Review could hit Southland hard

Southland could be hard hit by a review of the New Zealand Transport Agency's investment strategy and in particular the review of funding assistance rates, Southland District Council chief executive David Adamson said.

NZTA chief executive Geoff Dangerfield has written to council chief executives to inform them of the review. His letter outlines the potential plan to adjust the base funding assistance rates (FARs) for local roads in line with ability to pay.

Mr Adamson said this has raised alarm bells for him as the ability to pay is linked to land value at this stage, and that will affect the Southland region badly. At the moment a Southlander pays $437 including GST on average for roading, compared to an Aucklander who pays $196 (2011-12 draft Annual Plans).

"This is not comparing apples to apples and the rural people could seriously miss out. This is already evidenced in the extended funding being given to roads of national significance. A phenomenal amount of money is being put into urban highways," he said.

"We believe the current formula for distributing road user funds is not suitable as it is based on land value and land value does not reflect ability to pay. Rural wealth is reflected in land value but urban wealth is reflected more in capital value."

Southland District Council has the biggest roading network in New Zealand, with nearly 5000km of roads. This network is already experiencing significant heavy vehicle growth and if the assistance rates are reduced, even by a few percentage points, Southland roads and Southland ratepayers could be badly affected.

At present Council receives 54% in FARs from NZTA for various road projects - that is, NZTA pays 54% of the cost of the project and Southland ratepayers pay 46%.

"Any review should first establish whether ability to pay is the right principle as there are other methods, such as the benefit principle, size of network, activity on network - potentially by proxying transport revenue generated in a region, or population testing to ensure fairness and equity in funding," Mr Adamson said.

Mr Dangerfield had indicated there will be a full review of all FARs in 2013 to look at their fit with policy objectives, Mr Adamson said.

"Should this not be at the beginning of the review rather than the end?"

The review happening now has a high risk of generating inequitable outcomes and Transport Minister Steven Joyce, who said last week Auckland already receives 46% of Government road funding, needs to be aware that this review is likely to poorly serve our export economy, which is strongly rural commodity based, Mr Adamson said.

"A better outcome for all would be to undertake the detailed review and to make its outcome effective from 2015 and retain the status quo for this upcoming round."