One of the key discussions with the Long Term Plan (LTP) is around whether we should implement motorway tolling or increase Rates/Fuel taxes to pay all of the transport projects on the council’s plans.
As a quick recap for any new readers, the council has come up with two transport plans for the next 30 years. The Basic Transport Network is effectively the base case and is what the council say they can fund based on their level of rates. In the basic network most of the money goes to keeping roads maintained or PT running and that doesn’t leave much money for capital development – although thankfully the CRL is included in that. The Auckland Plan Transport Network is essentially the “everything plus the kitchen sink” option and would require additional funding to be able to build it. For the additional funding piece an independent advisory group looked at various options and ended up two of them:
One of the key issues I have with the debate is that it’s being presented as an all or nothing decision that needs to be made right now. I would like to see a debate about whether we need the full future Auckland Plan network or if we as a city would rather further cut some projects and divert the cash that’s freed up to help cover what’s left. However even if that happens we’re likely to need that is likely to leave us needing some form of alternative funding.
In this post I’m not going to debate the options for raising additional funding but I do want to highlight some more of the details in this post from Jarrett Walker we mentioned on Sunday titled whether you should vote for a transit tax. Now our funding discussion isn’t just about transit however many of the points seem fairly valid.
In his role as a consultant Jarrett says he’s been asked many times on whether there should be a new transit tax. From that he’s noticed some fairly predictable patterns in arguments which he has used create some points that need to be kept in our mind.
- In growing urban areas, transit needs grow faster than tax revenues.
- As transit demand grows, you sometimes need a major project.
- Not all rail projects are about improving transit.
- Who is for and against? (But don’t overreact!)
- But the transit agency looks so wasteful …
- But the managers have such big salaries!
- Will transit reduce congestion?
- If you’re still confused, vote yes.
Though-out all his points Jarrett makes a number of great points. I’m just going to cover a few of them so head over to Human Transit for all of them.
1. In growing urban areas, transit needs grow faster than tax revenues.
This problem is mathematically inevitable.
As cities grow, and especially as they grow denser, the need for transit generally rises faster than population, at least in the range of densities that is common in North America. This is completely obvious if you think about it, and I stepped through it in more detail in Chapter 10 of Human Transit. In brief: Suppose a particular square mile of the city doubles in population. Transit demand would double because there are twice as many people for whom transit is competing. But independently of that, if density is higher, each person is likely to find transit more useful, because (a) density creates more disincentives to driving and car ownership while (b) density makes it easier for transit agencies to provide abundant and useful service. Those two separate impacts of density on transit, multiplied together, mean that transit demand is rising faster than population. Again, go to my book for a more extended and thorough argument.
Auckland is growing quickly and a lot of demand for that growth is in or around the city centre where there are some of the best PT options available to people
2. As transit demand grows, you sometimes need a major project.
As transit demand grows in a growing city, it hits crisis points where the current infrastructure is no longer adequate to serve the number of people who want to travel. Several major subway projects now in development are the result of transit’s overwhelming success using buses
…
These big projects require huge lumps of money. So as transit demand grows, its revenue needs don’t just grow faster, they grow in a lumpier way, with big chunks of money needed at once.
I think in many ways this is the point where Auckland is getting to in its current stage of development. We’ve slowly been working through the lower hanging fruit with projects like integrated ticketing, electrification (plus the other upgrades prior to that), the new network etc. Once those are done in the next few years there will be little we can do to see significant change until we can build the City Rail Link.
8. If you’re still confused, vote yes.
Why? Because most people do the opposite. They vote no if they don’t understand, which is why it’s hard to get anything done. If you vote yes, you’re no more likely to be wrong than the no-voter is, and in a world where government often can’t seem to do anything, you’re voting for doing something. That sends an important signal in itself.
As a transit advocate, I’ve voted no on a couple of transit measures in my time, always with great regret as well as frustration. But usually, even if the plan contained something I object to, I’ve voted yes. Even a project that achieves its outcomes inefficiently usually achieves something. Even a project that’s solely designed to trigger condos for the very rich will at least get more rich people into the inner city, where they will then start caring about transit and supporting the kinds of transit a rich and vibrant city really needs. And while the failure of a ballot measure may be because of public objections to how the money was to be spent, lazy journalists and elected officials often treats it as a no to transit itself, so it often takes years to get another measure going.
