How to fund transport in Auckland is quickly shaping up as a major issue over the next few months, and potentially even during the election later this year. The issue has flared up following a war of words over the weekend between Finance Minister Steven Joyce and Mayor Phil Goff. During the flare up, both were busy talking past each other and in this case, both were kind of correct, but it doesn’t mean it’s helping things.
It started on Saturday on TV3’s The Nation, where Steven Joyce was interviewed about the upcoming budget. As well as kind of confirming that funding for the City Rail Link would be in the budget – a not unexpected announcement given developments last year, Joyce took a swipe at the council and how much they’re spending (full transcript here)
Let’s talk about Auckland. They’ve got a shortfall of $4 billion for doing the minimum they require in transport infrastructure over the next decade. How do you think that city should pay for that?
As an Aucklander, I think the government and Auckland Council should prioritise transport investment. We’re certainly doing it, because we’re spending more than we have before and a greater proportion of our share. Unfortunately, at the moment anyway, the way the budget is set up for Auckland Council, they’re looking at actually reducing their expenditure on transport over the next few years. And I think it’s important that Aucklanders have that discussion, because you’ve got central government, which includes taxpayers everywhere else over the country putting more money in, and looks like, on the face of it, a bit of a lower contribution by Auckland Council. So it’s really important that Auckland Council — and I’m talking about all the councillors, not just the mayor — look really closely at that transport spend and ask themselves, ‘Is that a big enough part of their budget?’
Goff shot back noting that we’re already spending more on transport.
“With all due respect, I think the minister is mistaken,” Mr Goff replied on Sunday.
“Auckland Council has increased its expenditure on transport by about 50 percent over the last few years, since it was amalgamated.”
Mr Goff is aiming to keep rates increases at or below 2.5 percent – well below recent hikes and the 16 percent figure he says would be needed to fund the city’s growing transport infrastructure.
As I said both are kind of correct. Effectively, Joyce is talking about the figures in the Council’s Long Term Plan – which sees funding decrease after the Interim Transport Levy expires in mid-2018 – while Goff is talking about what has happened with spending, which has seen council increase spending on transport since amalgamation. Funding is of course a perennial issue that will always be debated but it prompted a few thoughts.
- The council need to make it easier to understand their spending. It’s surprisingly difficult to work out just how much money the council has spent on transport in the past and what they plan to in the future. This is especially the case for finding out just how much is from rates vs other funding sources. some of the information is of course in detailed financial reports buried within 100+ page documents but very few people would bother to read and understand those. Given so much discussion seems to focus on the level of rates, it seems the council could do a lot better job at making this information accessible and explaining what the net spending that is coming from rates.
- Should we have a dedicated transport rate? Given how much discussion there is in the general public about transport, perhaps it would provide better visibility for the council to just have a separate rate for it. At the moment, all council rates go into a big pot which then gets distributed up amongst the various areas the council spend money on. The council will say what percentage they’re spending on each area but as with above, it’s not clear what the total amounts are. It can also be very hard to tell just what any rate increases are covering. For example, if a rate increase was 2.5%, are all areas of council spending increasing proportionally? Again, without wading through dense documents it can be hard to tell. Having all council transport funding come from a dedicated rate might make it easier for the public to understand. Ultimately it would also make it easier to replace that funding stream with something else, such as regional fuel taxes or road pricing.
- Goff seems too wedded to removing the Interim Transport Levy. Goff has said before he wants the Interim Transport Levy to expire and to be replaced with a regional fuel tax and has the 16% increase in rates he refers to relates to replacing the levy with general rates funding. As mentioned, this will be a big part what Joyce is referring to in his comments. The reality is, we’re already paying the transport levy so removing it is for all intents and purposes a rate cut at a time we need to be ramping up investment. It seems crazy to remove it only then have to introduce a new funding source to make up for it. Keeping the levy in place for longer, even if blaming the government for it, would surely go some way to putting the funding ball back in the government’s court.
- Keeping the Interim Transport Levy doesn’t solve the problem alone. While keeping the levy would help, it is only a small part of the puzzle. It raises only about $60 million per year whereas ATAP suggests the funding shortfall over the first decade alone is $4 billion. That still leaves a sizeable chunk of funding that needs to come from somewhere. By focusing on this issue for the council, it feels like Joyce is just trying to kick the can down the road for the government having to do its part.
- The government should be funding more strategic projects. We’ve talked before about how the government should be taking a larger responsibility for the big strategic PT projects and so not tied to council funding, just like they do with the strategic road projects (the motorways).
I don’t think it’s realistic to expect a perfect relationship between Joyce and what he’s saying in public could be quite different to what he says behind closed doors. But, it certainly seems the council could be doing a better job of ensuring there are fewer opportunities for Joyce to attack them. At the same time, transport issues are becoming an increasingly hot topic as the road network has a meltdown every few days. At what point does their fighting with the council over funding start to affect the upcoming elections?
Lastly it’s interesting to see we’re not alone in thinking about the election implications, such as this excellent piece from Newsroom’s Tim Muphy is also about the issue.