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Ministers are finalising a new transport strategy that will, for the first time, make climate change the top priority when it comes to deciding how transport funding gets invested.

The plan, which will go out for consultation this year, will dictate where tens of billions of dollars of transport funding will be spent in the next three years and promises a stark pivot towards public transport and away from emissions-intensive investments, like new highways.

Transport Minister Michael Wood has proposed changes to the way $2b of maintenance money is spent each year, which could mean swapping car parks for new bus lanes and cycleways - paid for with the money used to fix potholes, according to a briefing released to the Herald under the Official Information Act.

An overarching goal of the plan will be to reduce the amount of driving and thereby emissions - officials say projects that will increase emissions will not necessarily be axed, but face a “high threshold” to get funding.

The changes may come at a cost. Wood told the Herald, that after being frozen for three years, increases in fuel taxes and road user charges are once again on the table although no decision had been made about whether to increase them yet.

That could mean motorists copping a fairly significant increase in costs over the next year. Not only will the temporary 25 cents a litre cut be rolled back at some stage, but further taxes would be added to that.

The last time the current Government hiked fuel taxes was in 2018, when it increased the tax by 3.5 cents a litre each year for three years.

Wood’s plan is the Government Policy Statement on Land Transport, or GPS. Every three years (usually) a transport minister will draw up a GPS which sets out where they want Waka Kotahi - NZTA to spend the billions of dollars it earns from fuel taxes and road user charges over the next 10 years.

Waka Kotahi uses the GPS as a guide for its National Land Transport Plan which sets out, in detail, where it will spend that money over the next three years. Councils also use the document to set out what projects they might jointly fund with Waka Kotahi.

The sums of money are huge. The last GPS was touted as a $54b investment over 10 years. The NLTP that resulted from is estimated to come to $24.3b (thanks to core Crown and local government funding).

Each GPS has a series of priorities like road safety or maintenance, but this time around, Transport Minister Michael Wood has decided to single out one “overarching focus”: emissions reduction.

This will be followed by five other focus areas: safety, integrated freight, sustainable urban development, maintenance, and resilience.

“What comes out of the events of the past month has been that we have to bring forward even more strongly the focus on climate change and that is both sides of it: Firstly, the need to be building a resilient system that is better placed to manage more extreme weather events of the kind that we’ve experienced recently.

“And the second is the need to increase our efforts to reduce our emissions so that we’re not contributing to that problem and making it worse,” Wood told the Herald.

In fact, the extreme weather events of 2023 have delayed the draft GPS from going out to consultation. The Government did not want to overload councils currently burdened by the disaster response by asking them to consult on the GPS.

“We just need to make sure that we are fully taking into account the magnitude of what we have experienced in the way that we’re shaping up the priorities for the GPS,” Wood said.

“There’s some work underway at the moment to make sure that’s appropriately reflected in the draft document,” he said.

These documents can be hugely controversial. Labour’s first GPS, unveiled in 2018 shifted funding from state highways to local roads causing some highway projects to be scrapped.

The political outcry was so great Labour ended up borrowing money to build the roads anyway.

This GPS looks to be no different. A briefing on priorities for the GPS from October released to the Herald under the Official Information Act shows the Government planning an even greater shift towards emissions reduction by using road maintenance funding to take road space away from private cars and give it to buses and cycleways.

Currently 9 per cent of the entire road network is renewed or maintained each year. This is expected to cost $2b a year by 2024.

Instead of renewing “like for like”, the proposal in Wood’s document suggests “some street space dedicated to private vehicles (including for car parking), needs to be reallocated to deliver more bus lanes, separated bike/scooter lanes, and walking improvements”.

Wood said Waka Kotahi and councils needed to “start planning for these changes now” to make investments to “decarbonise the transport system”.

Wood gave an example of how this might work: “Imagine we’ve got a stretch of road in a fast-growing region, maintenance over the next couple of years.

“But imagine that in that same place, we also know that in the next three to five years there’s going to be really significant urban growth and that the council is planning to improve bus services into that area.

“Well, instead of just going in and doing the maintenance and replacing the road as it is, the approach that we’re outlining is we talk to the council and would say, doesn’t it make sense at the same time as we’re doing that maintenance to put in place capacity for a bus lane?” he said.

Green transport spokeswoman Julie Anne Genter said using maintenance funding to achieve emissions reductions would be “pretty sensible”.

“All this time we should have been able to use maintenance and renewal funds to improve the design of urban streets,” Genter said.

Genter was a co-author of the 2018 GPS, as associate transport minister in that government.

National’s transport spokesman Simeon Brown said Wood wanted to “raid the maintenance budget for our roads to take money from fixing potholes to put in place cycleways which very few New Zealanders use to go to work”.

Brown will effectively turn the election on the GPS by promising to rip it up and start again if National wins.

Another big part of the election debate on the GPS will be how it is paid for.

Labour put up fuel taxes in its first GPS by 3.5 cents a litre a year for three years. It then froze them in its second GPS, which has put massive funding pressure on Waka Kotahi, which has had to grapple with rising construction costs.

Any increase would come on top of the 25 cents a litre that would be added to the cost of fuel if and when the Government rolls back its temporary fuel tax cuts.

These costs exclude GST, which adds 15 per cent to any increase.

In his paper, Wood said there was a “greater level of uncertainty” about funding for transport than in the past.

The paper said “cost increases” across the land transport programme meant that most transport funding “will need to be devoted to maintenance and meeting existing funding commitments”, meaning less money for building new things.

Wood said a decision to continue the freeze or to lift taxes had not been made yet.

“That’s something that we have to carefully consider as part of this process and we haven’t made that decision”.

“We’re very cognisant of cost of living pressures at the moment … at the same time, we do have a challenge to make sure that we fund the system appropriately.

“Ultimately in any system like this, there’s a choice about how much collectively we want to fund the system and the outcomes that we can get from it,” he said.

To criticisms about the cost of living, he said that giving people “more transport choices will give them more of an ability to manage cost-of-living issues”. This could mean public transport and walking and cycling in cities, or taking logging trucks off the road and onto rail in rural areas, easing congestion.

Wood noted that National hiked fuel taxes by 14 cents when it was in office.

Brown could not definitively rule out hiking fuel taxes either, were he to redraw the GPS after the election, however, he said National did not “have any intention at the moment” when it came to putting up taxes.

Other funding sources will also make themselves felt in this GPS. In 2022, the Government created the Climate Emergency Response Fund, which used the billions of dollars generated from the Emissions Trading Scheme to fund emissions reduction policies.

Wood confirmed some of this funding would make its way to the new GPS.

Another tension will be over the number of new roads the GPS allows to be built. This will be the first GPS published since the first Emissions Reduction Plan and the Government’s Infrastructure Strategy.

Both of those documents said New Zealand needed to stop or slow down building infrastructure that encouraged emissions.

A consultation document said there needed to be “high thresholds for investments that do not support emissions reduction objectives”.

This would appear to make it very difficult to build new roads.

“Over time, transport investments and interventions will make it possible for more people to be able to walk, cycle and use public and shared transport, especially in our largest urban areas,” the document said.

This will not mean all investments reduce emissions, “but there will be a high threshold” for any investment that increases emissions”.

Genter said this was essential, and could go further.

“I don’t even know how we could even be investing in projects that don’t reduce emissions at this point.

“Every dollar we spend has to reduce emissions,” she said.

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