So if you’re still confused, it comes down to this:
All the other confused people are voting no. So vote yes.
I’ll have some more detailed analysis on just what’s in the LTP and our position on it in a later post.
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Matt, is there no way to make them look at the CFN as an alternative?
Agreed yes.Plus immediate maximising of existng arterial road corridors for bus and.protected cycle or at least space for Copenhagen cycle lanes. This might.mean spending $200 to $300m on new bus fleet for full control but worth it so the fleet can be fully maximised and cohesive. Then upgrade both corridors to high spec the smartest way.
I’d love to see some analysis to see if there is still a funding shortfall if for Question 2a we choose Congestion Free Network + Auckland Regional Cycle Network instead of option 1 or 2.
I actually think there should be a third option for the yes vote, and thats both Option 1 and 2.
Reasoning?
Firstly: over time fuel taxes won’t cut the mustard and fuel taxes and neither that or rates hikes won’t deliver the behavioural change needed, but they offer short term ways to kick start the process (and while fuel prices are low its easier to add more taxes like a fuel tax to it than any other time), and unless you pick option 1 rates are going up anyway under the Yes vote as its fuel tax and rates hike.
Secondly, The tolling option is needed longer term, but it will take time to implement and ramp up (no pun intended), and so I say put in the mechanism to toll the ramps and then use it sparingly to start with to nudge people – you may find a small nudge can have a dramatic effect. Then if the nudge doesn’t work keep pushing it until it does.
I also wonder if the tolling of on ramps is the right way to go – would it better/easier/cheaper to toll the off ramps instead?
Or: do both and halve the toll for each ramp meter you pass – so the on ramp toll is $1, the off ramp toll is $1 – go from A to B, pay $2, except it works at both ends. And also captures journey information ala HOP that can be used for traffic analysis down the track.
One of the reasons for doing on and off ramp tolling is that people who come from out of Auckland and who exit in Auckland still cause congestion on local roads if they exit at peak times, so they should pay. Under on ramp proposals they do not. Hence off ramp tolling suggestion.
But those who then do the reverse and go out of Auckland in peak traffic/peak times, also cause congestion on local roads as they go to the on ramp, so should pay as well.
By tolling both ends and halving the toll, you capture a lot more people, a lot more predicatably.
And in all cases those who travel through the motorway to points outside Auckland and who never leave the motorway pay nothing as they do now as thats using a State Highway which remains toll free (for now – until the AWHC is built anyway).
And both these options need Government legislation to pass, So might as well have an omnibus bill change that lets council implement one or t’other than a narrow one aimed at just fuel taxes say.
That way Auckland and other councils only need to go to the Wellington “law change” well once. And if the pollies ar eneverous put a sunset clause on each or the whole bill so it goes away unless extended or ammended in 5 or 10 years.
So my vote is for it, and for both options (and both phased in and out separately over time).
And then maybe Auckland Council and Transport can take a leaf from the LRT proposal, think outside the box a bit and maybe implement the best mix of options 1 and 2 to deliver the results needed.
There’s an additional point to Jarrett’s observation that Transit investment is ‘lumpy’. Those lumps are capital investments, like building the CRL, and these are one-offs. They are still running trains through tunnels built in the 1840s in London, so long ago that this country barely existed. The amortised cost of that RoW must be near invisible over such a period. Additionally with a project like the CRL that substantially lifts the utility and reach of an existing system the impact on ongoing operating costs can be profound.
So what’s missing from the debate about the capital cost of the CRL is how it will have a significant and positive effect on operating costs of the whole Rapid Transit Network and indeed the city in general. It will do this by attracting millions more fare paying users every year, lowering the subsidy per journey and per user profoundly, while also improving the economic power of the Network. Especially by increasing the current decongestion benefits that the growth in Transit uptake achieves and by fueling the strong economic growth in urban centres.
The current policy seems happy to increase operating subsidies out of a panicky refusal to invest in capital works. Is this the best use of our taxes? A subsidy once paid is gone, investment in high quality permanent and efficient systems are there for future generations and, when careful selected and executed, can lower subsidy and increase economic efficiency year after year.
Agreed sustainability and long term use for future generations, welfare of communities, environmental benefits, all are professional engineering ethics and should have a major bearing on things. Rail cannot be beaten, proven solution, busways proven solution, separated cycle paths proven long term solution. Invest in the best and make the.most of what resources we have, that is being sustainable and smart, what engineering is all about. Transport is so important to our liveability, and we should not be putting burdens on future generations. All transport should be on the proven solutions, not the failed ones.
