The transport agency’s facing a budget blowout as more frequent and damaging weather events put pressure on its emergency works fund
The transport agency’s only one year into its current National Land Transport Programme (NLTP) but amid more frequent and damaging weather events it’s already spent 80 percent of its three-year funding allocation to repair local roads.
In a briefing to Minister of Transport Michael Wood, Waka Kotahi officials wrote the local road emergency budget was forecast to exceed its allocation.
“We consider there is a very high probability of exceeding the 2021/22 portion of the 2021-24 NLTP’s provision for local road emergency works funding, and a very high probability of exceeding the whole 2021-24 NLTP provision for local road emergency works funding by the end of year three, if not during year two.
“The flatlining of maintenance funding in the last decade also reduced the amount that could be allocated to preventative maintenance, meaning weather events on the network have had a greater impact in some areas.”
The budget for 2021-2024 was $210 million, with $85m for the first year, $65m for the second and $60m for the third. There was an expectation funds unused would roll over into the next year.
However, the chances of any spare change are slim.
“We continue to see ‘compound’ events, such as repeated heavy rain on already saturated ground, combined with tidal surges etc which cause a number of large slips, dropouts, bridge/culvert failures and damage to seawalls.
“These types of events will often impact a large geographic area and involve multiple sites, resulting in longer and more complex reinstatement and recovery phases, higher costs and reduced resilience to future events,” officials wrote.
Events including recent flooding and slips in Wellington, Nelson and Marlborough and the West Coast are still to be added to the bill.
Emergency works are split into two activity classes: local roads and state highways. Funding for state highway emergency works was around the same mark at $211m with forecasts that would be met – although not blown out like the local roads budget.
“The state highway emergency works allocation is currently tracking to be on par with the NLTP provision annually and over the three-year period, noting the impracticality of trying to predict future events and their consequences,” officials noted.
“Due to funding constraints and competing priorities, we are not able to provide the level of funding for proactive resilience improvements that the system ideally requires.” – Waka Kotahi.
Funding pressures within Waka Kotahi aren’t new.
Its first quarter update for 2022 showed the agency’s ability to deliver on its NZ Upgrade Programme and NLTP targets would not all be met.
“Across the 40 significant capital projects, 21 are on track to deliver year-end targets. Of the remaining 19 projects eight are not currently on track but are still expected to meet year-end targets and 11 are not expected to meet year-end targets.”
Officials within the transport ministry said this was to do with inflationary pressures on labour and raw materials.
“The ministry sees a tangible risk that cost and time pressures – in addition to revenue losses – will limit Waka Kotahi’s ability to deliver the full NLTP to the scope and cost outlined.
“The ministry will continue to engage Waka Kotahi on delivery risks and work with the agency on possible trade-offs.”
Covid-19 put substantial pressure on Waka Kotahi’s funding stream with an 11 percent decline in National Land Transport Fund (NLTF) revenue for the first half of the 2022 financial year. The Government has loaned it $2 billion to make up for this.
And it’s not just funding that’s causing slow progress for the agency, with Waka Kotahi having difficulty retaining staff.
“High levels of staff turnover is adversely impacting productivity and momentum,” transport officials told Michael Wood.
The pressures don’t bode well with agency officials noting important work has slipped down the to-do list.
“Due to funding constraints and competing priorities, we are not able to provide the level of funding for proactive resilience improvements that the system ideally requires. For example, in this NLTP we have only been able to fund the business case phases of the most critical resilience risk location.”
Previous work identified a database of 380 risk locations, individually rated as low, medium, high or extreme risks.
Prioritising resilience has cropped up in numerous government policy documents including Treasury’s Living Standards Framework 2021, Ministry of Transport’s Transport Outcomes Framework, the Government Policy Statement on land transport 2021 as well as the developing National Adaptation Plan (NAP).
However, officials noted resilience does not have the “degree of profile” in the current GPS as it did in previous statements
“Consequently, the priority in our Investment Decision Making Framework has reduced, creating funding challenges. We are reviewing the [framework] to ensure it aligns with the new requirements which are anticipated from the upcoming Emissions Reduction Plan and the NAP.”
Keeping on top of resilience projects will continue to be a pain point for the agency and something officials say will be front of mind as its funding system is reviewed
“Longer-term we expect the funding demand from resilience improvements, preventative/targeted maintenance and emergency works to place significant pressure on NLTF allocations, such that it may risk our ability to invest in other strategic priorities across the transport system, including investment targeted at reducing emissions and safety.
“This challenge is a consideration in the current Land Transport Revenue Review, in addition to the challenge to tailor the programmes and manage accepted risk thresholds to available allocations.”