NZ Road Transport Funding: $1.5bn annual subsidy to road transport - report
October 22nd, 2009
A major report commissioned by the NZ Transport Agency (NZTA) has found the commercial road transport sector is effectively receiving an annual subsidy of $1.5bn to use the state highway network. The report says State Highway network users are paying only 40% of the full costs of providing roading infrastructure. Coastal Shipping and Modal Freight Choice, was commissioned to assess the prospects of coastal shipping increasing its share of the freight market in competition with road and rail.
Based on Treasury’s valuation of the State Highway network at more than $20bn, Rockpoint has calculated if operated on a commercial model as other modes of transport are required to do, the network should be generating approximately $2.5bn in revenue per annum. Instead, it only generates approximately $1bn leaving a shortfall and effective subsidy of $1.5bn per year.
As a result of this shortfall, the report concludes on a purely commercial basis, the assumed revenue receipts from all sources will need to more than double to achieve indicated commercial returns inclusive of a return on capital in respect to State Highways. The report says Govt and Territorial Authorities do not attempt to generate a full economic return on the value of the road network.
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