An article in last Friday’s NZ Herald provided an interesting insight into where the investigations into additional transport funding options are at. This is the second phase of the project to close the supposed $12 billion funding gap over the next 30 years. The article highlights that effort has been focusing on analysing different forms of road pricing and is perhaps leaning towards a motorway charging scheme:
Evaluating road tolls and fuel-tax rises and traditional funding methods such as rate rises and targeted rates is the job of the group due to report to the council next month.
The Herald understands that the independent alternative transport funding group is leaning towards motorway tolls. It will also provide options for targeted rates and extra rates rises.
On Wednesday, Transport Minister Gerry Brownlee reiterated the Government’s pre-election position that there would be no regional fuel taxes or tolling of existing state highways in Auckland.
Auckland Council cannot introduce motorway tolls or a regional fuel tax without government approval.
I think tolling motorways could have some benefits but it also could have considerable downsides and we’ve outlined some of these before. The main problem with them is the potential for traffic diversion from motorways onto local roads. What also can’t be ignored is that a fairly high proportion of money raised from schemes like these goes into the administration of the system itself, this means it’s a fund-raising system that’s likely to be quite a lot less efficient than fuel taxes and rates. Some of the strongest proponents of motorway tolling has been the NZ Council for Infrastructure Development (NZCID) and I suspect this is two fold,
- their members want to build, maintain and operate any tolling system
- their members want the additional funding that flows from the tolls to help build more infrastructure
One of the key problems with the alternative funding exercise right from the start has been the ignorance of whether we actually need to raise the additional funding for transport. The Integrated Transport Programme, which outlined the full transport programme over the next 30 years, included a huge number of incredibly costly and stupid projects included within its project list:
Knocking out $12 billion from the project list above is a pretty simple exercise – as we highlighted in our detailed analysis of the Congestion Free Network‘s financials. Therefore, based on the Integrated Transport Programme’s list of projects outlined above there is a very valid question about whether any form of additional funding is necessary. In addition even if a funding deficit still exists, if it was considerably smaller it might have allowed for some of the earlier dismissed funding options to be viable once again.
Another major flaw in many tolling proponents arguments that could have a significant impact on what projects get built is that any tolling or road pricing schemes are going to change demand substantially and as such it is likely to reduce or remove the need for many roading projects. Conversely it is likely to shift many PT projects up the priority ladder.
I guess the big question that we will all need to grapple with over the next few months, as the alternative funding group makes a recommendation to the Council, who then decides what they want to include in the draft Long Term Plan, is whether anything has changed since the ITP came out last year. It’s possible that two things have changed, which could mean a greater need for extra transport funding than we had previously expected.
- We know from the agendas for Auckland Transport closed board meetings that a lot of work has been going on to update the Integrated Transport Programme and the list of projects. Hopefully this means a lot of the crazier projects (like $665m on Albany Highway or around $900m on upgrading Great South Road) have been removed or the figures corrected.
- We know from the LTP Mayor’s Proposal that a lower level of rates increase means less money available overall for transport from normal funding sources compared to what’s in the current Long Term Plan. At first glance, it seems like most of the good projects can be funded over the next decade but there’s still no word on how much can be spent on things like walking and cycling, or the timing of various bus lanes and interchanges needed for the new network.
So given we know motorway tolling is an idea with many flaws and that the government isn’t going to approve new funding sources like this anyway, but there might be a need for a bit more money for transport, it seems sensible to be looking at other options. Which, returning to Friday’s Herald article, seems to be what’s happening:
Aucklanders could pay a new charge on top of rates to fund transport projects.
A “targeted rate” is one option being considered by an independent group looking at alternative funding measures to plug a $12 billion-plus transport funding gap over the next 30 years…
…Auckland Council cannot introduce motorway tolls or a regional fuel tax without government approval.
The National-led Government changed the law in 2009. Acting Mayor Penny Hulse said the $2.4 billion city rail link had been included in a new 10-year budget and did not need a targeted rate.
It will certainly be interesting to analyse the details of the transport budget as they emerge in the coming months, to see what can be afforded in the baseline transport programme and whether any additional money is required.
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This approach would assume that transport is the best recipient of extra money. Rather than, you know, something like parks and libraries. Do we know this is the case?
Otherwise seems like a more sensible way of raising extra money while the government continues to keep its head in the sand about road pricing.
I think it’s the opposite. To assume transport is the best use of funds would be to take all the existing rates money away from parks and libraries and the like and spend it on transport instead. A targeted rate for transport at least makes more of the transport funding non competitive with other areas of expenditure.
When you say you can easily knock $12 billion off, how much of that is actually government spending rather than AT spending? It looks like $12236 of the $16937 major projects should be being completely Government / Toll funded (i.e. state highways). Also half the CRL should be government funded. So to save AT $12 billion you have to exclude pretty much every AT roading project (probably not a bad thing) and / or some of the PT projects.
It all comes out in the wash. I doubt most of that is funded from the NLTF, things like a harbour motorway would be ‘magic money’ like the RoNS. Government can spend that magic money wherever it likes, doesn’t have to go on motorways. They could fund the CRL and various arterial roads with it instead and save council having to fund it.
