Better Transport Better Roads

Minister's Foreword

Transport touches every New Zealander's daily life. Efficient transport is extremely important to our economic and social well being. All aspects of the transport sector - air, sea, rail and road - have undergone significant change in recent years to meet the developing needs of our society and economy. These changes have brought real benefits to New Zealanders - greater competition, more choice, better quality of service and, above all, better prices. In many areas, the drop in prices has been significant.

However, we cannot rest on these successes. The Government has carried out extensive consultation on roads since 1994 and it is clear that:

Changes in our society and economy mean our road system is under pressure. The growth of our big cities has led to congestion. Developments in dairying, forestry and tourism mean that many rural roads are also under pressure;
Our roads are not as safe as they could be - safety should be a key feature in their design and operation to reduce the human and financial costs of crashes;
Environmental costs associated with our roads and their use are too high - including air, water and noise pollution, as well as the impact of roads on the landscape;
75 different entities managing our roads is too many for a country of New Zealand's size and population;
We need a system where people are given a clear understanding of the costs of their road use, and that is smarter at deciding where new investment should go. A system that results in our resources being used very wisely;
Lowering the benefit cost ratio required for a road project to be funded by Transfund, and spending more money on roads, would add costs to our total economy, including our exports, but would not ensure the most beneficial projects proceed;
Approximately $400 million raised by petrol tax goes to roads, another $600 million is used as general revenue to help fund areas like health and education. That cannot be used for roads unless Government finds the money from somewhere else; and
If we wait, the problems will get worse, and the costs of changing will increase. If we act now, the changes can be managed in a gradual process without creating major upheaval. Taking the easy decision today, of doing nothing, means that only hard options will be available in the future.

BETTER TRANSPORT BETTER ROADS

The Government believes the proposal outlined in Better Transport Better Roads addresses the issues, and a range of others that consultation has shown New Zealanders think are important. We propose a simpler, commercially focused system of road management, involving fewer, specialised organisations that are more directly responsive to users' needs. Rates would cease to be a source of funding for roads. Over time, users would be able to choose how they paid for the roads they want and they would be able to join together to negotiate better deals.

The system would be commercial, and encourage innovation and efficiency. There would also be a number of important safeguards to protect the interests of the public:

The roads we have would not be privatised;
Communities would have an input into decisions;
We would retain the roads we currently have;
The access rights of motorists, pedestrians and cyclists would be unchanged;
People's privacy would be protected;
Utilities would continue to use road-ways; and
Charging for roads would be sensibly constrained.

In addition, the new system would allow environmental costs to be better reflected in investment decisions and the way roads are used and managed. A new national safety regime would reduce road crashes.

Although there has been extensive consultation on roads, the current proposal is a major development. In addition, the recent local body elections have resulted in a significant change in the composition of a very important group of stakeholders in roads.

For these reasons, and because roads are so important, the Government has decided to hold a further round of consultation on the proposed changes. We seek feedback on the overall design of the new arrangements. In addition, feedback is sought on the technical issues on which it was not easy to determine the best policy option. Extensive consideration was given to: the ownership of land under state highways; the form that land title road companies should have; what should happen to land under new roads; the appropriate means to regulate prices; and the transition path to the new structures. The documents released with the proposal provide greater detail.

To facilitate discussion, and help build a broader understanding of the problems faced and the solutions proposed, the Government has released the following information:

Better Transport Better Roads;
A draft Roads Bill to implement the proposal;
The Cabinet Papers which deal with road funding and management; and
A set of associated documents dealing with information disclosure, pricing principles, Corridor Management Agreements, and safety management systems.

The Government invites submissions on the proposal. Submissions and requests for supporting documents should be made to:

Better Transport Better RoadsMinistry of TransportPO Box 3175WELLINGTONThe deadline for submissions is 30 April 1999.

Maurice Williamson
Minister of Transport

BENEFIT SUMMARY

Road management would be streamlined and administration costs reduced.
The way roads would be funded would result in much wiser use of our roads and investment in building new ones.
Road safety would improve for motorists, cyclists and pedestrians.
The environmental impact of roads would be reduced.
There would be lower levels of congestion in major urban areas, particularly Auckland.
The roads New Zealand currently has would be retained.
The way we pay for roads would be fairer because it would reflect actual use.
Urgently needed roads in rapidly growing areas such as the Bay of Plenty would be built faster.
Forestry roads in areas such as Marlborough, Northland and the East Cape would be able to able to be built and maintained without ratepayers footing the bill.
A greater variety of funding options would be available to pursue projects such as the Transmission Gully road north from Wellington.
There should be a significant reduction in property rates, especially for rural ratepayers.
Local authorities would continue to play an important role in running roads.
Local road companies would be accountable to communities through local authorities - the sole shareholders of local road companies.
Maori interests would be protected.
Public transport would be improved and would grow in importance.
The access that motorists, cyclists and pedestrians currently enjoy to our roads would not change.
People's privacy would be protected.

Making sure New Zealand has a transport system that meets its needs now and in the future is an on-going process. As part of that process the Government has, since 1994, led extensive public discussion on how New Zealand should fund and manage its roads. Better Transport Better Roads has emerged from that. It sets out a proposal aimed at making sure that, in the future, New Zealand has the roads and transport system it needs.

Better Transport Better Roads is a consultation document. Its purpose is to outline the Government's analysis, the direction of proposed policy, and to provide a further opportunity for interest groups and the public to have their say.

THE NEED FOR CHANGE

For years we have seen steady growth in traffic volumes. Currently, the traffic on our roads is increasing by about 4 percent each year. Also, the way we use our roads has changed. Expanding industries like forestry, dairying and tourism have increased road use in many rural areas beyond their capacity. Population growth in areas such as Auckland, the Bay of Plenty and parts of Waikato has meant that road use in these places is growing more quickly than in other parts of the country.

Some roads are less safe than they could be because they were not designed to carry either the volume of traffic or the amount of heavy vehicles they do. We can improve the safety of our roads, and reduce the human and financial costs that crashes create. The increasing use of our roads also puts greater emphasis on the environment - the environmental impacts of road use can be reduced.

Traffic growth is causing increasing congestion problems in many, particularly urban, areas. It is also increasing maintenance costs and the demand for new roads. We are struggling to meet these new financial demands.

Simply spending more money on the problems would add costs to our total economy, which we would all have to bear. What we need is a system that is smarter at informing road users of the costs they are creating, and smarter at deciding where new investments should go.

A system that results in our road resources being used very wisely. If we wait the problems will get worse and the costs of changing will be greater. If we act now, the changes can be managed in a gradual process with minimal upheaval.

Key Features

Specialist road organisations

The organisations that run our roads would be streamlined and would focus on the business of running roads.

Four to eight regionally based local road companies would take over running local roads (that is, all except the state highways and motorways) from New Zealand's 74 local authorities.
A Crown-owned company (Transit New Zealand Limited) would operate state highways and motorways.
Collectively, local road companies and Transit would be known as public road companies.
Another Crown-owned company, Transfund New Zealand Limited, would provide road funding.
The principal objective of the newly created entities would be to: operate as successful businesses; be as profitable and efficient as comparable non-public businesses; be good employers; and "exhibit a sense of social responsibility".

Direct funding
Better Transport Better Roads proposes changing funding to make sure the way we pay for roads more closely reflects how we use them.

Rates would no longer be used to fund roads. Currently costs of roads account for between 7 and 60 percent of rates depending on the area.
At the moment, part of the Fuel Excise Duty on petrol, CNG and LPG is used to fund roads. On petrol the amount is 13.6 cents per litre. This charge would be renamed the Road Use Levy to clearly distinguish it from the general taxation on these fuels.
Regional variances in the Road Use Levy could be used to fund different regional roading needs. A Vehicle Levy collected at the time of vehicle licensing could also be used for road funding.
The current use based payment system of Road User Charges on heavy vehicles and light diesel vehicles would be retained.
Collectively these charges would be called the 'levy system'. Transfund, a Crown-owned entity, would be responsible for recommending the rates of these charges to the Minister of Transport.

Payment options
Individual road users and groups of road users would be given greater choice in the way they pay for their road use. They could leave the levy system and choose an alternative way of paying for their road use. These users could enter into contracts with road providers either directly or through organisations that would establish themselves as intermediaries for this purpose.

Road users that choose alternative payment arrangements would be free to rejoin the levy system.
Public road companies would be able to introduce tolls on specific roads and facilities and to introduce congestion prices to restrain traffic demand on heavily used routes

ALTERNATIVE PAYMENT ARRANGEMENTS

Better Transport Better Roads would allow more flexibility in the way road use would be charged. Road User Charges, the system we use now for charging heavy vehicles, is a more targeted way of paying for roads than the straight fuel consumption methods used in many countries. However, it does not make it possible to vary charges for the time of travel, the actual vehicle weight, the road travelled on, the level of noise and gas emissions, or the suspension system of the truck. The cost to road providers and to other road users caused by heavy vehicles can depend on all these variables. It is now technically possible to set charges that vary on the basis of these different factors.

The following illustrate opportunities created by the proposal.

A public road company could be concerned that heavy vehicle traffic passing through a small town in the middle of the night meant it was breaking its obligation to reduce road noise. The changes to the Resource Management Act that are part of the proposal make this a real possibility. The road company could avoid the risk of heavy fines by negotiating lower charges with trucking companies on the condition that their trucks use a by-pass during night hours;
A public road company might be concerned about the damage trucks are causing to roads. It could negotiate a deal encouraging trucking firms to avoid vulnerable routes, or to install better suspension so their trucks create fewer problems;
A trucking firm wanting to offer low cost cartage between two main centres might negotiate special charges with the road companies involved providing their vehicles did not travel during peak hours;
A bus operator in Christchurch, in light of proposed vehicle emission restrictions, might suggest to the local road company that if it ran a fleet of low emission buses it should be charged less. The road and bus companies could then agree on a mutually satisfactory deal for low emission buses. The road company could offer the scheme to other bus operators; and
An organisation representing major truck operators might negotiate with road companies a payment arrangement that has charges based on truck movements that are tracked using GPS (Global Positioning System). Members of the scheme would generally expect to pay somewhat less than they would if they remained outside the scheme.However, should their trucks use specified congested roads at certain times, fail to use by- passes around small towns, or enter residential streets which have 'no truck' restrictions they would be charged higher fees and could end up paying significantly more..