And equally to give a NZ context – the Auckland Harbour Bridge, any CAPEX has long been amortised away and thats only 56 years since it was built and a fair chunk of it was paid by tolls until 1984 or so.
No one argues now if we should have built it – the only argument is why did we penny pinch so much when we did leaving out PT and walking on it and not make it so much better from day 1.
And fixing that lack of vision and investment will eventually cost over $5M in todays money to rectify and will result in tolls going back on the bridge.
CRL and other PT investments are failing into the same trap – too expensive to build they say, so cut it back, or stage it to save costs, but only fund it to build stage 1 – same effect.
We don’t see the other side of the ledger presented accurately and for like for like comparison.
So for OPEX, yes the bus operating model is one that has collectively cost the Auckland Ratepayer more than the CRL will ever cost in the “subsidies” handed out to private operators over the last 20+ years. Moneys thats wasted “paying rent” and nothing else, we have nothing to show for it, we don’t own or control the buses that ply the streets and we have had up to now no way to control what routes they provide or see their actual costs to know if the subsidies (“OPEX”) they claim are warranted.
And compared to whatever one off paltry sum we got when we were forced to privatise Yellow Bus Company (about $285m in 2005 dollars according to Stagecoach’s website when they sold it to Infratil/NZ Bus for $NZ305m, booking $20m gain) – selling it was a bum deal from the get go.
That Stagecoach sale to Nz Bus/Infratil incidentally included the right for NZ Bus to continue to use the Stagecoach name and livery until 2010 – so its not been “decades” since Stagecoach livery was seen around town as NZ Bus’ Zane Fulljames insists – and is why we see some old Stagecoach liveried dungers from time to time lurking in the corners.
So, the question really is, like every wannabe home owner faces – do we (As in Auckland Ratepayers) “rent” infrastructure like transit forever or do we “buy” – and thus gain the longer term ownership benefits.
I know a lot of Aucklanders want to own their own home, even if they can’t afford it right now, they know that owning offers them superior benefits renting doesn’t provide.
Auckland Council needs to be the same with their key infrastructure – own it not rent it (which is what the bus OPEX subsidy model is) and its rent with no end in sight and a landlord who ups the rent every year without fail.
In that light the AT proposal for LRT is likely at least no worse than the current bus model where we pay and pay and never stop, and it could end up – if structure is right, that we “rent to own” via a PPP, which would give us the benefits of having it sooner, with the long term benefits of owning.
And when you look it like that why is this not being openly discussed as part of the whole debate?
Good points Greg. In terms of buses and light rail we should just buy. When we open up gates fully mode share will skyrocket up , maybe fully up to CBD share of 31% or at least 50% of that in no time. Public transport should be owned by the public, privatisation is a failed experiment. I want real costs and real income, plus control and expertise in house to optimize both.modes plus have 20% put aside for fleet upgrades.
CBD Transit modeshare is already at 50% in am peak. Aim is to now leverage off that efficiency for more times and parts of the wider city. Through routing Rapid Transit is essentially in this. CRL.
Sorry I meant 31% bus only, I think that was the figure I’ve seen before but stand to be corrected. Absolutely take the 50% or more for transit right out there not just CBD. Just think we can do so much with an instant Class B , using a proportion of buses on the full CFN plan then do the CFN Class A grade separation and keep improving corridor as we go, so constant improvement and initially the whole city benefits and faster mode share change.
If Great North Rd/St Luke’s is an example of the AT Class B? I think it needs full bus lanes if there is one lane available left for car/truck and there are a lot of arterials that fit that criteria with zero widening, and probably more if parking zoned out even with protected two way cycling taking up 3.8m or so.
Stephen there is a physical limit to the number of buses the city can accommodate, and a lower one it can accommodate well [and cars too of course]. Luckily this is understood by AT; hence CRL and Light Rail projects.