Yes but these targeted rates and motorway tolls are required by AT for their projects – cutting NZTA / RONs funded projects isn’t going to remove the need for a targeted rate!
Does anyone have the list of actual AT spending (removing all government paid projects and government subsidies on council projects)?
It very well could, if the government spends the money in line with Auckland’s strategic plans. It’s a bit rich to say Auckland ratepayers need a targeted rate or motorway tolls to fund the basic infrastructure because all the normal transport budget is being spent on boondoggle projects.
I’m off the view that we should stop treating SH projects completely separately we should be building what’s best for Auckland, not basing decisions on who has the funding
The Greater Wellington Regional Council (GWRC) funds Wellington’s PT through a targeted rate (it is over half their rates income !). The actual targeted rates policies are quite hard to find (don’t look under “Rates“) . . . they are part of the GWRC Long Term Plan. They are described in Section 3.2 (Page 173) of the GWRC 2012-15 LTP Policies Document (900K PDF).
Many cities in the US are funding PT projects with a small sales tax – 3/4 cent in Minneapolis for example.
http://www.twincities.com/politics/ci_25173739/coalition-proposes-minnesota-fuel-and-sales-tax-increase
Half a cent in LA: http://www.metro.net/projects/measurer/
Is that not an option for Auckland?
Regardless the govt would need to allow it and that’s not going to happen. As an side a quick look at Stats NZ suggests about $25b in retail sales in Auckland over the last year so a 1% tax would raise ~$250m a year
Shows once again that Auckland needs the sort of control over finances that those US cities have.
Leaving all transport funding to the central government is just not working. Cities need more flexibility to get stuff done.
I guess in NZ our overwhelmingly rural culture means no-one sees cities as needing that level of control. A pity.
Actually, most cities have little control over state and federal transport funding. That is left with the states. If a city wants to devote their own money to transport they can, but that’s a pittance compared with federal funding. (And some states exercise more control than others, depending on the politics of the area.)
I can’t believe we’re shutting parks and pools and libraries, so we can build more motorways. In 2014.
A top-up rate would be an excellent way for the Mayor and certain councillors to give some pep to their anemic opposition, and find themselves without their positions in two years. People would dislike it, and some people would *hate* it. Someone needs to put a stop to this madness now. It should never have been conceived.
The council doesn’t fund motorways though.
But in my mind they ideally would be doing so. The idea is that council get bulk funding for transport and the city make the decision on how to spend that. The argument that the SH network should be funded separately due to it being a long distance interregional network is weakened by the fact all SH upgrades are too cater for local short distance traffic.
To put it another way: the cost of a new pool facility is about $10m, and the annual cost of operating free pools in the former Manukau City is about $6m, with significant community benefits (health, enjoyment, reduced drowning). This is paid for by a targeted Manukau rate.
For the cost of the St Lukes interchange, we could have built five or six new pools, or extended free entry to the rest of the city for a decade. I can tell you what would make people happier.
Good points George. I think it’s easy to get obsessed about throwing vast sums at “fixing” transport when perhaps it’s not actually that broken in many respects.
George, you’re too right, and I think it’s going to get worse as the budget process rolls along. A rate is a rate is a rate, targeted or otherwise. People won’t be fooled.
Suggest you calm down a lot George, no one has confirmed that council is closing libraries, pools and parks.
Thats rumour mill stuff at this stage, its simply “the Sky is falling” kind of thing.
Every Councillor – left, right or centrist knows thats the real small potato stuff in the scheme of things and doing it really just pisses people off – a lot.
The truth is that the opposition to Browns leadership simply push this “closing stuff down to pay for CRL” mantra endlessly and people like you repeat it as is ad-nauseum as these people want to scare ratepayers so they’ll get voted in next time. Not that they won’t turn around and then spend the same money on their own pet projects, like Penlink.
The truth is the council has a transport wishlist a mile long – it truly has something for everyone – problem is that while it gives a little to each in turn, it requires a lot more back in return also.
A lot of the stuff there is openly acknowledged by all as simply wishlist type stuff without any real reality checks being applied as to whether its needed, and if so, *when* its needed.
And if those checks were applied then the current long term spending plans would actually cover the really important stuff and enable it to get done soonest without all this special rate claptrap.
And you know what – once a lot of this important early stuff is actually built, and completed (like Electification, new Bus Network, CRL etc), then both Council and the Central Government will find the need for a lot of the downstream stuff will simply evaporate, if not for good, then for a decade or more.
I don’t mind spending on transport projects, but lets ensure as ratepayers we get Council to spend the money on those that will provably give Auckland and Aucklanders the best bang for their buck.
And I can tell you right now,any politician who thinks that building Penlink this side of never and ahead of funding for libraries, pools and parks is a temporary politician who will be mincemeat come October 2016.
Quax, Brewer, Wood, Hulse, Brown and their like will ill-serve, and in turn be ill-served by, their constituents, if they think otherwise.
It appears the special rate being proposed for all areas, when only a few areas would be beneficiaries. Would these special transport rates have a higher chance of getting up if applied to the area benefitted – a Penlink rate to the Peninsula, a NW busway rate to the new areas being developed in the north-west, etc. ?