Improved safety
In recent years considerable effort has gone into improving driver behaviour and vehicle safety. The road toll has significantly reduced. However, the state of roads contributes to around 15 percent of fatal crashes. Under Better Transport Better Roads:

Public road companies and some other providers of roads would have to have an approved safety management system setting out traffic management and engineering standards. They would be accountable for the safety of the roads they provide; and
The Director of Land Transport Safety would have powers to ensure compliance. The directors and management of a road company with unsafe roads would be liable to be prosecuted.

Protecting the environment
Roads have significant affects on the environment and communities through air, noise and water pollution. They also affect the landscape. Under Better Transport Better Roads:

Charges would better reflect the environmental impact of road use - they would be designed to bring home to road users the impacts due to the amount they use roads, the times that they travel, and the type of vehicles they use; and
The Resource Management Act would be amended to make regional councils hold road service providers responsible for managing the combined discharges to air from vehicles using roads in their area.

TIMING

These changes would be evolutionary, and their full effect would not be experienced for many years. Once legislation was passed to enact the proposals nothing would immediately change for road users.

The removal of rates funding for roads would occur about 18 months after legislation was passed. This would be the first change most road users would notice. Any increases to the levy system charges needed to offset the reduction of rates funding would happen at this time. Increases are likely to be modest and would require parliamentary approval. Road users could choose direct payment options for road use, rather than paying levies, about two-and-a-half years after the legislation was passed.

Technology would probably limit tolls and congestion pricing for some years to new motorways and bridges, or to heavily congested roads. The impact of other changes, such as the improved safety and environmental regimes, would occur over several years.

WOULD ROADS COST MORE?

No, roads would not cost more. In fact, it is expected they would cost less than if the changes did not occur.

The immediate direct financial effect on households of stopping rates funding of roads and increasing the levy system prices to compensate would be minimal.

In general, the impact on a particular household would depend upon the extent to which it currently contributes to roads through rates (directly or through rental payments) and how much it uses roads. For example, many older people would be likely to benefit immediately from the proposed changes because they tend to travel relatively little, but often contribute significantly to the funding of roads through property rates.

The longer-term impact on individual households is difficult to quantify precisely. However, road costs represent only a small proportion of total transport costs, and are only a small proportion of the total costs faced by most households and businesses. The financial impacts on the budgets of the vast majority of households and businesses would be likely to be very modest.

In addition, the amount of revenue a road company could generate would be controlled under the proposals. For example, to control demand at peak time a public road company could introduce congestion prices. However, it would then have to lower its prices for using other roads so as to keep its revenue constant. If a toll on a new facility recovered more than its full costs, the other charges of the road company would have to go down.

Overall, the proposal would benefit New Zealanders through improved investment efficiency, lower maintenance costs, lower administration costs, reduced congestion, improved road safety and better environmental outcomes.There would be increased costs to run new charging systems and restructure the existing organisations and to develop and maintain safety management systems. However, the net benefit to New Zealand as a whole from the proposed changes has been estimated at $115 million to $295 million per year. These estimates exclude the value of any environmental gains.

INVESTMENT

Presently work is proceeding piecemeal on building a four-lane expressway from the southern end of the Auckland motorway to Cambridge. Better Transport Better Roads would speed up construction because Transit would be able to borrow money to finish the project. At present, road funding is on a 'pay as you go' basis. Transit can only spend in any one year what it gets from Transfund, and Transfund only distributes the revenue it gets from road users. This means that projects are undertaken in small stages, and major projects are slow to be completed. What's more, the formal safety management system required under the proposal would place road companies under an obligation to deal with the more deadly sections of the road.

Building and maintaining local roads mainly used by forestry companies or tourists pose a real challenge to local authorities. At present, local authorities fund their contributions to roads through rates and, naturally enough, ratepayers can be reluctant to pay for maintenance and construction costs generated by a few logging trucks, or passing tourists.

Better Transport Better Roads would help deal with this problem. Rates would no longer be a source of local road funding. The possibilities for charging for roads would increase. For instance, a local road company could negotiate special tolls on logging trucks and tourist buses to cover the extra road costs generated by them.

KEEPING A LID ON PRICES

A number of the proposal's features would constrain the pricing power of road companies, and encourage them to be efficient.

The separation of Transit, the state highway operator, from the local road companies would permit some competition between them and make it easier to compare performance.
Choice in the way road use is paid for would also encourage competition to keep prices down.
Information disclosure by road companies would let the public assess the companies' performance.
Pricing principles would be established for road companies and disputes could be taken to the High Court.

A requirement that road companies could only earn additional returns by making additional investments would ensure that returns from the existing road network are constrained to current levels. The pricing principles would ensure that road companies cannot earn more on a new investment than its full cost.

THE INTERESTS OF MAORI

Public road companies would be required to consult with Maori over any roadwork which affects Maori land, or Maori historical, cultural or spiritual interests.

Crown road land currently used for state highways and motorways would be leased to Transit. Any leased land that is no longer required for road purposes would become subject to the protection mechanism for surplus Crown land which the Crown established in 1993 to ensure Crown land is available for potential use in settlement of Treaty of Waitangi claims.

Any land acquired by Transit after its corporatisation would also become subject to the protection mechanism should it subsequently become surplus to road requirements.

The traditional rohe (district or area) of Maori would be among the factors to be taken into account when determining the boundaries of local road companies.

LOCAL AUTHORITIES

Local authorities would continue to have a very important part to play in the management of roads. Local authorities would own all the shares in local road companies and appoint their directors. They would have the ability to comment upon or change a local road company's Statement of Intent (which defines the company's accountabilities).

Local authorities would also exercise oversight of road companies through their district plan procedures.

Road corridors (that is, the land through which a road passes) contain more than just roads or carriageways - they are important areas of public space. The amenities in a road corridor (such as statues, cycle lanes, gardens, trees or bus shelters) can shape the character of a community. Communities, therefore, want to have meaningful input into how road corridors are developed and used.

Unless they chose otherwise, local authorities would retain their ownership and management rights over amenities like cycle lanes off the carriageway, bus shelters and trees. Local authorities would also be able to declare sections of the road corridor, including parts of the carriageway, as land required for 'public space development' purposes. They would be able to use these provisions to create areas for pedestrian use and sidewalk cafe space, or for other public purposes.

There would be a Corridor Management Agreement between each public road company and the local authority to provide the link between the management of the road and the operations of the local authority.

A local authority would be able to purchase on-carriageway and off-carriageway services from a road company if there were other particular things the community wanted.

PUBLIC TRANSPORT FUNDING

Transfund currently subsidises public bus, ferry and rail transport. It also helps fund social service transport programmes: total mobility (taxi vouchers for less mobile people); concession fares for older people, school children and other targeted groups; and urban school bus services. Because some road users would choose to cease paying levies to Transfund, and choose alternative payment arrangements, the funding of these subsidies would fall unfairly to a smaller number of road users.

Instead, under the proposals regional councils could collect an annual regional passenger transport levy from all public and some other road providing businesses to purchase public transport services of benefit to road users. Regional councils would still be able to use rates to provide public transport.

CONGESTION

Congestion is a fast growing problem in Auckland, and to a lesser extent in Wellington. Congestion can be seen as either too much traffic trying to use the available roads, or too few roads for the traffic. Congestion can be tackled by reducing the demand for roads or increasing the amount of roads. Better Transport Better Roads would target both ways of reducing congestion.

First, road companies would be able to negotiate congestion prices. At present, users pay for roads partly through Fuel Excise Duty and Road User Charges, but the price does not vary according to the road they use or the time they travel. Congestion prices would provide users with incentives to travel at different times by charging more than at present for a heavily congested road, and less than at present for using the same road when it is not congested, or switching to another road which is not so heavily used.

A variety of pricing arrangements could be used to make this work. One possibility would be to reserve some lanes on a heavily used motorway for vehicles that have paid a special congestion fee. The revenue collected from the fee could be used to reduce levies in the wider urban area. This would mean that people who want speedy trips on roads in heavy demand would pay more, while everyone else would pay less to use the congested lanes, or another road. Moreover, some motorists would decide to leave their car at home and use public transport as an alternative, thereby reducing traffic on congested roads. Second, by allowing variable charges, the proposal would enable road companies to assess more accurately the real demand and the degree of willingness to pay for more road space. This would make it much easier to channel investment to those places where it was most needed.

OWNERSHIP

Road companies would not be privatised. The Crown would be the only permitted shareholder of Transit. Local authorities would own the shares in local road companies.

Other organisations which provide roads used by the general public - airport companies, forestry firms, port companies, the Department of Conservation, universities, and so on - would be little affected, apart from having to meet safety requirements appropriate to their circumstances. Private companies would be allowed to develop new roads that they would own.

No existing publicly owned roads would become privately owned as a result of Better Transport Better Roads.

RETAINING THE CURRENT ROAD NETWORK

Public road companies would be required to retain the physical road network they took over at the time they were established. That is not to say public roads could never be closed temporarily or permanently - they can at the moment.

However, at present, there are rules demanding public consultation if road closures are considered - Better Transport Better Roads ensures similar rules would apply.

If road companies wanted to change the quality of existing roads they would need to ensure the quality criteria contained in their approved safety management system were maintained. At the moment, roads can be downgraded, and there is no formal requirement to meet safety standards.

ACCESS

Better Transport Better Roads makes sure the access rights to roads that people currently enjoy would remain. Currently drivers must be licensed, their vehicles must be registered and licensed with a warrant of fitness, and petrol tax or Road User Charges must be paid. But vehicle users would be given an extra right; they could choose alternative payment arrangements instead of the tax-based levy system. There is no provision for pedestrians or cyclists to be charged to use roads.

