Two media articles this week made us even more concerned about the state of roads in New Zealand and Waka Kotahi NZ Transport Agency’s intentions for them.

Firstly, we read that Covid-19 has blown a $350 million hole in the transport fund, creating fears that infrastructure projects might be cut.

And somewhat bizarrely, it was reported that Waka Kotahi might be taking over nearly all New Zealand’s vital road building bitumen supply because it believes suppliers are overcharging. This had us envisioning a return to the Ministry of Works, from whence much of the comedy around the inefficiency of the public service originates.

With less people on the roads due to the various Covid-19 lockdowns and restrictions, the National Land Transport Fund (NLTF) isn’t as healthy as it should be. That fund pays for the roads and Treasury has predicted Waka Kotahi’s revenue from it will be down $350 million, so something will have to give. While freight movements have carried on as normal, paying along the way, personal travel has decreased significantly, and with it the dollars earned from fuel taxes.

The problem is, roads are already significantly run down and we need new roads – infrastructure building is supposed to be one of the ways to boost the economy post Covid-19.

Given that 93 percent of freight moves via road in New Zealand, and we are predicted to have supply chain issues for some time to come making road freight even more essential, it is getting increasingly difficult to see why the Government insists on taking road money for rail.

This shortfall doesn’t include the cost of the Government’s three month reduction of petrol tax and road user charges to compensate for the rapid rise in the cost of living. That’s another $350 million to be met by the Covid-19 fund.

If Waka Kotahi has to borrow to meet basic costs, the piper comes calling at some point and we know that no new work will be started under these financial constraints.

Roads are the lifeblood of the New Zealand economy. We are export driven and have to be able to get goods to market – much of it coming from some distance from the ports of departure to the rest of the world.

While we appreciate that bitumen is a “strategic commodity” for road building, we had to check the date on the news that Waka Kotahi might take over its supply – but it wasn’t 1 April and apparently, no joke.

Two things have happened to precipitate this news – bitumen has been entirely imported since Marsden Point refinery stopped producing it last year; and Z Energy – the main supplier of bitumen in New Zealand – has indicated it will stop importing it from July 2023, because the Government plans to take over procurement.

Unlike Z Energy, the Government does not have any experience, and possibly little expertise, in the purchasing, storage, supply and storage of bitumen, which is not an easy product.

This is where it gets a bit murky and media have been unable to get Waka Kotahi to confirm what is going on. In a 55 page Official Information Act release of reports to Radio New Zealand, Waka Kotahi blanked out 50 of the pages, mostly on the grounds of commercial sensitivity.

Given the timeline and the importance of bitumen to the road network, it’s time for some openness and transparency. We need a clear plan for the road ahead from the Government regarding maintenance of roads, new builds planned, and what on earth it is planning for the bitumen supply.

It is hard to see how Waka Kotahi’s negotiating skills in a global market impacted by the war in Ukraine and other geopolitical factors will be superior to in international supplier such as Z Energy with full understanding of the market it operates in every day.

It’s also concerning to consider what the cost might be of adding still more public servants to Wellington’s bureaucracy to take over this supply chain.

– Nick Leggett, CEO, Ia Ara Aotearoa Transporting New Zealand

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