The Transport Funding Farce (and how to fix it)

It’s comparatively very easy to come up with plans and strategies when it comes to transport planning. While reading through ARC transport committee agendas has to rank up there with watching grass grow and paint dry as one of the more boring things that one can possibly do, it is becoming obvious (to me at least) that the strategies are heading in the right direction in terms of promoting a greater focus on public transport and, hopefully, eventually reducing our auto-dependency. One can see this in the Auckland Transport Plan too, a lot of good thinking has gone into documents like that and there really is something of a ‘vision’ for how things a few decades down the track might be. You wouldn’t expect this kind of sentence in the forward of the Auckland Transport Plan if the powers to be weren’t at least somewhat serious about improving our public transport system:

Aside from this long-term strategic view, highlights of the ATP include electrification of the rail network, completion of the Western Ring Route, integrated fares and an integrated ticket, AMETI – the Auckland Manukau Eastern Transport Initiative, new and improved ferry infrastructure, and walking and cycling initiatives.

However, there’s a great old saying: “talk is cheap”. I don’t think any other phrase can summarise the current attitude towards public transport in Auckland better than that. Read through the draft Regional Land Transport Strategy or the Auckland Transport Plan in any level of detail and you’d be convinced that we’re totally “onto it” regarding the significant challenges facing transportation policy over the next decade or so: like peak oil and the need to reduce our transport sector CO2 emissions to combat climate change. Yet this doesn’t actually tell us the story of what’s going on. It’s not until you hit the figures of what funds will be spent where that you actually get the real picture of how transport policy in Auckland works. The table below outlines the real situation quite clearly:

Assuming that road maintenance and public transport services are basically running costs that can’t be avoided, if we start looking at real capital spending it is obvious how “cheap” all that talk about revolutionising Auckland’s transport system actually is. Taking “Rail Infrastructure” and “Public Transport Infrastructure” combined as capital expenditure on public transport, and “New and Improved State Highways” and “New and Improved Local Roads” combined as capital expenditure on roads, we see the following outcome in transport funding for Auckland over the next 10 years:

So for all ARTA’s talk about prioritising public transport spending, and the ARC’s fancy rhetoric about quantum shifts in in the future of Auckland’s transport, we instead see the following two outcomes:

1. In all time periods, at least two-thirds of transport money for Auckland is being spent on roads.
2. The situation actually gets worse over time, with $13 being spent on new roads for every dollar spent on new public transport infrastructure in the 2015-2019 time period.

I have hassled ARTA mercilessly on this issue in a previous post, and deservedly so for the mismatch between the rhetoric and the reality of what’s in their Auckland Transport Plan, but I think there’s a bigger question to ask here. Why do we have such a mismatch between the pro-public transport talk in all the plans and strategies, but continue to have an extremely strong bias in the funding of roading projects over public transport?

This really is the fundamental question for those who have an interest in transport in Auckland. In the end, everything comes down to where the money goes – as obviously nothing can ever get built without adequate funding. So why is it that, despite all the talk to the contrary, the vast majority of funding still gets shovelled into roading projects? For a start, I think probably the most significant factor in that outcome is the fact that it is central government and not local government that holds most of the purse strings when it comes to what transport projects do and don’t go ahead. So while local government (in the form of the ARC and ARTA usually) are empowered to come up with all the plans and strategies in the world, they actually don’t have much ability to cobble together the necessary funding to actually implement their plans and strategies. Most of the ARC’s spending on public transport gets sucked into the black hole of subsidising bus companies, while local councils seem to struggle to find enough money to repave footpaths, and aren’t really responsible for most public transport projects (aside from bus lanes) anyway.

The most effective way of gathering money to fund the transport system is from petrol taxes (including road-user charges and vehicle registration fees). These taxes currently raise about $2.75 billion a year across the whole country. Money for transport funding also comes from regional and local council rates, while general government funds are also allocated to the railway network via KiwiRail. I have no problem with the variety of sources for transport funds – with a mix of user-pays, local funding and general government funding being probably a quite sound way to provide necessary funds. I also don’t really have a problem with the amount of funding that is allocated to transport from this variety of sources. Of course it’d be nice if there was more money available, but then nobody ever wants to pay higher taxes so it’s easier to look at how that money is spent, rather than looking for ways to increase that amount. Which brings us to the issue of how that ‘pot’ of transport funding is allocated, which is outlined in the diagram below:

To make sense out of the above diagram, basically the story is that different transport projects are funded differently. State highways are fully funded by NZTA (petrol taxes), while public transport is a mix, rail is directly funded by treasury for below track stuff but a mixture of other sources for above track stuff. Local roads are a mix of NZTA funding and local council funding, and there are other roads that are fully funded by local councils. All in all, it’s a mess! Furthermore, it’s the primary reason for the mismatch between the “talk” in the strategies and plan, and the “walk” that we see in the amount of funds allocated.

To grossly simplify, generally it is NZTA who hold the purse-strings as they administer the money that is raised from petrol taxes. If they don’t provide the subsidy sought by local governments for public transport projects or local roading projects – then they will simply not go ahead typically. Yet it is ARTA and the ARC who are doing all the planning, saying what is required in the next few years or the next few decades. As another spanner in the works, any new railway lines are to be directly funded by the government, which may sound good in principle but what it basically means is that if we were trying to find the $1.5 billion for the CBD rail tunnel (for example) the use of that money wouldn’t be competing against something like the Waterview Connection, but instead competing against being spent on the health system, or on tax cuts. I can’t see it winning that battle.

The current situation makes it relatively easy for state highway projects to be funded – as petrol taxes are a pretty safe funding source (unless prices skyrocket and everyone stops driving), but damn hard for anything else to be funded. In recent years local councils have struggled enormously to find the necessary money for local road improvements, and NZTA have spent far less than expected on these projects because of this, not because the projects weren’t actually necessary or worthy. Similarly, we see NZTA looking at developing somewhat bizarre public transport projects like extending the Northern Busway to Orewa, simply because it’s the only public transport project they are able to plan and fund themselves. Not because it’s anywhere near the most necessary public transport project in Auckland.

The solution is obvious – one pool of funding for transport projects of all kinds. Everyone keeps contributing to the funding pool at current levels (which will be much easier from a local perspective once we end up with the Super-City) but all transport projects are able to compete against each other for funding from that pool – regardless of whether they’re a state highway, a local road, a new railway line or a bus lane. ARTA (and its successor) and NZTA jointly administer the funding pool, in a way that gives strongest effect to the strategies of the 30 year Regional Land Transport Strategy and the 10 year Auckland Transport Plan. The CBD rail tunnel is able to compete against the Waterview Connection to decide which project is most worthy of that $1.5 billion.

It’s simple. It would be effective, fair and it would end the discrepancy between the rhetoric of our plans and strategies, and what happens in reality when it comes to spending money on transport. If we are ever going to actually “fix” transport in Auckland, this approach is essential in my opinion.

Share this