PROTECTING PRIVACY

Consultation has shown privacy to be a key concern of road users. Better Transport Better Roads protects privacy in several ways:

Access to the motor vehicle register would be tightened considerably to improve the privacy of owners of motor vehicles;
Personal information collected from road users could only be used for road management, road safety and road service revenue purposes;
If charging systems such as electronic tolls were introduced privacy would be protected through a compulsory 'anonymous purchase option'. That means a payment option (perhaps like a prepaid telephone card) that did not identify users would be mandatory. In this way people's movements could not be traced; and
The privacy policies of road entities would be required to be available in a publicly accessible document.

UTILITY OPERATORS

The current rights of utility operators to place their water, sewage, telephone, gas or electricity assets in the road corridor would remain. Utilities would be required to notify public road companies of their intention to carry out work. Public road companies would be able to set reasonable conditions, such as not doing work during peak traffic periods. A national code of practice would be developed under the Resource Management Act to manage any adverse effects on the broader community of the construction and maintenance activities of utilities and public road companies.

THE IMPORTANCE OF TRANSPORT

New Zealand has an export-led economy but we are remote from the best markets for much of our produce - Europe, Asia, North America or, across the Tasman Sea. The same places are the sources of many of the products we need, and of much of the equipment that is necessary to sustain our economy and the way we live. In addition, international tourism is a significant and growing aspect of the economy, and creates new jobs.

Without good transport systems our businesses and economy would crumble. Transport is equally important to us as individuals. We need to travel to visit our families, play our sport, go to work - in essence to live. We are all immigrants, or descendants of immigrants, and a common strand in the two main cultures is the importance of discovery, travel and meeting the challenges presented by the new and unfamiliar.

However, New Zealand has a number of features that make providing good transport a challenge, especially within its borders.

New Zealand is geologically young; it consists of two main islands and scores of smaller ones. Erosion processes have not had time to round and smooth much of the landscape. Slopes tend to be steep and surface materials are generally unstable and variable. What's more, rivers are swift and prone to flooding. New Zealand's population at 3.7 million is not large when compared with many other countries. The population density of Japan is 24 times that of New Zealand.

The corresponding ratio for the United Kingdom is 18 times. The Auckland area is the most populous in New Zealand with nearly 30 percent of the population. However, significant numbers live elsewhere; the five main urban centres are strung out along the two main islands.

The location of New Zealand in the world and the distribution of its population mean transport is highly important. However, it is also more expensive to provide than in most countries. The length of New Zealand and the rugged physical landscape conspire against low cost transport, particularly low cost land transport. This emphasises the need to focus on the efficiency of our transport system. We must continually seek out ways and means to improve transport and its management.

RECENT TRANSPORT CHANGES

It is not surprising, therefore, that the development of transport has been an integral part of New Zealand's economic and social history. In recent years, many aspects of the transport sector have undergone significant change to meet the changing needs of our society and economy. To illustrate:

Entry to the domestic airline industry was freed up in the 1980s. Ansett entered the market and smaller commuter airlines were established. The quality and frequency of services improved for most passengers, and the real costs of airfares fell sharply;
Port reform began in 1988. The functions formerly performed by locally elected Harbour Boards were split between commercial port companies, regional councils and local authorities. A year later, the Government introduced competition in stevedoring. The real cost of using the waterfront has declined significantly, with considerable benefit to the New Zealand economy. The regulatory and recreational roles taken over by elected councils have received a sharper focus because they are now undertaken by bodies that specialise in such functions and have accumulated considerable expertise;
Licensing in the taxi industry moved from being 'quantitative' to being 'qualitative'. The availability of taxis has greatly improved and, after an initial period of adjustment, taxi charges have been largely static for several years; and
The restrictions on the carriage of goods by road in competition with the former New Zealand Railways were removed between 1980 and 1986. New Zealand Railways was corporatised in 1990 and privatised in 1993. There have been large improvements in the efficiency of both road and rail transport as a result.

RECENT ROAD MANAGEMENT AND FUNDING CHANGES

While change has been occurring in the broader transport sector, we have also been improving the way we manage and fund our roads. Major steps have been:

The introduction of Road User Charges on a distance/weight basis in 1977 to ensure that heavy vehicles and light vehicles using diesel fuel pay for the wear and tear they impose on the roads;
The creation of Transit New Zealand in 1989 to replace the National Roads Board. Transit became responsible for managing the state highways and the Land Transport Fund. Transit was required to make funding and other management decisions on the merits of particular cases, without direct political intervention;
The requirement from the early 1990s that Transit tender out all road works and maintenance on a competitive basis to ensure efficiency of costs. Similar requirements were introduced for all local authority road expenditure in 1992. Transit estimates that its savings from the changes it has made have been 17 percent for road construction and maintenance and 30 percent for professional services;
The establishment of the Land Transport Safety Authority in 1993 to undertake activities to promote land transport safety at reasonable cost; and
The creation of Transfund New Zealand in 1996 to take over the funding allocation role from Transit and to manage the new dedicated National Roads Fund.Transit continues to manage the state highways. The change clarified the separation of the funding from the provision of roads.

CONSULTATION UNDERTAKEN

Despite the progress made so far, the need for further changes in road management and funding systems has been identified in the following series of documents published over the past five years:

Transport Directions 1994 - 1999 (1994)
Land Transport Pricing Study: The Cost of Roading Infrastructure (1995)
Land Transport Pricing Study: Roading as an Economic Good (1995)
Land Transport Pricing Study: Environmental Externalities (1996)
Land Transport Pricing Study: Safety Externalities (1996)
Land Transport Pricing Study: National Traffic Database (1996)
Road Management: Options for Reform (1996)
Land Transport Pricing Study: Options for the Future (1997)
Vehicle Fleet Emissions Control Strategy: Stage One (1997)
The Way Forward: Roading Advisory Group Final Report (1997)
Inquiry into the Environmental Effects of Road Transport: Interim Report of the Transport and Environment Select Committee (1998)
Vehicle Fleet Emissions Control Strategy: Final Report (1998).

Interest groups and individuals have subjected these documents to widespread scrutiny and comment. Arising out of this process, the following problems with the current system have been identified:

EFFICIENCY

There is no clear relationship between what road users pay to use a road and what it costs to provide that road. We pay the same to use a highly congested road at peak time as we do to use the same road when it has little traffic. We pay the same to use a very expensive motorway as we do to use a low cost road. One result is extreme congestion at some times, and much idle road space at others. This is because users do not have the incentive to make good decisions about when to use a road and what road to use, and the providers of roads do not get the information they need to correctly decide where to build extra roads.

If we charged for toll calls the way we charge for roads, then calls would cost the same amount irrespective of the time of day, or day of the week, and irrespective of whether the call was by mobile phone or by land line. Few people would be surprised if as a result there was extreme congestion during peak calling hours on weekdays, lots of redundant capacity at other times and too little investment in the mobile phone system to cater for demand. Most people realise that a more flexible pricing arrangement with lower prices in the evening and at weekends, and higher prices for local mobile phone calls, has reduced the problems, and users have benefited in the process.

The situation is the same for roads. The congestion in the main centres at peak hours, and the difficulty experienced in providing roads to satisfy the demands from forestry, dairying and tourism are consequences of the inflexibility of prices under the current system. Prices are averaged across the road network, but costs differ significantly.

The maintenance of roads is decided mainly on technical grounds. There is no assurance that the levels of maintenance are the best economically. It may be, for example, that higher expenditure on the development of roads to reduce later maintenance costs could lower the overall cost of providing roads. The current funding structure does not facilitate trade-offs of this kind because maintenance money is allocated on a different basis from that used for new construction.

SAFETY

The current road management system does not incorporate proper incentives for the operators of roads to take all reasonable cost-effective steps to avoid or mitigate crashes. Of the three factors that largely account for road crashes - driver behaviour, vehicle condition and road quality - the first two are subject to strict legislative regimes.

While road quality is influenced by Transfund's policies when new projects are considered, at the day-to-day operational level, the safe provision of roads generally remains reliant on informal safety procedures, which vary across the country. In 1996, road factors were a contributing cause in 15.5 percent of fatal road crashes and 9.1 percent of injury-causing crashes. Significant road safety improvements could be achieved through greater attention to road quality.

ENVIRONMENT

The road transport system generates a number of harmful effects on the environment and communities. These include noise emission, greenhouse gas emissions, other air emissions, reduced water quality, landscape impacts, community severance, vibrations and visual intrusion.

The Transport and Environment Select Committee's 1998 Interim Report on the Environmental Effects of Road Transport points out that the current road funding system provides a poor framework for incorporating environmental costs into the costs faced by road users. If the threats to the environment caused by roads, and their use, are to be avoided or mitigated in a sensible manner, road management and funding decisions need to reflect such costs.

DESIRABLE ASPECTS FOR FURTHER IMPROVEMENT

From the submissions and comments made on the consultative documents released so far it is clear that any changes must take full account of the following:

Road corridors contain more than carriageways; they are important areas of public space. The amenities in a road corridor can shape the character of a community. A community can also be affected by the nature of a carriageway - its size and shape. Communities, therefore, want to have meaningful input into how road corridors are used;
There is a general requirement that the Crown have regard to the principles of the Treaty of Waitangi in any policy changes. This applies to the management and funding of roads;
People value the opportunities to travel along the current road network, and want it retained;
People want their privacy about where and when they travel protected;
Road corridors are important for the provision of utility services to properties. Electricity, telephones, gas, cable TV, water, sewage and storm-water services all use the space. Any changes need to recognise the rights of utility operators to use the corridor; and
Many roads are to a significant extent natural monopolies because, for many uses, there is no realistic alternative. Users, therefore, need to be protected against monopoly pricing practices.

EVOLUTION NOT REVOLUTION

Should the draft Roads Bill to implement the proposal be passed, nothing would instantly change for road users. The roads they use would not visibly change. The charges they face for using the roads would not immediately change, nor would the way they pay those charges.

However, if implemented, the proposed changes would start off a number of steps that over a period of 5 to 10 years would improve the management and funding of New Zealand's roads by addressing the efficiency, safety and environmental problems of the current system.

