Inside the Independent Advisory Body

This is a guest post from Donna Wynd who was part of the Independent Advisory Body tasked with looking into how to raise funding for transport in Auckland.

Myself and a range of others representing organisations from across the Auckland region have been working on a way to find the funds for Auckland’s so-called transport funding gap – in the order of $12 billion over 30 years (about $300 million per annum) – for close to two years now. The organisations represented included my organization, Child Poverty Action Group (representing the region’s ‘poor’, whatever that means), the AA (in the first phase), the business community (in various guises), tangata whenua, unions, and transport nerds Campaign for Better Transport, Cycle Action Auckland and Walk Auckland. I was the only woman on the group (a major blooper) and there was no Pacific representation which was also an oversight. While I held my ground reasonably well (I think), I cannot possibly claim to represent or speak for all the region’s women and low-income households.

Initially called the Consensus Building Group, we changed our title in the second phase that commenced in April this year to ‘Independent Advisory Body’. This was because we felt that when we got to the nuts and bolts of the funding decisions, it was unlikely that we would agree, much less arrive at a consensus.

Before getting to the group’s considerations, it is important to note that we were specifically precluded by our terms of reference from examining the merits or otherwise of the transport projects in the Auckland Plan that the Council is seeking to fund. Given the significant ideological differences within the group, this was probably a good thing. Also important is that the underlying driver of our future congestion is population growth. Two-thirds of that growth is internal (births and internal migration) and one-third is external migration. While we have some control over external migration, there is little we can do about the other two-thirds.

The final report of the group has recommended three possible ways forward for Auckland. The first is the low-cost ‘basic’ option. The other two were a package of either rates and fuel excise duty increases, or a motorway user charge. Unsurprisingly (for the readers of this blog, at least) the projects that would be dropped under the basic option are mostly public transport projects and arterial upgrades.

The decision to put forward the two funding mechanisms outlined in the report was made after a great deal of research into other options, including a cordon charge such as that operating in London. The point was not to maximize revenue, but to find a way to plug the $300 million per annum gap. Under the models used, both options generate the same revenue.

With respect to the rates and fuel tax pathway, it was considered that an additional general rate based on the value of the property was fairer than an annual general charge. Given the general distribution of the benefits of the additional investment in the transport network, it was also felt there was little justification for a geographically targeted rate. Under this option, businesses would pay less but be the major beneficiaries of the investment.

The motorway user charge option includes the option of a flat charge or a variable charge depending on when people travelled. Although our mandate did not include considering demand management, there is little doubt that building in a demand management component through variable pricing would provide the option to implement this at a later stage if desired.

So how much of an improvement to the performance of the network can Aucklanders expect for the additional $300 million per year? Not much, as it transpires. What the additional investment does is arrest the rate of deterioration in the performance of the network. The motorway user charge provides better performance as the charge will change people’s behaviour – there is no reason a rates increase will change anyone’s driving habits.

The graph below shows the percentage of time spent in severe congestion on the Strategic Freight Network (basically the motorway network) at the AM peak. Under all the options drivers are spending more time in traffic by 2036. ‘Flat Rate’ here refers to a flat rate motorway charge and ‘Peak Demand’ refers to the variable charge.

The flip side to this is passenger transport. We would expect to see PT use increase if a motorway user charge was introduced if it provided a cheaper, viable alternative (see graph below). The main reason PT boardings are lower under the low-cost option is that some PT projects will simply not go ahead. One of the key findings is that PT investment and investment in alternative modes such as the regional cycling network need to be brought forward to ensure that these alternatives are available. As a matter of equity, this is an absolute necessity; as a matter of politics none of this will work if the Auckland public does not see significant upgrades to the PT system.

My concern with much of this is that transport is about access and mobility for all, while most of the focus of the group’s work was on peak traffic congestion. Motorways do not improve travel options for much of the population whereas better PT does.

Back to the revenue: while the two options generate the same revenue, the incidence of the additional charges on households and individuals is very different. The average cost per household is about the same for both options. The key difference is the incidence on vulnerable (ie low-income, approx. $25,000 per year income) households. Strangely, the rates and fuel tax package affects a greater proportion of vulnerable households (12% as opposed to 7%). Equity considerations were given a great deal of deliberation throughout the process, and several options were rejected on equity grounds.

The single biggest problem in trying to think of a way around the uneven impact of the motorway user charge is linking an income with a number plate. While the research used by the group focused on household income, there are plenty of singles for whom this is an inappropriate measure. Given the existing complexity and fragmentation of New Zealand’s system of social assistance, there is no easy solution to this. Indeed some families interviewed as part of the background research commented that they would have to move out of Auckland if a motorway user charge was introduced given their current income.

At this point it seems fair to ask (as the group couldn’t) exactly what Aucklanders will be funding with their increased rates/petrol tax/motorway tolls? The central rail link is in, although the focus remains on roading. Aucklanders have been very clear that they want improved PT and cycling facilities and unfortunately some projects including rail to the airport are not within the ‘basic funding envelope’. With the Long Term Plan and its associated transport plan coming up for public consultation, this is the chance for Aucklanders to scrutinize where their money is going, and tell the Council what they would like it spent on if they are to be whacked with additional costs. And this is the chance to get in and plug the congestion-free network as an alternative model. It costs less and in these tough times that must make it an attractive option.

Lastly, I’d like to take the opportunity to thank all those who participated in the CBG and IAB. I think that for the most part members made a genuine effort to come up with a result most of us could agree on, and that would be of benefit to the region as a whole. This involved many of us putting aside our ideological differences, and I’d like to commend my fellow group members for managing that. I’d also like to thank the Council staff who provided technical and other support, and Peter Winder’s team for their assistance and hard work. Whether or not you agree with our conclusions is up to you, and I would encourage anyone who is interested to make your views known through the LTP process.

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