Agreed rail maximised first and foremost and light rail on the overly congested routes. It is the remainder , even if just your 2030 plan and a full lane to class b, apply 30-40% buses on rotation would work miracles if still at least one lane for car focussing on maximising rail like the 2030 plan. Then carry on with.Class A plans. I’m just frustrated as believe both this and the frequent bus network is way overdue and costing our city.mega bucks and ruining.liveability and not making use of rail. Pakuranga, Howick, Botany and feeds to Manukau prime examples with 4 or more current lanes and not one bus lane symbol at $2 each. Same could be said for safe cycling, meanwhile surplus asphalt going down out west with no bus symbols either. With both transit and cycle being primary is this good for the city, current and future generations. Isn’t it time for the transport heads to change tack at maximum velocity in terms of their ethics.
Surely if the route warrants a class a rapid busway it warrants an immediate class b bus lane with $2 bus symbols and signal tweaks. Mode share will change fast we need to break free.
I raised it previously but think a property rates on carparks is quick, easy and one person counts them tells rates clerk, job done. It doesn’t affect regional journeys or trucks, doesn’t need government approval, and promotes sustainable modes of transport. It could start quite low and see impacts, obviously too high would fix congestion overnight but not in the interests of the public. Someone else suggested may also be related to the land value of the carpark, maybe that is factored in. But either way wouldn’t do it until our bus fleet at free flow. Then you could use it slowely to further reduce congestion. Looking at the real funding gap with proven solutions, then maybe a staged min increase over time to cover shortfall and promote other modes.
Except you tell the council if you drop the #, you don’t tell the council if you increase the #.
and the council anyway mandates the number you have to have.
Win for council.
I think that affordability for ratepayers is also a big consideration. That 3.5% is actually 5.6% for residential Auckland, and upping 3.5 to 4.5 means hitting families with a rates increase of 7.2%. This is on top of massive increases of around 40-50% in recent years, so rates are becoming a huge expense for many.
Is there any way public transport investment can become more affordable for Auckland?
For example, accepting that the CRL attracts so many more fare-paying passengers, and assuming central government funds 50% of the capex, is it possible that building it won’t require a rates increase at all? It almost sounds like it could be self-funding and so should not lead to a rates increase. If it’s marginal then perhaps even an increase in fare recovery from passengers would be enough to balance the books?
By the way, is central government really going to fund 50% or is it just a loan, or don’t we know for sure?
The alternatives are that you will pay more than that per household to achieve the same thing – meaning you’ll actually pay a higher overall amount of money than the council increase in rates will be.
Average rates in Auckland are around $2500 PA, rising that by 5% would add $125 to your annual rates – about $2.50 per week.
While thats a lot of money, in the overall cost of owning (or renting) a house its not going to break the bank, lots of other things cost way more than that a year.
I know my mums place in Christchurch pays way more rates for way less services, so we’re not “out of line” by any stretch.
To give that some perspective that weekly increase is just over 1 of the proposed motorway toll fees of $2. Most people will spend that a day, not a week, so will pay at least 5 times $2 on “tolls” versus what $2.50 – $3.00 weekly on rates hikes?
The other option council has (which is being consulted on as part of the LTP process) is to hike the “Uniform Annual General” Charge which is the fixed portion of rates that all property owners pay before user pays stuff kicks in.
This is limited by law to no more than about 30 something % of rates, in Auckland the UAG is well under 30% and council could hike to over $700 per year without any problems, they haven’t done that but they could.
The problem that either option has is those that are asset rich but cash poor (like the elderly) cannot easily wear that cost if they are on fixed incomes like Superannuation, which only go up by the CPI rate.
But for those people there is Rates Relief offered by Central Government, it is capped at around $650 per annum, and is means tested – which means if you have other income than just Super you won’t get much of a rebate.
And it is a bit of a long winded route to claim it back.
As for Gov’t “funding” half of CRL, the expectation given by all major parties(inc. National) is that it will “pay its half share” not loan the money to AC and expect it to be paid off.
The argument that is not known for sure is if that 50% will be 50% of whats left to do at the time of the payment, or 50% of the total budgeted cost – so if AC did the whole lot itself, it would still get half its money back from Govt.
The Govt is ambiguous on this point, and I think for a reason.
By the way – Key said the other day when commenting over the rating reform proposal that no Councils in NZ are outside the Govt current rules on spending limits – including AC, so no matter what stories of rack and ruin you hear, AC is still within the spending rules.
And the elephant in the room for AT (and AC) spending is not CRL or Transit projects its roads – new ones and maintaining the existing ones. Even with Government giving 50% of the maintenance for local roads, the other half comes from rates, thats where the lions share of AT’s spending goes. Not CRL or train sets or LRT or other “luxuries”.
