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Based on the revenue forecast underlying the 2018 Government Policy Statement on land transport, we have developed a 10-year view of revenue and expenditure, as shown in the graph below.

Revenue forecast

The revenue forecast is based on fuel excise duty, road user charges and motor vehicle registry fees forecasts made through the Ministry of Transport revenue model, to which revenue from state highway property sales and incomes is added. The forecasts are also adjusted for deductions from the National Land Transport Fund (NLTF) for search and rescue activities, recreational boating safety and safety awareness, maritime services that benefit users of pleasure craft and activities related to the protection of the land transport revenue base and the maintenance of the integrity of the revenue system, including revenue forecasting by the Ministry of Transport.

We have shown the anticipated revenue over the ten years as a band, which indicates the range subject to forecasting risk. A key forecasting assumption set out in the GPS is that regular adjustments to the rates of fuel excise duty and road user charges will be made in line with the rate of change in the Consumer Price Index.

Expenditure forecast

We are required to match the expenditure from the NLTF to the target expenditure set out in the GPS. At the same time we are legally required to manage annual expenditure within the available revenue received in that year.

The 2018–21 National Land Transport Programme has been developed on the basis that sufficient revenue will be made available to achieve the GPS expenditure target. Planning for the subsequent seven years presumes that revenue will continue to be made available to achieve the target.

Short-term expenditure fluctuations

Short duration fluctuations in expenditure of moderate scale, arising from seasonal variability within a year or extraordinary events, such as severe storms and earthquakes, are intended to be managed through use of the short-term borrowing facility approved by Cabinet. This allows for short-term advances to a maximum of $250 million at any one time, which have to be repaid within a reasonable time frame. Over the 10-year period of the GPS, the expectation on the Agency is that it will manage expenditure in a way that its use of the facility will be fiscally neutral at the end of the period.

Significant variations

The GPS sets out minimum and maximum expenditure levels, shown on the graph above. Should revenue vary above or below the range set by these levels, the Minister of Transport may vary the expenditure target.

Within the GPS maximum and minimum expenditure range:

  • should revenue be higher than the expenditure target, Transport Agency plans may be adjusted to scale up expenditure in activity classes in response, and surpluses may be carried forward for spending in future years
  • should revenue be significantly lower than the expenditure target, the Ministry of Transport and the Transport Agency will advise the Minister on the options available to align expenditure and revenue.
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