detailed spreadsheets that sit behind the glossy NLTP headlines and fact sheets, many are discovering that there are some critical projects missing from their regional land transport plans.

Funding for public transport services and infrastructure has actually increased from $4.9 billion to $6.36 billion from the last NLTP, but with increased costs across the board, there are still many gaps. The New Zealand Transport Agency Waka Kotahi(NZTA) has been given an impossible task: council bids for National Land Transport Fund (NLTF) co-funding totalled $29.7 billion, but there was only $23.6 billion available to distribute.

Auckland Transport has identified a massive $600-million hole in their requested capital funding. Greater Wellington received a $3.3-billion allocation, but still has a funding shortfall of $134 million over the next three years. This means that 40 projects have not received their share of co-funding from central government, and these aren’t just the ‘nice to haves’.

These unfunded projects include seismic strengthening of some railway station buildings, and new bus stops with better lighting to improve public safety. Another glaring gap is the missing pedestrian bridge over Hutt River that is supposed to connect the relocated Melling Station to the Hutt CBD area as part of the Melling Interchange and flood protection work. Public transport fares in Greater Wellington also went up 10 per cent at the start of July, which, given that Wellington has the second-highest per capita use of public transport in Australasia, impacts a significant number of people.

Wellington and Auckland are not the only regions now reconciling their land transport programs. Waikato Regional Council was also declined $20 million in requested government funding from the NLTF. This funding was to contribute to an increase in bus trips to serve new residential developments in Peacocke, Rotokauri and Rototuna. Environment Canterbury also saw a $23.1-million shortfall that will impact the frequency of bus services along main routes and surrounding towns in the Waimakariri and Selwyn districts.

No matter how much we talk about it, and how much overseas evidence is provided, Aotearoa New Zealand still struggles to get proper alignment between land development and transport.

Our infrastructure is wearing out, too. As part of the NLTP, new pothole-prevention funding was announced to address the previous lack of maintenance as we sweated our roading assets. The Infrastructure Commission recommends spending $6 out of every $10 on maintenance and renewal. We still have a long way to go to reach this measure, and the battle is about to get harder as a tsunami of assets right across the country reach the end of their economic life.

For instance, there are more than 100 bridges in the Hurunui District that require replacement in the next 30 years. The reality, too, in Tairāwhiti and Hawke’s Bay, is that not every road and bridge will be replaced following Cyclone Gabrielle – it just isn’t feasible to do so. There is no magic money tree and, increasingly, New Zealanders are going to have to face up to that reality.

New Zealand’s transport system is at a crossroads. With growing infrastructure demands and financial costs rising, funding solutions are more critical than ever. The recent release of the final Government Policy Statement on land transport provides some clarity, but for councils already working to finalise their long-term plans by the 30 June deadline, the timing couldn’t have been more challenging. This intersection of long-term vision and short-term constraints highlights the pressing need for a comprehensive review of revenue sources and funding mechanisms.

A broken land transport funding system

The NLTF has grown over time, but the reality is that a larger and larger proportion of it is being directly funded by the Crown. Over $9 billion is coming from the Crown, including a $3.1-billion grant, a $3.1-billion loan, a $1-billion Crown contingency, and various other capital grants and contributions from other capital funds, including the Housing Infrastructure Fund.

This is the second NLTP in a row where more than $3 billion has been ‘loaned’ by the Crown. The probability is that this will never be paid back! Our land transport funding system is broken. What bank would lend billions of dollars against a decreasing revenue stream? The NLTF’s revenue from fuel taxes actually decreased by $1 billion between the current and the previous NLTP.

The previous government put in place planned fuel excise duty increases starting this year, but the current government cancelled these within a couple of months of coming to office. Given how much petrol price fluctuates due to changes in international demand and foreign exchange rates, would a planned increase of two cents per litre in July have been noticed by motorists? The government has pushed the fuel price increases out to 2027 with a bigger single increase of 12 cents per litre in what appears to be a classic case of kicking the can down the road.

Plugging the revenue gap

At the heart of any transport funding discussion lies the question of revenue. Currently, much of New Zealand’s transport funding comes from fuel excise duties, road user charges and motor vehicle registration fees; however, these revenue streams face a future of diminishing returns. As the shift towards electric vehicles accelerates, reliance on fuel excise duties becomes increasingly untenable. This trend is prompting an overdue conversation on alternative funding models, including road pricing mechanisms, regional funding levies and public private partnerships.

A thorough revenue review is essential to ensure that the country’s transport system remains both sustainable and resilient. While these reviews often focus on revenue gaps, a forward-looking approach must also consider how to incentivise sustainable transport, reduce congestion, and equitably distribute the costs of maintaining and expanding infrastructure.

These challenges have been recognised, but we now need immediate action. It was promising that Transport Minister the Hon. Simeon Brown announced the government’s Revenue Action Plan at the recent Building Nations conference. 

The main features of this action plan are:

• Make better use of existing funding tools for the NLTF.
• Reform tolling legislation to support bringing forward infrastructure investment.
• Unlock new funding tools, including value capture.
• Transition all light vehicles to road user charges by as early as 2027.

Change will be challenging, especially as the public already considers that it is paying for road use. Amending the current tolling provisions contained in the Land Transport Management Act 2003 to facilitate a wider tolling regime that could include existing roads with major upgrades, or parts of existing roads that have undergone realignments, will be a hard-fought battle.

Tolling raises legitimate questions of equity, accessibility and the impact on local communities. The current tolling legislation requires the NZTA to consult with affected communities, and we are already seeing strong public mobilisation against the proposed tolling of Penlink, Te Ahu a Turanga (Manawatū Gorge replacement) and the next stage of the Ōtaki to north of Levin corridor.

Looking ahead, the next generation of Roads of National Significance will play a crucial role in shaping New Zealand’s transport future. Securing sustainable funding for these projects will be critical. Done correctly, tolling could provide a valuable source of revenue to support the construction and maintenance of these high-cost projects. Tolls could also help bridge the funding gap while offering a pay-as-you-go model, allowing those who use the infrastructure to contribute directly to its upkeep; however, it’s critical to balance this with an integrated transport strategy that also prioritises public transport, active modes of travel and climate resilience.

Ultimately, the challenge of funding transport in New Zealand is not just about finding more money; it’s about creating a system that is sustainable into the future and that works for all New Zealanders. The decisions made today will determine how well we can move around our country tomorrow.