The cost of living has been getting a lot of focus lately as inflation rears its ugly head. One of the areas getting a lot of attention has been skyrocketing fuel prices, surging to all-time highs of around $3 per litre, and they’re only likely to get worse as a madman continues to launch actual rockets as part of a horrific invasion.
To put petrol prices further into perspective, this is from MBIE’s longer term data – which is only till September 2021. Even accounting for inflation it appears that prices now are even higher than they were in the 70’s and 80’s.
There’s little we can do about how much it costs to import fuel but in order to help ease the pain there have once again been calls from National to scrap 10c per litre Auckland’s Regional Fuel Tax (RFT). National have been calling for this since it was introduced in 2018.
The RFT certainly isn’t perfect, it’s a fairly blunt and somewhat regressive tool, especially as people on lower income households are more likely to have longer journeys and with fewer viable alternatives to cars than those living in inner areas. One benefit of the RFT over other forms of raising revenue is it does help provide a little incentive to avoid it by not driving.
All up the RFT is designed to collect about $1.5 billion over a 10-year period, however, the impact of it is a lot larger than this. The way transport funding in New Zealand works is that Waka Kotahi co-fund high priority transport projects that a Council has money for. As a general rule of thumb, they will provide 50% of the costs but in some cases they may provide more. If the Council doesn’t have the money, then the Waka Kotahi money ends up going to another region or on projects that don’t need Council funding (like motorways).
Similarly, the Regional Fuel Tax also makes it possible to do projects that also justify being funded through Development Contributions. Ultimately, this means the $1.5 billion of Regional Fuel Tax actually allows Auckland Transport’s investment programme to be nearly $4.3 billion, much bigger than it would otherwise be able to afford.
These projects aren’t just nice to haves either. The RFT is funding some regionally significant projects, such as the Eastern Busway which just so happens to be in National leader Chris Luxon’s electorate. A high-level summary of the areas the RFT is contributing to is below – from the consultation last year.
If the RFT was to be removed it would likely mean one of three things:
- The council would have to make up the funding another way. The most likely way would be via a general rates increase which in the past the council have said would see rates by around 10% on top of the normal rates rises. Such a large rates increase would usually be political suicide for the Council but in this case the Council could quite clearly put the blame the government and say that they’ve been forced into the rates increase.
- The government might look to cover the lost funding themselves. In its most simplest form, they could just cover the $150 million annually from general taxes. This would be relatively easy to do and would ensure the current funding from the NZTA remains unaffected. The downside to this is the optics from the rest of the country which might be perceived as just ‘ploughing more money into Auckland’ at the expense of the regions.
- The Council and government would need to renegotiate plans like the Auckland Transport Alignment Project. This could see projects cancelled, delayed or reduced in scope in order to fit within a new funding envelope. For Aucklanders who already worry about not enough progress being made, this will only make it worse.
The same issues apply not just to the RFT but also the wider fuel tax take which contributes transport funding around the country via the National Land Transport Fund. As it is that fund is over-subscribed and many projects go unfunded. There’s also the issue that global supply chain challenges mean the cost of delivering projects has increased significantly, further putting pressure on the fund.
The bigger issue here is just how dependant on petrol we have made our transport system. For decades we focused on only building one element of our transport system, more roads for cars, with almost no investment in alternatives until more recently. Our non-driving modes have around 60 years of no development to catch up on. That catch up hasn’t always been smooth either, such as ATs delivery of cycleways almost grinding to a halt for a few years.
All this means is that for most people there is very little viable opportunity to not drive and this has been even further compounded in recent years by the pandemic making public transport both less attractive, and particularly more recently, less reliable.
Notably, many of the projects funded by the RFT are all about helping to provide those alternative options.
If National and the government really want to help people to avoid the impact of high fuel prices they should urgently look at ways to help get people out of their cars. For example, how about them funding and supporting a programme of pop-up bike lanes in cities all around the country by replacing on-street carparking?
And they could help get people on to bikes in other ways too. It’s crazy that the government will help subsidise an electric car by as much as $8,600 but won’t provide any support for e-bikes which helps not only reduce costs of transport and emissions for people but also helps reduces congestion. These options and others were just some of the 10 recommendations made in a study a few years ago by Dr Kirsty Wild.
Electric City’s 10 recommendations:
- Provide more separated cycle lanes.
- Provide free-flowing, protected cycle highways within the 15km e-bike ‘goldilocks zone’.
- Separate pedestrians from cyclists where possible.
- If an e-bike speed cut out is introduced, it is recommended that it be 32km/hr rather than 25km/hr.
- Reduce the speed limits on more urban roads to 30km/hr.
- Provide opportunities for people to try out an e-bike for a trial period of two weeks.
- Reduce the cost of e-bikes.
- Create a new ‘E-bikes at work’ website
- Investigate opportunities to make e-bikes available to low-income people.
- Provide more secure bike parking, with e-bike charging facilities.