Infrastructure investment remains a hot topic across the country, with increasing demands for investment, but more limited amounts of funding available. High cost escalation for network infrastructure in recent years have contributed to a need to spend more than anticipated to get less than anticipated.

Recent announcements from government have provided more details on the future pathway for transport investment under the current government, and how things have changed from the path set by the previous government. Our analysis examines how this recent announcement on transport funding will be distributed across different categories and regions, and wider planning for infrastructure into the future.

The National Land Transport Fund (NLTF) is the pot of money available for transport spending in New Zealand. It is funded by Road User Charges (RUC), Fuel Excise Duty (FED), vehicle registrations, and a few other smaller revenue streams. The New Zealand Transport Agency (NZTA) administer the NLTF, alongside funds from the government directly (via loans and grants).

The Government Policy Statement (GPS) on Land Transport (GPS-LT) sets out the government’s priorities and informs how the NLTF is expected to be spent over the next 10 years. The National Land Transport Programme is a 3-year programme of “prioritised activities” that provides a more definitive view of what NZTA will fund from the NLTF, guided by the GPS-LT, over the next three years. The NLTP includes both the funds from the NLTF and from “local spend”, which is the contribution from local councils for local roads.

In short, the NLTP is the most detailed set of transport funding investment projections we get from a central agency. The latest NLTF, for the 2024-2027 period, was released in early September, with the government announcing a record $32.9b investment in New Zealand’s transport network, an almost $9b increase in funding from the 2021-24 NLTP.

The latest NLTP includes funding for the government’s new Roads of National Significance (RoNS), and some changes to how funding is allocated and named.

Each NLTP is important for regions across New Zealand, as the level of investment in land transport infrastructure drives economic growth by creating or maintaining infrastructure jobs, reducing congestion and travel times, improving safety, and connecting regions together.

The term ‘infrastructure deficit’ has been used more and more often as existing assets are run down over their lifetimes, compounded by severe weather events occurring more frequently.

According to the Infrastructure Commission, in recent years, we may have not been spending enough money on state highways and local roads to keep up with the wearing out of transport assets, as depreciation has outpaced renewal spending. So, despite a more limited fiscal landscape, substantial increases in funding appear necessary to achieve both larger strategic transport projects and fund investment in maintaining and upgrading current assets.

The largest amount of funding in the 2024-27 NLTP goes towards state highway improvements – that is, new highways and upgrades to existing highways. This activity class receives 31% of total functional investment. The large proportion going to this class is driven by funding for the initial RoNS to be funded, although the full series of RoNS are set to be funded over the next three NLTPs.

The Minister of Transport, Hon Simeon Brown, announced a greater focus on pothole prevention, with a substantial 19% of functional investment in the NLTP allocated to local and state highway pothole prevention (see Chart 1).

As clearly signalled, the National-led government is shifting funding away from the previous government’s focus on rail, with a 17% reduction in investment into the rail network over the three-year period, a $200m reduction from $1.2n to $1.0b (with this funding sitting partly in the public transport lines displayed in Chart 1, and some omitted from the Chart due to it being Crown-funded).

The shift away from walkways and cycleways to roading infrastructure is evident in the drop in walking and cycling activity class target investment from $910m in the 2021-24 NLTP to $460m in the latest Programme, despite the $9b increase in total funding allocated in the 2024-27 Programme from the 2021-24 Programme.

Despite funding for public transport infrastructure and services in the 2024-27 Programme having both increased 15% and 43% respectively, from the previous 2021-24 Programme, the level of funding appears to be less than hoped for and anticipated by local and regional councils. Some councils have reported a public transport funding shortfall, forcing councils to reprioritise funding to maintain current services. Greater Wellington Regional Council is set to face a $134m shortfall in funding for public transport, potentially resulting in Wellington transport fares needing to rise and some bus and rail services needing to be cut or scaled back to fill this funding gap. Public transport services and infrastructure funding is highly concentrated to Auckland, with 61% of the total.

A question that regularly arises is around the regional allocation of transport funds. Some regions will feel harder done by, if they receive far less than others on a per-person basis than other areas. Although population isn’t the only way to examine funding allocations, it is a simple to understand option. Other comparisons might include the length of existing roads, or using Vehicle Kilometres Travelled (VKTs).

Overall, it appears that the North Island receives a larger amount of funding per-person in the 2024-27 NLTP, with North Island regions receiving $5,148 in transport funding per-person on average, which is 1.8 times more than the South Island regions are receiving per person.

The glaring exception to this North-South trend is the West Coast region, which is set to receive the highest level of funding per-person of all regions, at $8,487 per-person (see Chart 2). Approximately 37% of the funding is for pothole prevention, followed by 27% for state highway improvements. Funding for the West Coast will always look skewed on a per-person basis, as the region has a small population but a large area to cover, a large roading network, and a substantial level of tourism activity.

Waikato is set to receive the smallest per-person funding of any North Island area, although this trend will be partly driven by the fact that Waikato received substantial funding in previous Programmes for the Waikato Expressway (WEX).

Another angle to look at regional funding shares is by Vehicle Kilometres Travelled (VKTs). We looked at the last three years of VKTs, and then used that to come up with (Chart 3), effectively making the assumption that VKTs by region over 21-24 will be materially in-line with VKTs during 24-27.

In general, the trends look fairly similar, although Auckland looks better on a per-VKT basis than on a per-person basis, and the West Coast doesn’t stand out as much.

Usually, Infometrics would start analysing and combining data from a range of sources, including the GPS-LT and NLTP, with local council data to form an updated view on the future infrastructure pipeline for transport investment.

Although this is not a straightforward update at any time, this year presents a few additional hurdles. We continue to collate Council planning documents, but the usual Long Term Plan process for 2024-2034 has seen a number of options taken up by Councils. Due to Cyclone Gabrielle in 2023, and changes to water funding models, three options were available to councils in 2024:

1. Enhanced Annual Plans: a 1-year plan, allowed for from water changes, and means a 9-year Long Term Plan next year.
2. Three Year Plan: a 3-year plan, which can be unaudited, arising from Cyclone Gabrielle.
3. Long Term Plan (LTP): generally a 10-year plan – the most common outcome. Horowhenua, due to high recent growth, continues to opt for an LTP that looks out over 20 years.

When we compiled and updated our data in mid-September, 53 of the 78 local and regional councils had published a 10-year Long Term Plan (54 including Horowhenua’s 20-year plan). A further 12 had opted to publish an Enhanced Annual Plan, and seven had published a Three-Year Plan (see Chart 3).

A further four local councils (and one regional council) hadn’t yet signed off and published their latest planning document. These documents are expected to be finalised and then published in September and October.

We’re still working our way through compiling investment intentions from across the various planning documents, and other resources. We’re also working on how we fill in the gaps, of 9-7 years, before we update our Infrastructure Pipeline Profile.

What is clear is that more funding is going into transport infrastructure across the country, but given large cost increases for projects in recent years, more funding might well only deliver the same, or likely fewer, projects.

The funding environment is difficult out there for infrastructure, despite the clear need for more and continued investment.