$1/litre petrol drives NZs biggest roading programme

A Green Party analysis of Land Transport New Zealand economic evaluations shows that the Government systematically discriminates against public transport projects, including pricing petrol at $1 dollar a litre.

“New roads today are funded on an assumed price of oil of $39/barrel, meaning the Government thinks petrol prices are sitting at $1 per litre,” Green Party Co-Leader Russel Norman says.

“Today, oil is actually selling for $143/barrel and will go higher. Pricing oil at a little over a quarter of actual prices is a far cry from the realities faced by Kiwi motorists.

“But the biased reasoning doesn’t end there. According to LTNZ, public transport users’ time is worth less than drivers’ time. LTNZ say that someone sitting in traffic in a car is worth 66 percent more to the economy than if they are sitting in a train.

“The sad result of this discriminatory reasoning is that many of those same motorists have no alternative to driving - because public transport has been unfairly and incorrectly priced out of the transport equation,” Dr Norman says.

“The Green Party analysis of LTNZ measures shows that the reasoning behind Government decision-making deceptively encourages investment in roads ahead of public transport, cycling, and walking.

“This Labour Government is investing in the largest road-building programme in New Zealand’s history at a time when petrol costs more than it ever has. How they justified that decision is now clear, thanks to our analysis.”

Note: The key document for the governing of transport funding decisions is the Economic Evaluation Manual, published by Land Transport New Zealand in 2007. It includes the following assumptions:

i) Carbon priced at $40/tonne; International prices for carbon are consistently trading above $NZ40/tonne
ii) Most negative external effects of vehicles are not priced, such as the costs of induced traffic with more carbon emissions, accidents and noise, while most positive external effects of public transport are not counted.

iii) Short evaluation time periods of 20 years discourage investment in public transport;
iv) Discount rates are erroneously high by international standards. This prioritizes short term gains over long term sustainability.