The following diagram shows the current system in simplified form.

INITIAL CHANGES

The initial changes would be to:

The current 75 road controlling authorities - Transit New Zealand, which runs state highways, and the district and city councils, which operate local roads; and
Transfund - the Government's road-funding body.

TRANSIT AND TRANSFUND

Transit and Transfund would be formed into companies wholly owned by the Crown. The Minister of Finance and another minister would be joint shareholders. Transit would continue to operate the state highways and Transfund would continue to fund public roads.

All current staff, apart from the chief executives, would automatically transfer to the new companies at their current rates of pay and with all current conditions, but without any right to redundancy payments as a result of the transfer. Assets and liabilities would also be transferred.

In the case of Transit, a long-term lease over the land in the state highway road corridor would be granted. The Crown would own all the land in the corridor. The land covered by the lease would exclude paper roads, unformed roads, stopped roads, legal roads not required for operating purposes, air and substrata rights unless required for road purposes, and properties not required for road developments.

Transit and Transfund would have financial reporting and other statutory management obligations, such as the production of a Statement of Intent, similar to those of a state- owned enterprise.

The standard process for creating corporate entities out of government agencies would be used. Establishment boards, assisted by small establishment units, would oversee the formation of Transit New Zealand Limited and Transfund New Zealand Limited. The new companies would begin operation about nine to 10 months after the legislation was passed.

LOCAL ROAD COMPANIES

The road controlling activities of the 74 local councils would be amalgamated into a much smaller number of local road companies (probably between four and eight). A special statutory agency called the Local Road Companies Establishment Commission would be created to oversee the formation of these companies.

The three members of the Establishment Commission would be chosen primarily for their commercial skills and their ability to oversee and manage the formation of local road companies. The Governor-General would appoint them by Order-in-Council on the recommendation of the Minister of Transport. The Minister would have to consult with an organisation representing local government before making the recommendation.

For each local road company, the Establishment Commission would:

Recommend boundaries to the Minister of Transport after consultation, and in accordance with the criteria contained in the legislation;
Appoint the establishment board from nominations provided by local authorities;
Provide guidance and, if necessary, direction on the valuation of assets, treatment of access rights, and company constitutions to ensure consistency; and
Approve the local road company's plan covering the transfer of assets, liabilities and employees.

The criteria the Commission would use to determine its boundary recommendations would be:

The promotion of a competitive and efficient road system;
The ability of road companies to achieve their principal objective of operating as successful businesses in the provision of roads and road-related services; and
The interests of the community and road users.

The Governor-General would determine the number of local road companies, and the boundaries of each, by Order-in-Council, on the recommendation of the Minister of Transport. The final boundaries would be announced about six months after the legislation was passed. If the Commission recommended more than eight or fewer than four local road companies, then it would be required to provide a justification showing satisfactory financial viability for the road companies it recommends.

The local road companies would have financial reporting and other statutory management obligations, such as the production of a Statement of Intent, similar to those of a local authority trading enterprise (LATE).

They would take over all road improvements on roads currently owned by local authorities. Road improvements include all road and road safety related assets. Shares in the new companies would be issued to local authorities in exchange for these assets. Amenities in the road corridor, such as statues, bus shelters, toilet facilities and (non-safety related) garden beds, would continue to be owned by local authorities. The assets of utility providers, such as telecommunications cables, sewers, storm-water and water pipes and electricity reticulation assets, would remain the property of their current owners.

Ownership of the land in the local road corridor would remain with the local authority. Under the proposal, the local road company would have a statutory right of access to the road corridor. The definitions in the statutory access agreement would exclude paper roads, unformed roads, stopped roads, legal roads not required for operating purposes, air and substrata rights unless required for road purposes, and properties held by local authorities not required for road developments.

The road management staff of local authorities would transfer to a local road company and would do so at their current rates of pay, and with all current conditions, but without the right to technical redundancy payments as a result of the transfer. If the local authority and the establishment board of the local road company were unable to agree on what staff were road management staff, and hence to be transferred, the Establishment Commission would decide. Staff remaining with local authorities would be unaffected by the transfer process. Staff who transfer would have the same rights and entitlements as they had when employed by the local authority.

For each local road company, an establishment board would be appointed by the Establishment Commission from nominations provided by the local authorities that would contribute assets to the company. It would be the establishment board's job to set up the new company. A small establishment unit would assist each board. It is planned that establishment boards would be appointed about nine months after the legislation was passed, and the companies would begin operations about one year later. Only local authorities would own shares in local road companies. The shareholders would appoint the directors of road companies in accordance with the provisions of the company's constitution, and only a minority of directors could be members or employees of any local authority that is a shareholder.

Where a local authority owned shares in a road construction or maintenance business, the share ownership and management of this business would be required to be kept separate from the share ownership and management of the road company. Changes in the constitution of local road companies would require the approval of the Minister of Transport. The Establishment Commission would approve the initial constitutions as part of the establishment process.

Local authorities would be precluded from owning any road generally open to the public, or engaging in any road-related service other than through a road company. The only exceptions would be if owning the road or the service were secondary to another function, such as providing a reserve.

PUBLIC ROAD COMPANIES AND ROAD SERVICE PROVIDERS

Transit and the local road companies would be referred to as "public road companies". Their main objective would be to operate as successful businesses in the provision of roads and road-related services. They would also be required to be good employers and exhibit a sense of social responsibility by having regard to the interests of the community. The proposal restricts them to road activities, and precludes the companies owning or participating in non-related businesses and assets. Public road companies would be able to enter into joint ventures with each other and with other companies. They would be able to borrow and invest capital in anticipation of future demands. They would pay taxes and would be able to pay dividends to their shareholders. Local road companies could transfer roads between themselves and to Transit, but Transit would not be able to transfer roads to local road companies.

The proposal recognises that there are numerous other entities that provide roads for public use - ski-fields, airports, the Department of Conservation, forestry firms, and so on. Aspects of the proposed legislation would apply, or could be made to apply, to some of these roads. The term "road service provider" would be used to refer to public road companies together with other organisations that provide roads generally open to the public.

TRANSFER OF ROAD MANAGEMENT AND ROADSIDE PARKING

Transit New Zealand Limited would take over the state highways about nine months after the legislation was passed. Local road companies would take over road management from local authorities about a year later. Approximately 18 months after the legislation was passed, the powers to manage roads and to control roadside parking would pass to the new public road companies.

By-law-making powers would not be transferred from local authorities to public road companies, because the latter would be commercial entities and should be required to seek, where practicable, commercial solutions.

However, in some cases, such as the setting of speed limits and weight restrictions, or dealing with overhanging trees affecting road safety, public road companies would need the ability to make enforceable rules. Public road companies would only have such powers when they are necessary to protect roads, or to ensure their safe and efficient use. Powers would only be given when the property rights of road companies were insufficient.

On the other hand, local authorities would lose powers that have road management and traffic safety as their primary purpose. Moreover, any powers they retained which affect the road corridor would be subject to a requirement to consult with the public road company. The existing powers available to the Minister of Transport to disallow any by-law affecting a road or road traffic on the grounds that it is unreasonable or undesirable would remain. Utility operators like gas, water and sewage, electricity and telecommunications providers currently enjoy the right to place distribution assets in the public road corridor. These rights would remain. However, utilities would be required to notify, in advance, public road companies of their intention to carry out work, and the public road company would be able to set reasonable conditions for their disturbing the road and occupying the corridor. Similarly, public road companies would notify, in advance, any affected utilities of their intention to carry out works.

A national code of practice under the Resource Management Act 1991 would be developed in consultation with local authorities and other interested groups. This would allow local authorities to manage adverse effects on the broader community of the construction and maintenance activities of utilities and public road companies. It would cover issues such as the notice required to residents before disruptive work begins, and requirements to mitigate inconvenience and reduced access for households and businesses.

Should the proposal be implemented, public road companies would take over responsibility for parking management and enforcement. They would employ parking enforcement officers, who would be required to hold a warrant from the Commissioner of Police. While parking revenue would go to the public road companies, revenue from the enforcement of all parking offences would be paid to the Crown. The Minister of Finance would have the power to determine, from time to time, an allowance to be paid to public road companies to cover the costs of enforcement. The maximum level of parking fines would continue to be specified in legislation.

The proposal is to give public road companies the power to determine parking terms and conditions. However, this power is subject to the provisions of Land Transport Rules specifying the signs and markings to indicate parking restrictions, safety matters to be taken into account when imposing them, and the procedures for public notification of changes. The Minister of Transport would have the power to disallow parking terms and conditions.

REMOVAL OF RATES FUNDING FOR ROADS

The road activities of city and district councils would pass to local road companies about 18 months after the passing of the legislation. At this point a change would occur in the way we pay for our roads: the contribution to local roads sourced through local authority rates would cease.

The money to replace rates would come from:

Increases in Road User Charges on heavy vehicles and light diesel vehicles;
Increases in the Fuel Excise Duty on petrol, compressed natural gas (CNG) and liquefied petroleum gas (LPG). The Fuel Excise Duty dedicated to roads would be renamed a "Road Use Levy" to clearly distinguish it from the tax on these products that is general revenue; and
The possible imposition of an "Area Road Use Levy" on petrol, CNG and LPG and/or a Vehicle Levy collected with the motor vehicle licensing fee.

Any changes in Road User Charges or Road Use Levies, the introduction of a Vehicle Levy, and any subsequent change to an Area Road Use Levy would be by the Governor-General by Order-in-Council on the recommendation of the Minister of Transport. However, any Order- in-Council would need to be confirmed by legislation passed through Parliament within a specified time.

In making a recommendation, the Minister would be required to consider:

Transfund's recommendation to him or her; and
The adequacy of consultation that has taken place with road users and their agents.

The Minister would be required to state reasons for any differences between his or her recommendations and the recommendations he or she received from Transfund. When setting the Vehicle Levy, the Minister would be required to consider the impact of any fee on compliance with the vehicle safety and motor vehicle registration systems, in addition to the above factors. The current exemptions available from the Fuel Excise Duty dedicated for road purposes would apply to the Road Use Levy and any Area Road Use Levies.

