The Transport Agency delivers the 2018–21 National Land Transport Programme (NLTP) by:
These elements of NLTP delivery are commonly interdependent – a change or response in one will impact on the others.
When the NLTP is adopted, each activity class is allocated a funding budget made up of:
Funding provisions vary amongst activity classes. In many cases, the provision is a relatively small part of the activity class budget, which means that the funding available for new investments or cost-scope adjustments is limited. The graph below shows the situation forecast for the 2018–21 NLTP.
Most approvals for new improvement projects occur during the course of the NLTP, drawing down on the national funding provisions in the relevant activity class.
The majority of these projects will have already been included in the NLTP as potential candidates for NLTF investment. When their business cases are sufficiently developed, they can be advanced for funding approval. They are grouped into two funding priority categories, as being either of:
When an application for funding approval is received, it is assessed using the Transport Agency’s Investment Assessment Framework, which is a key means of giving effect to the Government Policy Statement on land transport (GPS). Should the assessment of the business case not support a high enough funding priority, it is unlikely to be approved for NLTF investment.
Cost and scope adjustments to approved activities occur either when the cost of the activity increases above its approved investment level or where the scope of a project changes materially. The Transport Agency is not obliged to approve cost-scope adjustments and requires evidence based justification before it does so.
New activities that are not in the NLTP may be proposed for inclusion during the three year term of the current NLTP. If these have already been included in a Regional Land Transport Plan (RLTP), the addition of higher priority activities usually is straightforward. If it is not in an RLTP, it will be necessary for the relevant regional transport committee to approve its inclusion in the RLTP before it can be added to the NLTP. For more significant cases, public consultation will also be required.
Actual expenditure often varies from the plans that local authorities and the Transport Agency have prepared for the NLTP. Sometimes this is due to economic conditions and competing priorities for an organisation’s funds. It can be caused by market conditions and prices, resulting in activities being delivered at a lower or higher cost than expected. Fluctuations in NLTF revenue can also mean that activities in the NLTP have to be deferred or advanced, depending on whether revenue increases or decreases, and on how much flexibility the Transport Agency has left in its short-term borrowing facility.
Expenditure is monitored closely by the Agency, at NLTP, activity class and approved programme levels. We will respond to underspending in one area by transferring funds to other areas where they can be put to good use, delivering outcomes prioritised by the GPS. This is an important part of achieving value for money from the NLTP as a whole.
We also monitor activity class expenditure against the minimum and maximum limits of GPS funding ranges and respond as required when these are at risk of being breached. This may require measures to reduce or increase expenditure in an activity class, or may require an amendment of the GPS funding range where expenditure cannot be managed to within the range. Controlling the level of investment approvals is one of the measures by which the Agency manages expenditure.
While the Transport Agency aims to maximise the allocation of funds to value-for-money transport investments, it must do so within the terms and conditions that govern use of the short-term borrowing facility from the Crown. Cash-flows have to be managed tightly to avoid breaching the terms of the facility.
Historically, NLTF cash-flows have displayed substantial seasonal variation within a financial year, due to:
In addition, event-related fluctuations may also arise. For example, events such as the Kaikoura earthquake and the Manawatu Gorge slip.
Forecasting is critical to NLTF cash-flow management and the Transport Agency places substantial importance on approved organisation and its own quarterly forecasts.