How the NZTA Investment and Revenue Strategy applies to NLTP dvelopment

Key Messages and Questions & Answers

(Updated 16 June 2009)

Key messages

The NZTA is developing its first investment and revenue strategy. The first section being developed deals with how the NZTA allocates land transport funding through the NLTP. It will provide a direct link between the GPS and the NLTP and will demonstrate how the NLTP gives effect to the GPS. Over the next few months the strategy will be extended to cover more of the NZTA’s functions.

The strategy informs the assessment framework that guides the NZTA Board when it both adopts the 2009/12 NLTP and makes funding decisions during this three-year period.

The primary difference between the NZTA’s previous assessment criteria and the new approach lies in a stronger emphasis on strategic fit, to better reflect the GPS impacts, particularly the focus on national economic growth and productivity.

The NZTA will use the new assessment criteria in assessing RLTPs.

Questions and answers

Why has the NZTA developed the strategy?

The strategy defines how the NZTA will give effect to the new Government Policy Statement on Land Transport Funding 2009/10 – 2018/19 (GPS) and its emphasis on economic productivity and growth. It will direct changes to the NZTA’s existing funding and assessment framework and prioritisation process for activities funded through the NLTP.

Who has the strategy been developed for?

The strategy has been developed as the guiding document for the NZTA to give effect to the GPS. We consider it useful to share the strategy with those responsible for developing RLTPs, so that their RLTP processes can be aligned to the NLTP processes as far as possible.

How was the strategy developed?

The strategy takes the Government’s direction expressed in the GPS, and establishes principles and priorities that will guide the NZTA in allocating funding through the NLTP.

What is the status of this document?

The NZTA Board has adopted the draft Investment and revenue strategy and assessment framework for the development of the 2009-12 NLTP.

Does the proposed strategy change the funding allocation process for the NLTP?

The proposed strategy changes parts of the funding allocation process. It guides the Board in the allocation of funding to the activity classes (consistent with the GPS), and has directed changes to the assessment framework and prioritisation process.

Priorities outlined in the Government Policy Statement on Land Transport Funding 2009/10 – 2018/19 released during May 2009 have required a number of changes to the NZTA’s assessment and prioritisation of activities.

The key changes in the GPS are:

• Establishing economic growth and productivity as the primary objective for investment in land transport infrastructure and services
• Ensuring the allocation of funds is more strongly guided by economic efficiency
• Revising funding allocations to activity classes
• Identifying roads of national significance which will be given priority within state highway construction.

The GPS released during May 2009 replaces targets with short to medium term impacts that the government wants to achieve.

The NZTA will retain the three factor assessment framework – however there are changes to the criteria underpinning that framework. We have also replaced the “serious and urgency” assessment factor with ‘strategic fit’.

Strategic Fit - provides a rating of the alignment with the GPS impacts and Government priorities signalled in the GPS such as roads of national significance. It places greater emphasis on addressing potential opportunities to improve the transport system to achieve the objective of economic growth and productivity, and to achieve the specific impacts now outlined in the GPS.

Effectiveness – a measure of impacts achieved for the activity cost. It is an additional measure to ‘economic efficiency’ assessment, but can handle impacts that are difficult to express in monetary values. This category focuses on the extent to which a proposal can be shown to be part of a fully optimised solution that considers land transport, land use and other infrastructure.

Economic efficiency – The benefit cost ratio (BCR) continues as the primary measure of economic efficiency for improvement activities. The BCR is one assessment factor that needs to be carefully used to avoid favouring discrete low cost activities without considering wider impacts. The other assessment factors of ‘strategic fit’ and ‘effectiveness’ provide a way to capture other wider LTMA and GPS objectives.

Will these changes require consequent changes to RLTPs?

A review of the existing assessment factors shows that most of the GPS impacts can be taken into account when applying the assessment criteria, particularly the economic efficiency factor.

Will AO’s be required to re prioritise the activities in their draft RLTPs in order to be consistent with the GPS?

AOs are not required to re-prioritise the activities in their RLTPs– they are however required to check that their RLTP is consistent with the GPS. The proposed strategy provides AOs with an opportunity to assess the impacts of the assessment process that the NZTA will apply to the adoption of the NLTP on their RLTPs.

What are the changes to prioritisation?

Prioritisation of activities in the NLTP have been changed to give greater weight to economic efficiency. When the activity scope is correctly established through strategic fit, it can be assessed against economic efficiency, and thirdly against the effectiveness of the proposed solution. The presumption is that a correctly scoped activity with high economic efficiency assessment will lead to funding approval.

The previous prioritisation sorted on ‘seriousness & urgency’ first, then ‘effectiveness’ and finally ‘economic efficiency’. Giving greater emphasis to ‘economic efficiency’ requires ‘strategic fit’ to be the primary sort to ensure correct scoping followed by ‘economic efficiency’ and finally ‘effectiveness’.

Will the assessment criteria have any effect on the threshold between N and R funding?

The revised assessment criteria have resulted in a different priority order to the previous assessment profiles and to the assessment profiles for different types of activities. Until the RLTPs are submitted and the revised assessment process applied to activities it is too early to determine whether this has affected the threshold between N and R funds.

Where does safety fit into the assessment framework? Is safety now less important than economic growth?

The immediate three year focus of the GPS is to provide better opportunities for economic growth and productivity. Improvements in road safety is still an important impact and will continue to receive priority ranking through the coverage of safety impacts within the assessment factors and the prioritisation process.

Will RTCs need to change their RLTPs in response to the GPS release?

RLTPs must be consistent with the GPS and also with the relevant RLTS. RTCs should consider if they need to make changes. These may only be technical in nature, e.g. removing reference to targets no longer in the GPS. Where the draft RLTP is otherwise consistent no further changes would be required.

After 30 June, any changes to RLTPs will need to be done as a variation to the adopted RLTP. RTCs also need to consider if the variation triggers the significance policy. It is therefore recommended that changes be made before accepting RLTPs.

Will RTCs need to reprioritise activities in their RLTPs?

So long as their RLTP is consistent with the GPS, there is no need to reprioritise. They can choose to reprioritise in order to reflect the GPS.

Does the strategy have an impact beyond the NLTP?

The most urgent need has been to develop the strategy as the guiding document for the NZTA to give effect to the GPS through the NLTP. The strategy will be developed further to integrate NLTP funding with other NZTA functions. An example is freight, where the NZTA functions in funding and regulation can be brought together to achieve better outcomes.

How will the expenditure on R funds be decided?

The same policies and procedures as before apply.

When does the assessment framework become final?

The NZTA Board have adopted the draft strategy and assessment framework and criteria at its 29 May meeting. It will consider the final strategy alongside the 2009/12 NLTP in August.

How will Roads of National Significance (RONs) be assessed?

The NZTA is assessing RONs in a similar way to other improvement projects. The strategic fit assessment factor has been amended to include roads of national significance.

When will further information be available on the freight, tourism and model community strategies?

The NZTA is developing programmes for release in December 2009. Interim guidelines have been produced for use by NZTA and AOs.

Page created: 24 June 2009