Last week Finance Minister Steven Joyce gave a speech to Massey University and Auckland Chamber of Commerce about the economy and this year’s budget. There were some notable elements related to transport in it worth highlighting, especially those in relation to demand management.
The demand management part of the speech came after a decent amount of chest puffing and back slapping over all the major transport projects underway in Auckland including motorway projects, local road projects and the CRL.
However as this work comes to fruition over the next five years, Auckland as a city is going to come up against a hard constraint, and that’s one of geography.
There is no getting away from the fact that central Auckland is built on a narrow isthmus which makes it hard to get around – and the available land transport corridors are rapidly being used.
So beyond the current building programme we are going to have to look at demand management to reduce the reliance on the road corridors, in favour of buses, trains and ferries.
That was one of the conclusions of the joint Government/Auckland Council ATAP process last year.
To have this being acknowledged by Joyce is hugely positive given many of the comments he’s delivered over the years about transport issues in Auckland, especially during his time as Transport Minister. Quite how he’ll act on it could be another thing entirely though and so we’ll need to wait to see if as Finance Minister he delivers any money for PT projects.
If in the future we were to look back on what ATAP achieved, getting the government to finally acknowledge that we can’t just rely on more roads in Auckland will surely be near the top of the list.
Another big outcome from ATAP was the general acknowledgement between government and the council on the need for demand management, including the use of road pricing to achieve that. One positive of ATAP was that it assessed the need for road pricing outside the need to raise additional revenue to pay for infrastructure but even so, it found that just in the next decade alone an additional $400 million per year is needed.
The Government is developing a work programme to look at demand management tools including electronic road tolling in the medium to long term.
But to be clear, we see this primarily as a way to make the roading system work better – and not as a revenue raising exercise.
And today, I can confirm the Government’s position is:
First, we would expect that any road pricing initiative on existing motorways and highways would predominantly be a replacement for petrol taxes and road user charges not in addition to them.
We’ve suggested for many years that if introduced, road pricing should initially done so in a revenue neutral manner by replacing existing rates and/or taxes. While some would pay more and some less than they do today, the idea is that overall revenue gathered remains about the same which would help improve acceptance of any road pricing scheme. So in this case too it feels we’re roughly aligned with Joyce. This isn’t to say there still shouldn’t fuel taxes though, we still want to encourage moves to more fuel efficient vehicles after all.
The next part to note relates to his response to Mayor Phil Goff who had been pushing for a regional fuel tax.
And second, I stress that we are not interested in introducing a regional fuel tax. I have reiterated to Mayor Goff this morning that we do not see regional fuel taxes as part of the Government’s mix for transport in Auckland because they are administratively difficult, prone to leakage and cost-spreading, and blur the accountabilities between central and local government.
However we are keen to have a more detailed discussion about demand management tools, and explore further options for longer term funding for new infrastructure, including the use of private finance for certain projects, such as Penlink for example. Mayor Goff and I have agreed to work together on those.
Finally something to disagree on, I honestly can’t see how regional fuel taxes would be administratively difficult. I’m sure fuel companies know how much they sell at each of their stations and how many people are realistically going to drive outside the Auckland to get fuel. With the exception of a few people, most would probably spend more on the fuel to get out of the Auckland region than they’d save on petrol prices. Fuel taxes certainly may be a raising additional revenue in the short term till other solutions are put in place – and remember ATAP suggests we need to raise $400 million extra each and every year on top of what we’re already spending.
This announcement disappointed Mayor Phil Goff who claimed that without a new funding source, rates would need to rise by 16% – although that also includes covering for the special transport levy which we (and the AA) feel should be retained.
The last comment quoted above is concerning though, Penlink has long been proposed as a toll road but the problem with it has always been that tolls would only cover a small fraction of the costs. Waiving the PPP phrase around doesn’t suddenly make it more viable, in fact it is likely less so as PPPs require significant contracting work by agencies and are ultimately just a private loan which ratepaters would be paying back.