TRANSFUND CHANGES ROLE

Another change that would start when local road companies took over road management would be unlikely to be noticed by most road users, although, in the long term, it would profoundly alter the way our roads are financed and managed. It would be a key factor in overcoming inefficiencies in the current system. Transfund would be transformed once again, not in its corporate form this time, but in its role. Until one year after public road companies start operating, Transfund would continue to be a funder of road maintenance and improvements. However, from then on it would become a purchaser of road services on behalf of road users from Transit, local road companies and other road service providers. This would require a change in focus by Transfund. Instead of being concerned with benefits and costs analysis of projects it would need to shift its emphasis to what road users wanted, how much they were willing to pay to get it, and how it could be most efficiently provided.

PUBLIC TRANSPORT

The change in the role of Transfund would mean that it would be inappropriate for it to continue its role of subsidising some public transport and funding the "Efficient Alternatives to Roading" programme it administers under Section 3D of the Transit New Zealand Act 1989. Under the latter, Transfund can contribute funds from revenues it receives from road users towards rail and shipping proposals which promote alternatives to the cartage of goods and passengers by road.

Transfund has budgeted in 1998/99 to contribute $35.8 million towards subsidising bus, ferry and rail public transport services administered by regional councils. Regional councils will contribute a further $41.3 million out of their rates revenues.

Transfund has also budgeted in 1998/99 to contribute to three public transport social service programmes operated by regional councils:

Total mobility, a taxi voucher system for people with disabilities and older people who are unable to access other transport (Transfund $2.50 million, regional councils $3.75 million);
Concession fares, a system of subsidised fares for older people, school children and other targeted groups (Transfund $2.90 million, regional councils $4.35 million); and
Urban school bus services (Transfund $1.50 million, regional councils $2.15 million). Rural school bus services are provided through Vote: Education.

Transfund plans to spend $500,000 in 1998/99 on alternatives to roads through the "Efficient Alternatives to Roading" programme.

These programmes are all pursued for a variety of local reasons. Broadly, they are to meet community social needs and, in the absence of proper pricing of roads, to benefit road users by reducing traffic on the roads. The proposal is that when rates ceased to fund roads, the programmes would be regionally funded. Regional councils would be empowered to collect from that date an annual regional public transport levy from public road companies and specified other road service providers for the purpose of purchasing public transport services of benefit to road users. The current provisions under which regional councils apply rates to providing public transport would continue to be available.

The aggregate of the regional public transport levies would initially be capped at $43.2 million per year, plus any additional expenditure under Section 3D authorised in the meantime by Transfund. However, the Minister of Transport, in consultation with the Minister of Finance and the Minister for the Environment, would be charged with developing a mechanism to quantify in monetary terms the direct net benefits accruing to motorists from public transport services. Once Ministers approved the mechanism, it would form the basis for the levy, and the temporary cap on the revenue able to be raised would be removed.

Regional councils would be required to apply the annual public transport levy consistently between road service providers within their region, and would be required to justify the level they set through the financial planning and reporting processes under the Local Government Act 1974. Until the introduction of the new system, Transfund would continue to fund public transport services. The proposed Bill would repeal Section 3D of the Transit New Zealand Act 1989 from the same date.

ALTERNATIVE PAYMENT ARRANGEMENTS

The next change to impact on motorists would start about a year later than the removal of rates. From that date, road users would be able to enter alternative arrangements to pay for their use of the roads. Instead of paying Road User Charges, Road Use Levies, Area Road Use Levies, and/or the Vehicle Levy, road users could pay for their use of the roads by other means.

Users would be able to enter into road contracts with other intermediaries that set themselves up to act between road users and those that provide roads. Road users would also be able to directly contract with road companies for the use of their roads. Transfund would be the only intermediary entitled to receive payment via Road User Charges, Road Use Levies and any Vehicle Levy.

These tax-based charges, which would be referred to as the "levy system", would continue to be set by Order-in-Council and require confirmation by Parliament. Transfund would be the purchaser of road services on behalf of road users that do not have another payment arrangement, and everyone would be entitled to return to paying for their use of the roads via Transfund and the levy system if they wished.

Transfund would be able to prevent users entering an alternative payment arrangement if it unreasonably increased the risk of evasion or avoidance of the levy system. If Transfund declined a request to enter an alternative payment arrangement, an appeal against the decision could be made to the Secretary for Transport.

It is anticipated that user lobby groups, large dairy and forestry companies and major commercial truck operators would be interested in being intermediaries, or in directly negotiating on their own behalf agreements with road service providers. These agreements would be subject to commercial regulation to ensure that they are economically efficient.

The possibility of road users entering alternative payment arrangements would encourage Transfund to focus upon the requirements of road users. If it failed to satisfy the needs of a sizeable user or groups of users, Transfund would be vulnerable to their making alternative arrangements. The possibility that users would return to Transfund and the levy system would act as a constraint upon the pricing behaviour of road service providers and intermediaries. Road service providers would not be allowed to have an interest in an intermediary organisation, and an intermediary would not be allowed to own an interest in a road service provider.

However, road service providers would be allowed to contract the same billing agent for the purpose of collecting and administering payments for the use of the road network, but public road companies could not own such businesses, or allow them to set their prices. Measures currently available to enforce Road User Charges would be used to support the enforcement of alternative payment arrangements.

COMMERCIAL REGULATION

Rail, shipping and air services provide alternatives to roads for some passenger and freight movements. However, for many trips, road users would have no realistic alternative to using the roads of a particular road service provider. Roads are generally natural monopolies.

The proposal, if implemented would:

Alter the current regulatory regime which works imprecisely and indirectly through "political" control of road controlling authorities - Transit and the 74 local authorities; and
Introduce a suite of additional measures to ensure road companies are constrained in their ability to exercise market power to make excessive profits, to exploit those road users who lack alternatives, to be complacent about reducing costs, and to act anti- competitively. All public road companies and specified other road service providers would be subject to these measures.

The basis of the current "political" control of roads is the periodic elections for central and local government. This is complemented by the power to use the Official Information Act, the financial reporting requirements of central and local government and, in the case of Transit and Transfund, the checks on government agencies exercised by Parliament through scrutiny of expenditure plans and the activities of select committees.

Most of these aspects would not change, but the road activities of local authorities would be performed indirectly through a local road company. Much more detailed information on the financial and other aspects of the performance of these entities, and of their plans, would be available for public scrutiny and comment than currently exists.

Additional measures to stimulate competition and remove anti-competitive behaviour are that public road companies and other road companies covered by the commercial regulation provisions would be subject to:

The anti-competitive and consumer protection provisions of existing commercial law (Commerce Act and Fair Trading Act);
Competition in some circumstances. For example, there would be a number of opportunities for competition between a local road company and the state highway operator. There would also be some opportunities for new road providers to develop to compete with existing ones by establishing alternative roads and highways;
An information disclosure regime similar to that applying to electricity line companies;
Restrictions on their activities. They would be able to be only road service providers, and would not be able to have an interest in an intermediary;
A requirement to negotiate in good faith with representatives of significant users which wished to agree prices and terms and conditions for road services;
The possibility that price control would be imposed;
A set of pricing principles when formulating prices for road use. The pricing principles, which would be contained in regulations made under the proposed legislation, would be aimed at ensuring that prices were economically efficient, and that a public road company's returns should only increase through it undertaking new investments;
A mechanism to settle disputes over prices that would allow recourse to the High Court. The court would be able to use a lay assessor with economic or accounting expertise to assist it, and would be able to strike down prices that were not in conformity with the pricing principles; and
A requirement, in most circumstances, to seek competitive tenders for road construction, road maintenance, and for the professional services associated with such work.

OTHER REQUIREMENTS ON ROAD COMPANIES

A road company would also be required to:

Retain the physical road network it took over at the time it was established. Similar provisions to those currently controlling the closing of roads by local authorities would govern closures by public road companies. All roads a company operates would have to satisfy the quality criteria contained in the company's safety management system, as approved by the Director of Land Transport Safety; and
Accept connections to its roads and, in the case of a local road company, take over roads in subdivisions unless another road company offered to do so. The conditions to which subdivision and other road connections must be built would be required to be reasonable, and would have to include the company's:
Safety management system;
Charging method for works associated with connections;
Charging method for assessing connection proposals; and
The time period within which proposals of different types of connection would be assessed.

The conditions could also include the road company's engineering standards and traffic management regime.

The road company would be able to recover the costs of connection and any on-going operating costs, but would not be able to recover lost revenue or upgrading costs elsewhere in its network that result from the interconnection.

A road company would not be required to accept connections that breached any "limited access" declaration relating to a road. These would continue to be used to control the number and position of entranceways and intersections on main roads for safety reasons. In general, therefore, the operations of road companies would be subject to greater restraint and open to better informed public scrutiny than the current operations of road controlling authorities.

TOLL AND CONGESTION PRICING OPTIONS

Another change which might affect road users is the potential for more public roads to be subjected to tolls. Road service providers would be able to introduce tolls and congestion prices for the use of specific roads. Congestion prices are tolls set with the purpose of reducing congestion on a road. Often they vary according to the time of day or level of traffic on the road.

Road companies wishing to introduce tolls and congestion prices would have to negotiate with Transfund, intermediaries offering alternative payment arrangements, and road users that had directly contracted such arrangements with them. The charges would have to conform to the pricing principles mandated by the legislation. One consequence is that if tolls for new facilities recovered more than their full costs, other prices would have to fall. Moreover, the requirement that a public road company's returns should only increase through it undertaking new investments means that, in general, if congestion prices were imposed on existing roads, the prices for other roads would have to fall to hold the company's overall revenue.

Given the cost of collecting tolls with current technology, and the constraints placed on them by the regulatory regime, it is unlikely that the widespread introduction of tolls would occur quickly. Areas of severe traffic congestion and new roads, bridges and tunnels would be likely to be the first places for new tolls to be introduced.