So the best way to make transit cheaper is to make it more popular – the more people the use it, the less subsidisation it needs – and the less AT needs to spend on fixing up or building roads.
And thats what AC is doing.
Borrow for major capital projects… that way the cost goes to the people who benefit i.e. the *future* population of Auckland. Also, that way, the cost is incurred at the time that the benefits are realised, making it easier to pay (i.e. it’s easier to pay when the projects have already made us all “wealthier” via reduced economic drag from congestion).
Exactly, but use a realistic discount rate in assessing long life projects like urban rail tunnels. Long amortisiation.
Public works are borrowed for, at low rates and the interest is not incurred until the facility is open, for the reason you outline.
The real problem is all the money being wasted on dubious state highways in Auckland and around NZ. Take the money from Puhoi-Warkworth, Northern Corridor etc. and redirect to actually needed projects and there wouldn’t be a funding gap.
But thats controlled by central government not local government and they have a policy of investing big time in roads.
Even if NZTA stopped funding those projects tomorrow, there is no guarantee they would spend the money any more wisely than they do now, because they are politically directed to spend where the government wants it spent.
It would probably fund a bunch of even lower BCR RoNS elsewhere.
But one thing is certain, if NZTA stopped with the holiday highway all is not lost, AT wouldn’t have to allocate funds to keep the old “SH1” route open as they are required by law to do, while the HH is tolled.
(providing a free alternative route is a requirement for tolling roads) – so once the HH is tolled, the old SH1 is now AT’s problem to maintain, so it becomes a burden in more ways than one.
It hardly seems fair that when central government builds a toll rd, that it mandates that the free road must stay open but then doesn’t continue to maintain it 100%.
A lot of things don’t seem fair like investing in all this pavement the last 60 years and if it was a balanced approach with long term public transport like rail maximised from the start we would be spending a lot less now, and our carbon footprint lower, and more choice for everyone. So basically we are all paying.more because our experts ignored paid advice to do that in the 1950s, but now still going even with car km traveled flat lining. what will happen when we do open up PT and cycling 100% and there is choice, and not herded into a car lane like sheep.So what does current demand say MOT/NZTA and councils? Isn’t that rapid PT transport and separated cycle? Overdue time to do a 180 degree and say stuffed up spending your.money NZ!!
Where’s ‘Move the port, use the proceeds from the land sales and developments to build stuff’ box?
Surveys all show Auckland wants a waterfront owned by the public and that didn’t have buildings all over it between the people and the sea?
Well can’t sell off the port land to developers and expect them to not develop with 8+ storey appartments right on the waterfront.
So how will doing that help long term develop Aucklands waterfront?
It might balance some books short term but make us all the poorer in every other way.
Don’t ever sell waterfront or other valuable public land; lease it on long timescales. The near term value is identical and it eventually reverts, fully upgraded, to we the people. Also we retain better control over its development. Britomart and Wynyard have been developed like this, 120/150 year leases, IIRC.
+1. Removing the port does seem a bit of a oo brainer, particularly if it’s done as part of a coherent plan to upgrade rail links to Wangarei/Tauranga.
Get rid of a load of road freight, push some viable jobs to “the regions”, give Auckland a waterfront park and a heap more of the housing it so desperately needs. There is the matter of the income it generates for Auckland but some kind of joint venture with the alternative ports, as well as the money to be made from prime real estate development should still see it come out ahead.
A lot of cities have successfully moved ports from downtown CBD areas quite successfully. Helsinki for example. Why not Auckland?
We cannot move the port so far from its customers. Few industrial sites in Auckland have rail access which means double handling most cargos. Cities that have successfully moved their port to new location choose sites at the edge of the city, not a 2-3 hour drive
Attempting to locate international ports close to their customers is an exercise in futility when what we need are efficient delivery networks.
After all if we consider the humble motorcar, the components for this are likely to have originated from all over the globe before being put together and shipped to New Zealand; any “double handling” here could be considered a rounding error in the scheme of things.
I’d agree though that we need to better consider the infrastructure required for the delivery of goods within Auckland and the location of the businesses which sell them. What for example is logic of car yards on the Great North Road or within the inner suburbs? We have a motorway network and we do ( by some miracle) have a rail freight network. It doesn’t seem unreasonable to think we might have a “car yard quadrant”, connected by rail for deliveries; and motorway for the customers.
