Some rather concerning news has hit the headlines over the past day or two, about how Auckland Council is having to cover transport subsidies that NZTA would normally pay for – on the basis that NZTA will ‘pay the money back’ at some point in the next few years. This is elaborated further in this article:
The council will contribute $100 million extra to transport projects over the next two years as the NZ Transport Agency does not have the funds to cover it.
In return, the Transport Agency will increase its subsidy for Auckland projects in the 2013/14 and 2014/15 financial years.
Auckland Transport was approached about the loan mid-year and the council shortly after.
In a statement issued today, the council said it was “frontloading its share of funding to maintain momentum on key transport projects in Auckland”.
I first highlighted NZTA’s significant struggle to ‘pay their bills’ quite a number of months ago – based on NZTA board papers that I had acquired under the Official Information Act. This is what the NZTA was saying in July about their cashflow issues: Somewhat disturbingly, it also seems that some accounting errors by the Ministry of Transport may have also contributed to NZTA’s financial position becoming so bad in recent times (from this July Board Paper): Ultimately though, the reason NZTA are having financial problems is quite simple: people are driving less. If people drive less than expected, they buy less petrol than expected (or use less road-user charges), and therefore pay less petrol tax and road user charge. This means less money available for NZTA to spend on their projects. Delaying an increase to the fuel tax levy earlier this year most probably just added to these problems.
Reducing transport revenue will, I suspect, become a huge problem over the next few years for our transport plans – ultimately until we can transition towards some other form of transport funding mechanisms. As vehicles become more fuel efficient we’ll obviously need to shift more to a vehicle-distance based system, but if we continue to drive less then that won’t help either. (Fortunately, if we’re driving less then we shouldn’t need to expand our road network – although that logic seems beyond our government.)
I just hope NZTA is able to repay the money in the next few years. It’s not like Auckland Council really has hundreds of millions of dollars it can just give away.