Getting it right for transport's sake

February 2003

28 February is the last day for submissions on the Land Transport Management Bill, the key enabling legislation for the government's transport strategy aspirations.

While there is much to applaud in the bill, first introduced last December, changes will be needed if the bill is to solve transport problems and encourage increased funding from the private sector.

Once the submissions are in, it is critical that all sectors and parties abandon their traditional stances and work together to get this bill right: the stakes are too high to fail.

We are all interested parties, as the bill will affect every New Zealander. It has been introduced against a background of insufficient funds for transport needs, ailing and failing roading infrastructure, congested traffic arteries, roading vs. rail tensions, inflexible funding systems and, of course, loud local, regional and national political clamour for change.

Land transport impacts the delivery of goods throughout New Zealand and to our international ports, and the advantages of creating the best possible transport infrastructure are obvious.

Every dollar saved by businesses through efficiency gains will ultimately benefit the economy. Businesses and commuters alike will benefit from being able to travel more quickly and safely.

The introduction of broad, innovative enabling legislation is a key first step in addressing New Zealand's land transport problems and, as such, the bill stands as one of the more significant legislative developments of recent times.

However, if the bill is to deliver what the government wants - and the country needs - there is some work to do.

However, the greatest area of concern lies in the bill's ability to encourage private sector investment in transport projects through public private partnerships.

At present, the bill contains too many risks and too great a level of uncertainty to attract private sector interest.

In particular, the project process described in the Bill seems to follow a political model with little acknowledgement of the practical stages and risks of major transport projects.

Contractors and financiers are accustomed to managing risk through competitive tender and contract management; but few will be willing to invest if projects can be changed or stopped well into the project process, and without clearly defined criteria for cancellation or variation on the table at the start.

Thought should be given to discretion being applied on a 'staged' basis, with criteria defined at the outset, and the risk of political interference restricted to the early stages of a project.

An even playing field is another essential element if PPP is to succeed. At present, the bill imposes different thresholds on public project and public-private projects, a situation likely to greatly limit private sector participation.

As it stands, the bill prohibits any compensation for below-forecast traffic/usage figures. Legislating for one area of commercial risk in this way is a significant and potentially price-escalating impediment, and it would be better to avoid such inflexibility at the outset.

Outside the public private partnership provisions, the bill lacks integration with the aims of the recently released New Zealand Land Transport Strategy. The strategy committed the government to a forward-looking, collaborative, accountable and evidence-based approach to transport.

The bill only partially delivers on the strategy's aims. Consultation is mandatory for public sector agencies, while the bill does little to bring the private sector in as a true partner in consultation and decision making on projects.

The strategy also promises lower compliance costs through flexible implementation of government policy; the bill's introduction of prescriptive and detailed rules for local authority ownership combined with highly discretionary hurdles for approval of PPP projects and tolling schemes work against this promise.

Lastly, the bill contains a number of requirements for consultation and thresholds that are currently undefined or unaligned with existing legislation or policy, such as a requirement that a scheme will "ensure environmental sustainability".

The good news is that none of these issues is insurmountable. We need an open and positive approach from all involved. It is also essential that we look to the future and ignore the political and partisan. Indeed, it is with these principles in mind that Bell Gully has released a comprehensive issues paper on the Land Transport Management Bill.

With just a little bit of work and a great deal of partnership, this bill could easily become the powerhouse for change that was originally envisaged.