Putting aside the fact that the port occupies prime real estate, it is hemmed in by New Zealand’s largest city and the people who live there. Given freight volumes and ship sizes are heading in only one direction, It seems unsustainable for it to remain where it is and the move is a case of when, not if.
Why all the focus on funding only comes from tax?
Why can’t we do TOD with private developers?
For example we could grant priority development rights near railway stations and transport hub, in exchange for funding contribution to build/improve those infrastructure.
Funding shouldn’t be a problem that only Auckland Council attempts to address. Funding should be a central Government concern as well, since they are the ones that control how much money goes into each transport activity class. It simply isn’t good enough for Government to just say “no” to every suggestion. Nikki Kaye and the Government need to step up. ACT has a policy of road user charges, but so far they have been mute in their support of the tolling option. Why did they bother getting elected if they aren’t going to attempt to implement their policies?
My personal view is that the funding streams we have now are sufficient, but they aren’t being utilised in an efficient way. For instance, the Government has missed the opportunity to increase fuel excise while fuel prices are low. Instead they are locked in to a relatively small 3c increase in July of this year. Also if the Government was concerned about a strategy for climate change (and I believe they should be since the US and China are), then I would have thought an excise tax component ring-fenced for projects that aren’t reliant on fossil fuels is the way to go. I emailed Simon Bridges about this three weeks ago but am yet to receive a response. In the meantime our Government is looking increasingly out of step with other countries such as the US and China, who are taking positive steps to reduce carbon output. Far from being “fast followers”, we are looking like lazy laggards.
As far as rates go, my own rates have increased significantly but they are still a relatively small expense for a family of five. Auckland is moving to a consistent rating system where houses of the same value pay the same in rates and I think that that is also a fair principle.
Great sense from Cam, as ever. Doesn’t the government have a Climate Change policy of ‘fast following? As from the wisdom of this, who are we following and how fast exactly?
Isn’t Cam’s suggestion to take this opportunity of lower oil prices to institute a Pigovian Carbon tax a win/win? The tax itself will encourage more careful fossil fuel use and it will fund improvements to the cleaner options that our cities so desperately need.
“who are we following and how fast exactly?”
Based on evidence to date, Australia.
Excellent ideas. Also good if climate change considerations disadvantaged options that had high emissions and as you suggested earlier.longer term options like rail look at overall benefit cost period over a longer timeframe as they are permanent fixes and operating costs are lower for future generations.
All good points. There is way too much focus on the rates take for a typical household (yes, there always will be war widow in a huge mansion to run a sob story about). I guess since it comes as a discrete bill, rather than through invisible extraction, it will be more obvious that central government taxes which probably equate to more than ten times the amount for a typical household.
I’d like to see a third option that caps rates increases at inflation and a prioritisation of council projects. Can’t work out why such an option wouldn’t be part of a long-term funding debate.
Maybe we’ll get that option under the next mayor?
Rather than making attractive sounding suggestions like that with no substance can you point me in the direction of any work done on what council funding and outputs would actually look like under that scenario?
It’s easy to say ‘we should spend less money’. But when it’s only confronted with what they actually might mean that people can make an informed choice of whether than is something they want.
That’s my point conan, there hasn’t been any work done by council to produce an option of what this might mean.
Thus ratepayers can’t make an informed choice about what funding/services combination they want,
That’s not really an option unless you also cap the population of Auckland. Money needs to be spent or we’re in for grid lock and no services.
What about Councils getting a share of the GST bill on new builds. Developers, builders… are always moaning about governments charges and taxes when building houses. Others complain about the cost of infrastructure that migrants and other newcomers generate…..
Well GST is the largest bill that goes to the State, what if some of that went to the regional council to supply local infrastructure that the new build generates?
On a $500,000 new house GST is about $75,000! If central government shared that around a bit more then there wouldn’t be a problem.
Yup. But snowballs chance; gov ain’t letting a penny go to Councils. Note this is how they often fund Transit capex in the US, State-wide or City-wide sales tax increments. LA Light Rail for example.
And then the GST given to local council would be labelled as “Development contributions” and so the next step is for ACT and its mates to then require that the actual council development contributions be reduced accordingly based on the GST portion given to the local council. So the net effect for council is the same $ for the same value of development, Government gets less money and developers get a similarly reduced development contribution bill.
