Fact Sheet: Review of Value for Money in the Land Transport Sector EXG Reviews Information Release

What was the main purpose of the review?#

• Maximising value for money from the National Land Transport Programme (NLTP). including options for minimising unnecessary future cost increases in activity classes and activities funded under it.
• Improving monitoring and reporting of allocation and expenditure from the NLTP.

What were the main findings?#

• Filling the strategic gap: the review found there was a gap between the vision and broad objectives in the New Zealand Transport Strategy and the Land Transport Management Act 2003, and their implementation through the NLTP. As a result, it is difficult to assess whether the NLTP delivers value for money. The government’s substantive objectives should provide guidance for decision-making and, in particular, on how to prioritise funding decisions across the land transport system.
• Ensuring role clarity: the review recommends that the Ministry of Transport, Land Transport New Zealand and Transit New Zealand focus clearly on their respective roles, that is, the Ministry fulfilling its role as the government’s key policy advisor on transport issues and sector leadership, with Land Transport New Zealand and Transit New Zealand focusing on their funding and operational roles.
• Improving performance measures and monitoring: there is scope for increased precision in accountability documents, in performance measures, and in the monitoring and reporting on performance.

What changes will be made as a result? What will be the benefits?#

• The Government has already asked the State Services Commission to undertake a Next Steps review of the Government land transport sector, to report back by 30 April 2007. The Next Steps project will consider the performance, roles and responsibilities of the Ministry of Transport, Land Transport New Zealand and Transit New Zealand, and also of the Treasury with regard to Rail. The interface of certain activities with local authorities may also need to be considered. The project will draw on lessons from the Advisory Group on Roading Costs and the Review of Value for Money in the Land Transport Sector.
• The Review of Value for Money in the Land Transport Sector also recommends a number of initiatives that will achieve greater transparency and monitoring of funding decisions and expenditure. A number of those initiatives are already underway.

In what areas did the review confirm that current practice is appropriate and providing value for money?#

• The transport sector reforms and vision introduced by the New Zealand Transport Strategy (NZTS) in December 2002, and the Land Transport Management Act 2003 (LTMA), have been broadly welcomed by the sector and there is a general commitment to making the new system work.
• The Ministry’s Transport Sector Strategic Directions Document (TSSD), published in December 2005, supports longer term cross-sector collaboration and more informed thinking on cross-sector policy issues.
• The Ministry is actively seeking to grow capacity and to undertake the leadership role envisaged by the transport sector reforms.
• Land Transport New Zealand is working more closely with Approved Organisations to ensure the quality of funding proposals.
• Although the sector faces a potentially serious skill shortage, there is at present a core of committed and qualified personnel.
• There has been an increased focus on passenger transport in recent years, with a corresponding increase in patronage of 63 percent. Contracted and commercial passenger transport services together are expected to move 122 million passengers in 2006/07.
• Increased fuel prices have led to a greater recognition amongst the public of the importance of passenger transport and an increased willingness to use it.
• Regions are able to tailor passenger transport requirements to meet the specific needs of their communities.
• The introduction of ARTA appears to have led to greater co-ordination and co-operation across Auckland local government. This is resulting in more cohesive planning of transport, including that for passenger transport, in the Auckland region.
• Central and local government are developing a greater shared understanding of the nature of the requirements for longer-term development of passenger transport in Auckland, illustrated by the current Auckland Transport Strategic Alignment Project. There is also a greater understanding of the implications of the current legislative environment due to the analysis undertaken for the Ministry’s Public Transport Procurement Legislation Review and Land Transport New Zealand’s Procurement Procedures and Guidelines Review.
• The Road Safety to 2010 strategy established clear goals and objectives for road safety. There is a large body of research and information to support road safety policy development, the key players are committed to a collaborative working environment, and Land Transport New Zealand’s programme preparation tools are being further developed.

What are the next steps?#

• The Ministry of Transport will distribute a public discussion document by August 2007 on options and issues around implementing the New Zealand Transport Strategy. The Implementation of the New Zealand Transport Strategy document will be completed by March 2008.
• Transit New Zealand will release a National State Highway Strategy in April 2007 that will be reviewed in 2008/09 in light of findings in Next Steps and Implementing the New Zealand Transport Strategy.
• The Ministry of Transport will establish a robust monitoring and reporting programme for the 6 year State Highway Construction Plan with an interim report in May 2007 and full implementation achieved by November 2007 with a particular focus on gaining value for money for the Crown’s investment.
• Land Transport New Zealand will commission an independent review of its funding allocation process with terms of reference to be completed in April 2007 and full review completed and implementation underway by March 2008.
• The Ministry of Transport will lead work to define government objectives for Passenger Transport as part of Implementation of the New Zealand Transport Strategy, to be complete in March 2008.
• Subsequent to the initiative above, the Ministry of Transport will include revised output measures for Passenger Transport in Land Transport New Zealand’s Statement of Intent for 2008/09.
• Subsequent to the above two initiatives, Land Transport New Zealand will develop monitoring systems for passenger transport expenditure that ensure funding is aligned to government’s objectives by March 2009.
• The Ministry of Transport will have reported back to the Minister and implemented decisions on options for implementing discount rate and benefit cost ratio changes in the transport sector by August 2008.

• The Ministry of Transport will develop a set of Value for Money Indicators for inclusion in the accountability documents of Transit New Zealand and Land Transport New Zealand by early 2009 for inclusion in the 2009/2010 accountability documents.