Transport Funding Options – My preferences

A few days ago the council asked the question about how we should pay for Auckland’s transport infrastructure as they have estimated that over the next 30 years that their is a $10b-$15b funding gap. Of course one of the big elephants in the room is that the transport shopping list is quite long and contain a huge amount of motorway projects but I don’t want to discuss that. Instead I want to look at what the funding options suggested are and which of them are my preferred options based on my initial understanding of them.

The discussion document was in yesterdays Strategy and Finance Committee meeting, and as a result of the meeting some of them have already been cut from the list so now we have :

• general rates
• targeted rates
• development contributions
• tax increment funding
• regional fuel tax and RUC diesel levy
• tolling new roads
• road pricing on existing roads (This is in two forms, network pricing and congestion/cordon charging)
• additional car parking charges
• visitor tax
• airport departure tax

There is information on each of the options which have been assessed based on the following criteria:

Fairness – That the amount paid by individuals or groups should reflect their ability to pay balanced with the benefit received for the service funded by tax or charge

Administrative Efficiency – the costs of raising the revenue should only be a small percentage of the amount raised. That is it should not cost 50 cents to collect a dollar.

Transparency – those paying should know how much they’re paying and what it is they are paying for.

Neutrality – paying the tax or charge should not cause undesirable changes in behaviour, e.g. congesting suburban streets because charges are payable on motorways.

Capacity – the source of funds should be large enough to provide the revenue needed without causing unacceptable hardship to those paying.

These all seem pretty straight forward, My personally feeling is that the many of the suggestions would be too hard to collect, would meet too much resistance or have too many issues with them i.e. encouraging development where we don’t want it. Here are the options that I like and how they rate with the criteria above (you can read all of them in the funding paper here which is from page 73 onwards)

I think that routes like the East-West motorway link would be perfect for tolling however my only concern is that with a cost of over $1b, tolling won’t make a big enough impact as even with a decent toll it might only be possible to collect half of the money needed.

This probably has the ability to raise the most money out of all of the suggestions made. Using the figures in the section above indicates that even if a network wide charge was implemented for all trips over 10km of say $1 per trip on working days and with collections costs of about 30c per $1 then would raise about $1m per day and just under $250m per year. $2 per day shouldn’t impact on peoples finances too much so would probably get a lot less resistance than many of the other suggestions made.

I don’t know how many commercial car parks there are across the city but lets assume 200,000 and lets assume they are only charged on working days. A small $1 charge per car park would work result in about $32m per year generated. I think the council would definitely need to remove minimum car park ratios though to allow property owners to develop the site as a way of avoiding the charge.

I think we have to be really careful how much we charge tourists but once again a low cost of say $1 per guest night is unlikely to break the bank would bring in about $6m per year. Perhaps the money could be ring fenced for improvements to airport access (i.e. airport rail)

Again another one that we have to be careful about as we don’t want to put tourists off but seeing as departure tax is quite low by regional standards we could look at bumping that up a little. An increase of $5 per departure would bring in an extra $16m per year (again perhaps it needs to be ring fenced for airport transport improvements)

All up with these suggestions we get about $300m per year which over a 30 year term would equate to about $9b. Not enough to fund everything but we should at least be able to cross our most important projects off the list, it is also worth adding that the only one that would need government agreement on is the network charges one. If only we could decide what were the most important projects are and focus on those rather than just continuing with a massive shopping list we should be fine.

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