Not exactly a win all round really.
And don’t forget the developer gets to claw back all their GST inputs from the GST payment. Its only the mug who buys the house who pays to full amount, so while “developers” complain about their “$75K GST bill” – its not actually theirs as its paid 100% by the purchaser they just pass along the difference from the amount they charged the purchaser and their input costs.
Based on the moaning about endless costs and ticket clipping that developers do, that actual GST payment they make to IRD for their share of the $75K should quite a bit less than the $75K they charged the purchaser.
Greg you probably would get rid of ‘development contributions’ but this ‘construction GST’ tax would capture far more revenue so it would genuinely help regions provide needed infrastructure as Patrick details above. The highest DC I have read is about $40K but most are a lot less. Also a lot of renovations, extensions… do not incur a DC fee at all. The DC system we have currently doesn’t really work IMHO. It is basically a war between planners and developers regarding extracting the most income from the poor mugs who build houses. At least the construction GST tax would be a transparent and predictable charge.
Can’t see Bill English signing off on that idea any time soon. Be easier to sell all of the state houses in one go than get them to swallow that idea.
And one big argument will be which “Local council” (TLA) gets the money – is the GST refunded to the TLA based on the location of the property, or on the locations where the services it needs are located/coming from?
When its a development in say Grey Lynn easy to decide, when it out in the wops of Rodney with Northpower providing the power and gas to it, and who know for the water supply?
Yeah gets complicated working that out.
Im not convinced we have a funding shortfall. The $12 billion figure is bandied around all the time with no serious scrutiny of whether the projects behind that sum are all needed,
– delay CRL
– remove large roading projects (AMETI, EAST WEST etc)
And then Im not sure we’d have a problem.
The consultation is very shonky. We should be asked “are you prepared to pay an extra 1% rates in order to construct the CRL” and other similar questions rather than not even reflecting the cost of the CRL in the budget!
A peak hour access fee on car parks within the motorway ring would be the most painless way of imposing a charge similar to motorway tolling, and it would not require negotiation with NZTA. It would capture more the the CBD-bound traffic than motorway tolling, because it would capture traffic on arterial roads. The area within the motorway ring would cover about one third of employment, and generally the best paying positions. There are fewer alternatives for cross-town travel, and it probably causes less congestion than CBD-bound traffic. It could work something like this:
– enter an automated carpark between 7 am and 10 am and park for more than 2 hours, a peak hour access fee of perhaps $3 or $5 would be added to the car park charge
– open car parks could be overflown by aerial photography (eg drone) several times a year and a fee paid by the car park owner based on the number of cars that have been added between 7 am and 10 am
– non-automated car parks could provide other auditable data
Such a system would send the following messages
– all-day “early-bird” parking is discouraged, particularly because it imposes morning peak congestion
– the CBD is open for business for short-term parking
– the car park owner isn’t liable for fees for days the car park isn’t used (eg Melbourne has a long-stay parking charge paid by the car park owner and unrelated to useage)
It upsets me that basic network budget for walking & cycling is only $5M (cf: $10M currently). It seems that walking & cycling champions are being used in a political game to have us vote for the bigger budget (which includes massive roading projects that make walking & cycling unsafe & unpleasant).
There is noting wrong with the current level or method of funding.
Auckland Council collects $1.4B in rates, and with income from other sources gets a total of $2.9B annually.
There is no justification for the proposed rates rise, given current inflation is about 0%.
The council needs to get it’s spending under control, just some examples:
-staff salaries (1780 Auckland Council staff earning over $100k. Total operating funding, payments to staff & suppliers = $2.1B )
-number of staff (council employed 500 more staff at 30/06/14 than in the previous 12 months)
-computer systems (“NewCore” programme is $100M over budget and 1 year late)
-non core council business (state house sculpture on Queens Wharf)
-projects with lousy CBR (Penlink)
I agree, Give the Council more money and they will spend it on fringe activities, not on PT or rubbish collection
I disagree.
There is nothing wrong with the idea of local government (probably in NZ at the regional/supercity level) getting a greater proportion of the taxation pie and being responsible for delivering more public services -such as urban transport systems. This is the norm in many, many places overseas and works better than what we do here in NZ.
