LGNZ encouraged by commitment to explore other funding avenues

22 February 2006

In the context of the shortfall in roading funding, announced by Transit today, Local Government New Zealand is heartened by the comments last week of Finance Minister, Michael Cullen, to explore new avenues to fund looming road transport infrastructure issues.

The realisation of a likely funding shortfall of at least $600 million triggered by rising construction costs has led those agencies involved in transport funding to examine further sources for financing roads.

“The Government’s decision to examine value for money in transport funding in light of rapid increases in the cost of materials and contracting for building and maintaining roads and infrastructure is timely. Prompt decisions need to be made now to ensure the necessary funds are available to finance existing and future projects,” says Local Government New Zealand’s Transport Spokesperson, Mayor Graeme Weld.

“Current discussions have been focused on issues surrounding road pricing, debt, and the funding of key infrastructure and these issues should not be forgotten. There is significant diversion of fuel excise tax and road user charges into the consolidated fund to capture the social costs of roading and transport, in particular, the cost of road accidents and law enforcement.”

The extent of the diversion of monies into the consolidated fund was a focus of public discussion in the lead up to last year’s elections. The decision on the extent of diversion into the Fund for road use is always at a balance between economic and political decision-making.

“We are urging the Government to examine this issue in finding the necessary solutions to support the roading network. Given it is unlikely there will be immediate financial top-ups to finance the shortfall, we commend the Government on its desire to investigate other funding options,” said Mayor Weld.

ENDS

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