In order to enforce tolls, road service providers would have to be able to:

Deny physical access to vehicles whose operators had not yet paid the toll;
Use surveillance technology to detect under-payment;
Use technological evidence of non-payment, such as photographs;
Access the motor vehicle register to obtain the personal details of the vehicle owner for the purpose of recovering toll debts;
Recover the toll, plus the enforcement costs as a civil debt from the road user or the registered vehicle owner; and
Seek the recovery of toll debts through the courts if necessary.

However, it is also proposed that, in relation to tolls, road users would have to be provided with notice of any toll rate prior to the point at which they have no option but to proceed through the tolling facility.

Moreover, in relation to road charging, it is proposed that:

An anonymous purchase option must be made available for any charging system introduced, to ensure privacy is maintained by preventing vehicle movements being linked to individuals;
Personal information collected from road users could only be used for road management, road safety and road service revenue collection purposes;
The disclosure of personal information would be prohibited, unless authorised by the motorist or ordered by a judge or Court Registrar, or required by a court warrant; and
The privacy policies of road entities would have to be available in a publicly accessible document.

SAFETY FUNDING

The New Zealand Police and the Land Transport Safety Authority currently undertake a range of educational and enforcement activities to promote safe vehicles and safe driving. The Government, through the Safety (Administration) Programme, purchases these outputs. Under the proposed regime, the Government would continue to purchase safety services from the Police and the Land Transport Safety Authority. The programme would be known as the New Zealand Road Safety Programme (NZRSP). The Director of Land Transport Safety would be responsible for its preparation. The National Road Safety Committee would advise on priorities and strategies. The Minister of Transport would approve the programme, which would be published annually.

Vehicle owners would continue to fund road safety outputs. Currently they do so partly through charges levied when motor vehicles are registered and licensed and partly through a small charge on petrol. Under the new regime, the funding of road safety education and enforcement would be entirely through motor vehicle registration and licensing fees. Moreover, the revenue from vehicle registration and licensing fees, net of collection costs and any specified levies for matters such as ACC, would be dedicated to the purchase of road safety through the NZRSP. If the expenditure in any one year differed from the road safety revenue received, the surplus or deficit would be carried forward to subsequent years. Parliament would continue to approve changes to the levels of fees, and to appropriate the Government's purchase of road safety outputs through the NZRSP.

SAFETY MANAGEMENT

The safety management system model has been introduced elsewhere in the transport sector, and was the favoured regime in the public submissions on the Ministry of Transport's consultation document "Road Management: Options for Reform" (1996). The proposal is that it would be adopted for the first time for roads as part of the changes, although its full implementation would not be possible until some years after the formation of public road companies.

A safety management system would:

Set out the traffic management and road engineering standards, guidelines, manuals, codes of practice, and the proposed expertise and procedures for providing a safe road network;
Set out the management structure responsible for maintaining and implementing it;
Provide for regular internal audits by approved persons to ensure compliance;
Provide for disclosure of information, such as traffic counts, maintenance databases, information about road conditions, and traffic crash reports, to the industry supervisor; and
Provide for the development of a safety strategy to identify problems and solutions.

The proposal is to require that all public road companies adopt a safety management system approved by the Director of Land Transport Safety as soon as practicable after their formation. The system would cover all users - heavy and light vehicles, cyclists and pedestrians - and would focus on road factors as causes of crashes. Failure to comply with obligations under the safety management system would be an offence, and penalties would be able to be imposed on companies, directors and managers.

The Director would also have the power to require other road service providers to adopt and comply with a safety management system. When the Director exercised this power, the Governor-General through Order-in-Council could, in specified circumstances, also grant the road service provider any, or all, of the road management powers available to a public road company.

The Director of Land Transport Safety would have a regulatory and enforcement role, and would be guided in his or her decisions by principles set out in the legislation:

All aspects of road safety able to be improved by altering the road would be covered;
Responsibility and accountability for identifying and managing road safety risks would rest with the road service provider;
The direct and indirect costs of regulation could not exceed the expected safety benefits, and the level of regulation would have to be appropriate for the type of road. The requirements for a motorway would differ from those for a ski-field access road or a rural road, for example;
Regulation would need to be kept to a minimum and, where required, would have to be undertaken in a way that does not impose unnecessary delays or costs; and
Consistency would be required in matters such as road signs and markings in order to give certainty to drivers.

Whether the Director's decisions conformed to these principles would be open to judicial review.

Under the new regime the Director would have powers to ensure compliance and to address serious road safety concerns. These powers would involve: undertaking random checks; requiring special audits; requiring information to be provided; requiring remedial work; imposing special conditions on the use of a road; publishing audit reports and evaluations; and initiating prosecutions against a road service provider subject to the regime, its directors and managers.

The expenditure by the Land Transport Safety Authority in relation to safety management systems would generally be funded from user charges set by regulation, and so would be subject to oversight by Parliament and Cabinet.

As a transitional measure, until its safety management system had been approved, every public road company would be required to report to the Director annually. The report would have to cover the procedures it had adopted to maintain or improve the safety of its existing network, and to ensure that new works met appropriate safety standards. The Director would be able to take action in respect of roads which were not safe.

ENVIRONMENT

The transport system generates a number of effects on the environment and communities, and some of these are increasingly recognised as unsustainable in the long term. These include noise emissions, greenhouse gas emissions, other air emissions, reduced water quality, landscape impacts, community severance, vibrations, and visual intrusion. The move towards more direct charging for road use would have environmental benefits. Over the longer term there would be the ability to add to direct charging to bring home to road users the fact that the extent and time of vehicle use impact on the cost of infrastructure and on the environment. However, it would be only one step of a number that would be required. Other necessary steps would be: accurately determining the nature and extent of the impacts of road transport on the environment; assessing the most economical way of controlling these impacts; and ensuring that the means of control did not have perverse effects like shifting users to more environmentally harmful alternatives. As a result of the analysis undertaken to assess the future for roads, the Government has come to the view that:

Road service providers should be subject to the Resource Management Act 1991 in the same manner as other network utility operators;
The Resource Management Act should be amended to ensure regional councils can hold road service providers responsible for managing the combined discharges to air from the vehicles using their roads;
Encouragement should be given to local government and road service providers to develop, possibly with Standards New Zealand, an appropriate national road noise standard;
The Resource Management Act should be amended so that the general duties to avoid unreasonable noise and avoid, remedy or mitigate adverse effects apply to land under a designation, as well as other land, and should apply to all designations;
Climate change gas emissions from road transport should be addressed as part of the broad economy-wide response to meet New Zealand's commitment under the Kyoto Protocol to bring emissions of six greenhouse gases in aggregate back to the 1990 level, on average, during the years 2008-12;
New Zealand's commitments under the Kyoto Protocol have implications for any decisions on reductions in rates of fuel taxes on the transport sector, and these should be explicitly considered before any reductions occur; and
The Government should undertake a review of the decision-making powers of "requiring authorities", such as network operators like road service providers, to consider shifting the power of primary decision making on recommendations relating to land use conditions on "designations" from the requiring authority to the local authority.

MAORI INTERESTS

Currently, government agencies involved in roading, as well as local authorities involved in roading, are required to consult with Maori over any roadwork which affects, or is likely to affect, Maori land or Maori historical, cultural or spiritual interests. Under the proposal this would continue to apply to public road companies.

Crown road land currently managed by Transit would be leased to the Crown road company, Transit New Zealand Limited. This lease would contain provisions for the release of land no longer required for road purposes. Land so released would become subject to the protection mechanism for surplus Crown land established in 1993 to ensure Crown land is available for potential use in settlement of Treaty of Waitangi claims. Moreover, any land acquired by Transit New Zealand Limited after its establishment would also become subject to the protection mechanism should it subsequently become surplus to road requirements. The leasing of Crown land and the transfer of road improvements to Transit New Zealand Limited would not trigger the first right of refusal contained in the Ngai Tahu and Waikato-Tainui settlement legislation, although subsequent disposal of such land by Transit might do so.

As part of its work in determining the boundaries of local road companies, the Establishment Commission would be required to consider the interests of the community and road users. This consideration would include the need to have regard to the relationship between the boundaries of local road companies and the traditional rohe (district or area) of Maori.

Under the Resource Management Act, all persons exercising functions and powers under the Act are required to take into account the principles of the Treaty of Waitangi. This requirement would, as a matter of course, apply to the changes to the Resource Management Act, which form part of this proposal.

COMMUNITY INTERESTS

Road corridors contain more than carriageways; they are important areas of public space. The amenities in a road corridor can shape the character of a community. A community can also be affected by the nature of a carriageway - its size and shape. Communities, therefore, want to have meaningful input into how road corridors are developed and used. As representatives of communities and the current guardians of assets in local road corridors, local authorities also have on-going interests in the corridor. On the other hand, it is important that road companies would be able to make the investment and operational decisions needed to fulfil the requirements of road users, and meet the obligations placed on them by any new safety management and environmental requirements. The proposal would balance these interests. Amenities

Local authorities would retain their ownership and management rights over amenities in the corridor, unless they elected not to do so. Amenities include items such as cycle lanes off the carriageway, plantings and landscaped areas other than those in safety median strips and traffic islands, public transport shelters, and public conveniences.

If a local authority did not wish to retain ownership or management rights over amenities, these would pass to the public road company. However, the local authority would be able to resume these rights at any point in the future.

In urban areas, a local authority would also be able to choose to exercise management responsibility for the entire off-carriageway area in the road corridor. If it did so, it would be prohibited from doing anything that would adversely affect the ability of the public road company to fulfil its safety and environmental responsibilities.

Statutory right of access
Local road companies would have statutory rights of access to the corridor and all public road companies would own and manage all road improvements.

Improvements include: all carriageway assets and assets associated with the use of the carriageway; the road kerb to kerb, including parking and bus lanes; footpaths, including pedestrian under and over passes; road signs, street lighting and traffic lights; engineering works associated with the carriageway; median strips and traffic islands, and traffic calming assets, where required for safety; drains that affect the road; vehicle crossings; and entrance ways.

