1. Targeted investment in roading
June 2019
Peter Carr
Director Regulatory Market Development

2. Outline
Introduction
Issues
Funding system design
Funding options
Tolling
Micro-tolling using eRUC capabilities
Conclusions

3. 81,772 telematic units across 3 countries (March 2018)
EROAD Ltd
To bravely solve complex transportation problems, delivering intuitive solutions that help our customers succeed
World First – EROAD was the first company to implement a national network wide GNSS based eRUC solution (New Zealand – Feb 2010).
81,772 telematic units across 3 countries (March 2018)
59,843 units in New Zealand
c. 40,000 HT vehicles in NZ
c. 20,000 light vehicles in NZ

4. Issue 1: Poor quality roads – but poor enough?
Source: KiwiRAP (2018) Highway Safety Ratings

5. Issue 2: Road freight growth – but could be lumpy?

6. Issue 3: Weak rail options – but improving?
Rail network share: 7.9%
Rail freight task share: <1.0%
Est. revenue/km: $0.02m
Est. net return: -$13.1m
Remaining working life: <5 years

7. System 1: Evolving from beneficiary pays to user pays

8. System 2: Hypothecated funding under permanent authority

9. System 3: Principle-based cost allocation
E.g. As the Ministry of Transport showed for 2015…

10. System 4: One Network, pay-as-you-go approach
Not all roads pay their way
Most roads go years without needing major expenditure
The approach evens things out
Modelled Results for Illustrative Purposes

11. System 5: Value-maximizing investment approach (-ish)

12. Options: alternative funding mechanisms
At present, the principal mechanisms for funding projects out of sequence are:
Crown grants
NLTF loans
Public-private partnerships
Crown or private loans

13. Crown grants Pros: Cons: Free money; someone else’s money
The community gets the thing it needs that it otherwise could not afford and/or earlier
Cons:
High risk of unnecessary or unsustainable assets

14. National Land Transport Fund loan
Pros:
Works through a fiscally neutral transfer in time
The community gets the thing it needs that it otherwise could not afford and/or earlier
Cons:
Needs a big book of work in the district’s forward programme
Requires headroom in the NLTF
Modelled Results for Illustrative Purposes

15. Public-Private Partnerships
Pros:
Converts an upfront capital cost into a spread out operational one
Transfers supply-side cost risks onto the private partner
The community gets the thing it needs that it otherwise could not afford and/or earlier
Cons:
Not actually a financing mechanism
Current model needs big/complex projects to work

16. Public or private loan Pros: Cons:
Lump sum of funding available when needed
The community gets the thing it needs that it otherwise could not afford and/or earlier
Cons:
Needs repayment, which constrains cash-flow in outyears
The borrower needs to represent a good risk to the lender

17. Tolling

18. GNSS-based electronic charging
Micro-tolling is just free flow tolling without the roadside infrastructure
A surcharge is applied to a vehicle that enters, exits or crosses some defined area or boundary relating to a new or substantively improved road
Surcharges can be varied by vehicle class, time of day, or direction of travel
However, every vehicle of interest needs to be connected via an appropriate GNSS (GPS) device

19. Is it lawful?
Road tolling schemes can be established:
Under the Land Transport Management Act 2003, which provides public road controlling authorities with a broad cost recovery power – relating to new* roads – subject to approval from the Minister of Transport
Under the Local Government Act 1974, which allows a council to establish ‘toll gates’ (not a defined term) at bridges, tunnels and ferries, subject to approval by the Minister of Local Government

20. Is it technically feasible?

21. Precision

22. Intelligence

23. Insight

24. Uptake

25. Versatility Power in the data… Technology enables Road users enact
Fleet Management & Optimization
Driver Coaching & Speed management
HOS and HSW Monitoring, Reporting & Assurance
Easy, Accurate and Fair Tax & Charging
Integration & Communication
Real-time Geospatial Oversight, Analytics & Services
Technology enables
Road users enact

26. Conclusions
New possibilities are opening up as technologies mature
Some change is needed at the national level to make these benefits accessible to communities
Communities need to be clear about what they want to be able to do, and whether what is possible is actually what they want
The time for communities to tell central government what they want is now: the NZ Productivity Commission inquiry has opened the door

27. THANK YOU