Lets have a ‘cut the crap’ moment and acknowledge that the reason this doesn’t happen is that central government politicians do not want to give freedom to urban areas to make these decisions for themselves. That it is in the DNA of the National party to oppose/disrupt/circumvent the creation of transit orientated communities because they think those communities will not vote for them. While Labour likes transit orientated communities it also likes big statist institutions so genuine bottom-up devolution is not in their DNA either.
We need to zone all parking off arterial roads only, and maximise existing paved widths, layout changed for key bus routes and separated cycling via re-roadmarking. Every cent then goes into both networks, apart from City Rail Link over next 3 years. If deemed best use for bus network two lanes and barrier space on all motorways given to bus no questions. Buy buses at $300m for the full 1000 but we may need less if now into free flow. Order 500 now at $150m.
I was just thinking $1 toll, and the rates option.
Seriously, the Toll option would be ~$800 for me, and the Rates + Petrol option would be ~$80
It looks like they are going “motorway users pay all” or “all road users pay all”
I’m inclined to go “Motorway users pay more”, and “Road users pay some” because the theory is supposed to be you reduce congestion and benefit all road users, but particularly motorway users.
Allow $200k for legal costs against transport industry based on North Shore Busway verification of bus effectiveness in own lane and Copenhagen 41% cycle mode share. Negligence based on one sided car projection models and inappropriate past spending on not using a non biased transport solution approach to solve our issues. No rate increase!!!!!
The answer is easy. Just replace rates (paid by 30% of Aucklanders) with a council tax (paid by 100% of Aucklanders) – Boom – problem solved.
Hahahahahahahahaha, a pole tax, the unworkable thing even Thatcher couldn’t force through, Phil you are a dreamer. Dreaming of ever more ways to have the poor subsidise your lifestyle….
No Patrick, I am suggesting a council tax -like they have in the UK – where every household pays its fair share of local Govt costs. Why should the 30% of Aucklanders who own property subsidise people who rent even though they have million dollar share portfolios?
I am not dreaming of ways to have the poor subsidise my lifestyle. My lifestyle is subsidised by the people like you that think oil is always going to be $100/bbl 🙂
David B has a point – I’d be very happy to replace rates with local sales tax.
Why are the 70% who don’t own property being subsidised by the alleged 30% who do?
If they rent (residential or commercial tenants), they are paying rates indirectly through their rent (to the landlord they rent off,who then pays council).
Commercial tenants usually pay the rates on the property as part of the outgoings of the place and is apportioned based on amount of the building they lease.
If landlords are not including the rates in the rents and outgoings, then *they* are subsidising their tenants, not Auckland ratepayers.
This discussion has been had many times before Phil and you saying it isn’t so is not going to change the facts.
Right, and petrol station owners subsidise petrol tax for motorists who don’t own their own petrol station, and supermarkets subsidise GST for anyone buying groceries.
Phil is insane if he thinks I’m paying my tenants rates out of my own pocket. Perhaps he has heard of this thing called ‘rent’ that landlords charge renters. This ‘rent’ is a special fee paid in exchange for for use of the home. Turns out landlords don’t just give it all away!
“…a council tax -like they have in the UK – where every household pays …”
Changing to such a tax does not change the number of households ergo no change to AC’s income. Boom? The sound of your argument collapsing .
Precisely. Phil doesn’t understand how rates work.
Auckland council sets its operating budget then divides that across all the households in Auckland. Currently the share you pay is made up partly of a fixed charge per dwelling and partly based on the value of the dwelling. Butthat only affects your share relative to others.
Whether those households pay as a rate or as a, er, slightly different rate, doesn’t change the budget, the amount recovered or for the most part how much people pay.
Cross-subsidies are also a feature of the current rating system though, aren’t they? I think the US system of local sales taxes is probably the fairest, on the basis that those who spend the most (and therefore contribute the most) have the most disposable income and are probably also be the wealthiest.
Eric Crampton says Local Government NZ’s funding report deserves better than John Key’s dismissal.
http://www.interest.co.nz/opinion/73913/eric-crampton-says-local-government-nzs-funding-report-deserves-better-john-keys-dismi
Does the proposed tolling system (is it the Orewa/Puhoe one) support the option of tolling single occupant vehicles?
No it wouldn’t, the charge would be per license plate with no way for the system to tell who was inside at the time. However any per-vehicle cost will tend to discourage single occupant use to some degree.