A public road company would take over the existing on-carriageway regime including current levels of services in relation to bus and high-occupancy-vehicle lanes, bus stops, cycle lanes on the carriageway, and traffic calming devices. It would be required to retain these unless the local authority agreed to their removal, or removal was required for the public road company to meet its safety management responsibilities.

Public space developments
At the time local road companies were established, local authorities would have the right to declare sections of the road corridor, including parts of the carriageway, as land required for 'public space development' purposes. The creation of areas for pedestrian use and provision for other amenities would be reasons for such declarations. The Establishment Commission would have the power to approve or decline all declarations of this kind.

Subsequent to the establishment of road companies, local authorities would be able to secure further road corridor land for 'public space development' through either:

Negotiation with the local road company; or
Notifying the local road company no fewer than five years prior to the date that the proposed development is to take place, and obtaining the agreement of a majority of the company's shareholders by value, and no fewer than three by number, to the proposed redevelopment.

If the second option were adopted, the local authority would not be required to pay compensation to the local road company. The level of compensation payable under the first option would be a matter for negotiation.

Corridor Management Agreements
It is proposed that there would be a Corridor Management Agreement between each public road company and the local authority to provide the link between the management of the road corridor and the plans and operations of the local authority. The responsibility for producing the initial Corridor Management Agreements would lie with the road companies' establishment boards in negotiation with the local authorities. The Establishment Commission would provide guidelines, and would ensure that any initial Corridor Management Agreement did not unduly prejudice the purpose of changes in road management and funding and the ability of the road company to act as a successful business, or discharge its safety and environmental obligations.

The Corridor Management Agreement would:

Describe the accountabilities and responsibilities of the parties;
Identify the assets in the corridor the local authority owns, and any land it has identified for 'public space purposes';
Include a disputes resolution mechanism;
Provide that the decisions of the parties could be subject to judicial review; and
State the term of the agreement.

It could also provide, among other things, for: the local authority to purchase additional on- carriageway and off-carriageway services; the responsibilities of local authorities to be altered so they manage all off-carriageway areas in rural locations; and additional disputes resolution procedures to be prescribed.

If either party subsequently wished to change the Corridor Management Agreement, the parties would be required to enter negotiations with a view to reaching agreement. The party seeking changes would be obliged to produce a full justification for the proposed changes.

In summary, local authorities would be able to influence the local road company through:

The appointment of directors;
Commenting upon, and if decided by the shareholders collectively, changing the company's Statement of Intent;
The Corridor Management Agreement; and
The Resource Management Act, including the district plans. The third of these mechanisms would also apply to the Crown-owned road company. The last would apply to all road service providers.

PRIVACY OF MOTOR VEHICLE REGISTER

The current legislation dealing with access to the motor vehicle register is inconsistent with the general tenor of the Privacy Act. As part of the development of policy the Government has formed the view that the primary purposes of the motor vehicle register should be specified in legislation, and that these should be:

Motor vehicle safety, including the recall of vehicles with faults;
Law enforcement, including the prevention of insurance fraud;
Road-related revenue collection;
Recording the changes in registered ownership of vehicles; and
Statistical purposes.

To enhance privacy, it is proposed that the current statutory provisions relating to access to personal information on the motor vehicle register be replaced with provisions that set out that:

Individuals who meet criteria prescribed in regulations may have their personal information placed on a confidential register with prescribed criteria for release of that information from that register. The criteria would enable greater use of the confidential register for both personal safety and property protection reasons;
Individuals would have the right to appeal to the Privacy Commissioner on decisions relating to the holding or release of their personal information from the register;
In order to restrict widespread searching of the register for the compilation of lists, the number of queries that may be made for personal information within a given time period by general users would be prescribed in regulations;
Except when the information is required for safety or enforcement reasons, the information released to general inquirers would be restricted to the name and suburb or town of the vehicle owner; and
An offence of knowingly supplying, receiving or using information from the register for purposes other than authorised in legislation would be created. The maximum fine would be $50,000 for a body corporate and $10,000 for an individual.

LAND TRANSPORT STRATEGIES

Under existing legislation provision is made for a regional council to prepare a Regional Land Transport Strategy. The main purpose is to guide the expenditure of public money through public bodies. Under the proposal, a regional council would be allowed to develop a strategy for land transport in consultation with local authorities and other interested parties, including road service providers and the public of the region.

If a regional council spent public money on public transport it would be required to produce a Regional Land Transport Strategy document that detailed, at least, how the council intended to spend the money and a strategic direction for future expenditure. The appointment of a regional land transport committee to assist it would be optional. A regional council would be bound to its strategy only in so far as it involved the expenditure of public money on public transport.

The legislation underpinning the development of a National Land Transport Strategy would be revoked. In its place the Minister of Transport would release a National Transport Statement setting out the Government's broad policy objectives, and the outcomes that the Government seeks to achieve through these objectives, covering the transport sector overall.

How Would Needs be Met by the New System?

This document identifies three key areas in which improvements to our current road funding and management system is desirable: efficiency, safety and the environment. The proposed changes outlined in this consultation document address each of these issues.

EFFICIENCY

For efficiency, the answer is clear - there would be improvements. Over time, the changes would result in a much closer relationship between what the use of a road costs and the payment for that use. Roads in areas where construction costs were high would tend to cost more; roads in areas in which costs were low would tend to cost less. Users who imposed relatively high costs on the roads through the vehicles they used would tend to be charged more than users who imposed relatively low costs. People who wished to travel in built up areas at times of high congestion would tend to pay more than those travelling at off-peak times. In this way they would be encouraged to alter their travel patterns to reduce the need for expensive extra roads.

The shift to more business-like pricing, funding and management structures would force road companies to focus on what new developments their users want, and the prices they are prepared and able to pay to get them.

The focus would shift from Transfund's administrative procedures, and what qualifies for subsidy, to what users really want. The current constraint on undertaking large, but potentially very worthwhile investments, imposed by the current policy prohibiting Transfund and Transit from borrowing, would be removed. The new entities would be able to assess road projects on the basis of expected future demand and revenue, not on the basis of current cash balances. Experience in other areas of transport and other sectors of the economy indicate that the long-run beneficial effect of this change in investment focus on the economy is likely to be considerable.

As regards maintenance, the shift away from technical criteria to a more business-like environment would focus attention on what maintenance is actually needed, and how it can be done cost effectively, and shift the emphasis away from what maintenance qualifies for a subsidy. There would also be some changes in emphasis between investment in improvements and maintenance as road companies face the true costs of these as alternatives.

An assessment has been made of the overall impact of the changes on the New Zealand economy in 5 to 10 years by identifying and quantifying specific benefits and costs. The following table summarises that assessment, and shows that total annual gains are estimated to be between $115 million and $295 million per year. This is modest in comparison with the size of the overall economy, but still well worthwhile in aggregate. The estimates are explained more fully in the Appendix.

BENEFITS AND COSTS FROM THE CHANGES IN ROAD MANAGEMENT AND FUNDING

Benefits:	Possible gains (and losses) within 5 to 10 years, per year
Improvements in investment efficiency	+$20 m to +$55 m
Savings in maintenance costs	+$50 m to +$100 m
Reductions in congestion costs	+$50 m to +$135 m
Savings in administration costs	+$5 m to +$10 m
Adoption of the safety system	+$25 m to +$50 m
Improved environmental outcomes	Expected improvement
Costs:
Extra costs from new charging methods	- $30 m to - $50 m
Administration costs of CMAs and other contracts	- $2 m to - $3 m
Annualised restructuring costs (annualised over 10 years)	- $1 m to - $2 m
Additional safety system costs	- $1.5 m
Total net annual gains	+ $115 m to +$295 m

Road costs account for only a small proportion of direct household costs. The average New Zealand household spends an estimated $481 per year when GST is added - or 1.4 percent of the average after tax household income - on roads and road safety costs. This comprises just 10 percent of the $4,740 that the average household spends on transport in total in a year. The average GST inclusive household cost of $481 varies by region, from $552 in Waikato and $542 in Gisborne to $447 in Wellington and $468 in Auckland.The regional variation is almost entirely due to differing rates payments.

The average rural household tends to spend slightly more on roads because its rates are higher. Those in rural regions tend to spend about the same as those in urban areas on the current charges directly related to travel - fuel tax and Road User Charges. This suggests that while living in a rural area results in longer trips on average, the urban lifestyle requires more frequent trips to work and leisure, and the two roughly balance out.

Road costs are also a small proportion of total costs for most businesses. For beef and sheep farming and forestry, road costs are approximately 2 percent of total direct costs. For dairy farming, even when the extensive truck operations to gather milk from farms are included, roads still only account for about 3.5 percent of costs.

Because of the relatively low level of road costs in most budgets, the impacts on most households and businesses would inevitably be small. The following examples illustrate the likely direct impact on households of the removal of rates and the increase in direct road charges to compensate for this change, if the current basis for allocating charges between different types of vehicles were retained.

IMPACT OF THE REPLACEMENT OF RATES BY HIGHER FUEL LEVIES ON EXAMPLE HOUSEHOLDS

Hypothetical example 1: Middle aged couple with children, in Auckland

Middle aged couple living in Auckland with two children who own their house (Government Valuation (GV) of house is $220,000). Their total annual income is $65,000 and they own three cars. A total of 38,000 kilometres is travelled in the three cars per year. Their total current transport costs would be $11,264/year of which $771/year would go to fund roading, road safety and enforcement. The replacement of rates by higher user charges would mean that the household would face an increase in transport costs of $102/year (0.9 percent) or $1.96/week.

TRANSPORT COSTS	CURRENT COSTS		AFTER RATES REPLACEMENT
	Transport Costs ($)	Road & Safety Costs ($)	Transport Costs ($)	Road & Safety Costs ($)
Depreciation on cars
Year 1990 value $8,000	1,416		1416
Year 1992 value $12,000	2,124		2,124
Year 1986 value $2,000	354		354
Petrol 38,000 km using 3,040 litres	2,508	465	2,747	705
Vehicle registration (3 cars)	474	168	474	168
Rates of $920 with 15% to roading	138	138
Maintenance and repair	3,040		3,040
Insurance	1,210		1,210
Total	11,264	771	11,366	873

Hypothetical example 2: Retired couple in Hamilton

Retired couple living in Hamilton who own their house (GV $200,000). Their total annual income is $19,900 and they own one car. A total of 7,000 kilometres is travelled in the car per year. Their total current transport costs would be $4,793/year of which $476/year would go to fund roading, road safety and enforcement. The replacement of rates by higher user charges would mean that the household would face a decrease in transport costs of $290/year (6 percent) or $5.58/week.

TRANSPORT COSTS	CURRENT COSTS		AFTER RATES REPLACEMENT
	Transport Costs ($)	Road & Safety Costs ($)	Transport Costs ($)	Road & Safety Costs ($)
Depreciation on cars	2,655		2,655
Year 1995 value $15,000	470	86	514	130
Petrol 7,000 km using 560 litres	158	56	158	56
Vehicle registration Rates of $1,152 with 29% to roading	334	334
Maintenance and repair	560		560
Insurance	616		616
Total	4,793	476	4,503	<186

Hypothetical example 3: Young couple in Timaru

Young couple living in Timaru with a child, who own their home (GV $95,000). Their total income is $45,000 and they own two cars. A total of 25,000 kilometres is travelled in the two cars per year. Their total current transport costs would be $6,851/year of which $715/year would go to fund roading, road safety and enforcement. The replacement of rates by higher user charges would mean that the household would face a decrease in transport costs of $139/year (2 percent) or $2.67/week.

TRANSPORT COSTS	CURRENT COSTS		AFTER RATES REPLACEMENT
	Transport Costs ($)	Road & Safety Costs ($)	Transport Costs ($)	Road & Safety Costs ($)
Depreciation on cars
Year 1987 value $3,000	531		531
Year 1990 value $8,000	1,416		1,416
Petrol 25,000 km using 2,000 litres	1,698	306	1,856	464
Vehicle registration (2 cars)	316	112	316	112
Rates of $990 with 30% to roading	2,97	297
Maintenance and repair	2,000		2,000
Insurance	593		593
Total	6,851	715	6,712	576

Hypothetical example 4: Single income family in Gisborne

Single income family in Gisborne with one child and living in rental accommodation. Total income is $14,700 with one car. A total of 10,000 kilometres is travelled in the car per year. Total current transport costs would be $2,295/year of which $178/year goes to fund roading, road safety and enforcement. The replacement of rates by higher user charges would mean that the household would face an increase in transport costs of $63/year (3 percent) or $1.21/week. Although no reduction in rental has been assumed in the table, tenants generally bear rates paid by landlords and, over time, market rents will reflect changes in rates, including reductions in them. The effect of reduced rates is likely to exceed the $63 increase in petrol costs per year, and this would leave the family overall better off.

TRANSPORT COSTS	CURRENT COSTS		AFTER RATES REPLACEMENT
	Transport Costs ($)	Road & Safety Costs ($)	Transport Costs ($)	Road & Safety Costs ($)
Depreciation on cars
Year 1982 value $2,000	354		354
Petrol 10,000 km using 800 litres	707	122	770	185
Vehicle registration	158	56	158	56
No rates paid
Maintenance and repair	800		800
Insurance	275		275
Total	2,295	178	2,358	<241

SAFETY

Under the proposal, the safety management system would be introduced to manage road quality from a safety perspective. This approach has been adopted elsewhere in the transport sector and was widely supported in the consultations conducted by the Ministry of Transport. Thus, the proposal would correct the anomaly of only two of the three factors contributing to road crashes - driver behaviour and vehicle condition - being explicitly targeted, and would provide for more focus on road quality through safety management systems.

The proposal provides that the funds collected for administering the New Zealand Road Safety Programme through motor vehicle registration fees and licence fees would be dedicated to that purpose and would not be able to be spent for other purposes.

ENVIRONMENT

By permitting prices for road use to more accurately reflect cost, the proposal would achieve some environmental benefits. However, significant work is involved to: accurately determine the nature and extent of the environmental impacts of road transport; assess the most economic way of controlling those costs; and avoid adopting regimes that have the perverse effect of shifting road users to more environmentally harmful forms of transport. Work on vehicle emissions is well advanced. The ''Vehicle Fleet Emissions Control Strategy - Stage 1' document was released in September 1997. This has been followed up with the release of 'Vehicle Fleet Emissions Control Strategy - Final Report'.

It is also proposed that the Resource Management Act be amended toensure regional councils can hold road service providers responsible for managing the combined discharges to air from the vehicles using their roads. To correct a drafting error that recent court decisions have identified, it is proposed that the general duties to avoid unreasonable noise and avoid, remedy or mitigate adverse effects would apply to land under a designation, as well as other land.

Furthermore, the Government (led by the Minister for the Environment) intends to review the decision making powers of 'requiring authorities', which includes network utility operators like road service providers. The purpose is to consider shifting the power of primary decision making on recommendations relating to land use conditions on 'designations' from the requiringauthority to the local authority.

Other Outcomes The extensive consultation process that preceded the development of the current proposal highlighted other aspects of roads that people want to be taken into account. These aspects were identified at the beginning of the section describing The New Road Management and Funding System.

COMMUNITY INTERESTS

Local authorities would retain their ownership and management rights over amenities in the road corridor, unless they elected not to do so.
If the local authority did not wish to retain ownership or management rights over amenities, these would pass to the public road company. However, the local authority would be able to resume these rights at any point in the future.
In urban areas, the local authority could also choose to exercise management responsibility for the entire off-carriageway area in the road corridor. In rural areas, the local authority would be able to negotiate to retain this right through the Corridor Management Agreement.
A public road company would be required to retain the current bus and high-occupancy- vehicle lanes, bus stops, cycle lanes on the carriageway, and traffic calming, unless the local authority agreed to their removal, or removal was required for the public road company to meet its safety management responsibilities.
Local authorities would have the ability to reclaim sections of the road corridor, including parts of the carriageway, for 'public space development' purposes - for example, the creation of pedestrian malls and the provision of other amenities.
There would be a Corridor Management Agreement between each public road company and the local authority, which would cover roads owned by the company.
In addition, local authorities would own the shares in local road companies, appoint their directors and comment formally on, and be able to require changes to, their Statements of Intent.
All road service providers would be subject to the Resource Management Act, including the district plans of the areas in which they would operate.

MAINTAINING THE NETWORK

A public road company would have to retain the physical road network it took over at the time of its establishment.
The provisions for temporarily or permanently closing roads would be similar to existing provisions.
All roads a company operated would have to satisfy the criteria contained in the company's safety management system, as approved by the Director of Land Transport Safety.

PRIVACY

An anonymous purchase option would be required to be made available for any charging system introduced.
Personal information collected from road users could only be used for road management, road safety and road service revenue collection purposes.
The disclosure of personal information collected by road service providers would be prohibited, except in specified circumstances.
The privacy policies of road entities would be required to be available in a publicly accessible document.
Access to the motor vehicle register would be tightened considerably to improve the privacy of owners of motor vehicles.

UTILITIES' ACCESS TO THE CORRIDOR

Utility operators' rights to place their distribution assets in the road corridor would remain.
Utilities would be required to notify, in advance, public road companies of their intention to carry out work, and the public road company would be able to set reasonable conditions.
Similarly, public road companies would notify, in advance, any affected utilities of their intention to carry out works.
A national code of practice under the Resource Management Act 1991 would be developed to manage any adverse effects on the broader community of the construction and maintenance activities of utilities and public road companies.

OWNERSHIP AND CONSTRAINTS ON MONOPOLY POWER

Public road companies would be owned by public bodies. The law would preclude their sale. In addition, public road companies and specified road service providers would be:

Subject to the anti-competitive and consumer protection provisions of existing commercial law (Commerce Act and Fair Trading Act);
Able to compete with one another in some circumstances. There would be a number of opportunities for competition between a local road company and the state highway operator;
Subject to an information disclosure regime similar to that applying to electricity line companies;
Required to restrict their activities to road service provision, and would not be able to have an interest in an intermediary;
Required to negotiate in good faith with any representative of a significant number of users which wished to agree prices and terms and conditions for road service;
Subject to the possibility that price control would be imposed;
Subject to a requirement that all their prices for road use must be consistent with a set of pricing principles contained in regulations made under the proposed legislation;
Subject to a mechanism to settle disputes over prices that allows recourse to the High Court. The court would be able to strike down prices that were not in conformity with the pricing principles; and
Required in most circumstances to seek competitive tenders for road construction and maintenance and for the professional services associated with such work.

B>Conclusion

In the Government's view, the proposal outlined in this discussion document effectively address the issues New Zealand faces in funding and managing its roads. It also caters for the other aspects that consultation has identified as important: community input into decisions about roads; maintenance of the network; preservation of privacy and access for utilities; and prices being sensibly constrained.

Road management would be streamlined and administration costs reduced.
The way roads would be funded would result in a wiser use of our roads and investment in building new ones.
Road safety would improve for motorists, cyclists and pedestrians.
The environment would benefit.
There would be lower levels of congestion in major urban areas, particularly Auckland.
The roads New Zealand currently has would be retained.
The way we pay for roads would be fairer because it would reflect actual use.
Urgently needed roads in rapidly growing areas like the Bay of Plenty could be built faster.
Forestry roads in areas such as Marlborough, Northland and the East Cape would be able to be built and maintained without ratepayers footing the bill.
A greater variety of funding options would be available to pursue projects such as the Transmission Gully road north from Wellington.
There should be a significant reduction in property rates, especially for rural ratepayers.
Local authorities would continue to play an important role in running roads.
Local road companies would be accountable to communities through local authorities - the sole shareholders of local road companies.
Maori interests would be protected.
Public transport would be improved and would grow in importance.
The access that motorists, cyclists and pedestrians currently enjoy to our roads would not change.
People's privacy would be protected.

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Minister's Foreword