Public Sector

It's not how much, but how would you like to pay?

Funding Auckland Transport

How did you get to work this morning? Alone in your motor car, or perhaps car pooling? Did you catch the bus or take a train or ferry, or combine modes of transport? Maybe you played dodgems with the traffic and cycled to work, or braved the weather and walked? Perhaps you simply strolled from the breakfast table to a computer in your own home.

If you live in Auckland, it does not matter how you got to work, there are proposals in Auckland Council's Discussion Document Funding Auckland's Transport Future, that will see you paying for the transport programme laid out in the 30 year Auckland Plan.

The task

Auckland Council has tasked the Consensus Building Group (CBG), made up of representatives of a range of interest groups, with coming to an agreement on how to fund the predicted shortfall between current funding sources and the planned increase in investment in Auckland Transport over the next 30 years. That shortfall is estimated to be at least $12 billion in today's terms, or up to $15 billion on the Council's own estimates.

The Discussion Document examines a range of options to meet the funding shortfall and invites submissions on its two preferred options before presenting its findings to the Auckland Council in July 2013.

The CBG avoids discussing the merits of the individual projects in the Auckland Plan, and concentrates only on how those projects will be funded. However it observes:

"To keep Auckland's transport system moving in the future, we will need to do even more than what is contemplated in the Auckland Plan. Our analysis showed that the Auckland Plan projects will make a difference to Auckland's transport system, but even with those improvements, we still face greater congestion in the future than we do today."

In other words, assuming a way is found to fund the $12 billion plus shortfall, in 30 years time the traffic situation in Auckland will be even more dire than it is at present. Nevertheless the CBG has rolled up its sleeves, and got to work tackling the funding options needed to fund the predicted shortfall, noting that funding available from existing sources until 2042 will be somewhere between $52 billion and $60 billion. Those existing sources are rates revenue, development contributions and fuel taxes.

Identifying funding options

In looking at ways to increase the funding options or the yield from those options the CBG applied a series of screening criteria:

  • Strategic alignment
  • Revenue potential
  • Administrative simplicity.
  • Efficiency
  • Fairness
  • Acceptance.

The list of funding sources considered is set out in the Discussion Document, and all will be familiar to anyone who has followed public debates about the funding of public infrastructure in the media. The list includes:

  • departure tax
  • development contributions
  • dividends and interest from, or sale of, Council owned assets
  • fuel taxes
  • levy on vehicles registered in Auckland
  • parking levies
  • public transport fares
  • rating based sources
  • tax increment financing and betterment
  • regional GST/sales tax
  • regional lottery
  • regional pay roll tax
  • road pricing
  • tolls
  • visitor bed tax.

A number of those potential sources have been dismissed by the CBG as impracticable, raising insufficient funds, or on grounds related to fairness and lack of association with the transport system. Remember, these are funding sources to raise revenue over and above that raised by measures already in place. The CBG comment:

"Rates and fuel taxes are the main sources of existing transport funding. We need to start increasing the revenue generated from these sources immediately."

By immediately, the Discussion Document contemplates increases to rates and fuel taxes from 2015 onwards.

Preferred options

The Discussion Document identifies its two long-term options for funding Auckland's transport improvements.

  • Option 1 Larger increases to rates and fuel taxes, tolls to fund major new roads, further government contributions and small fare increases to public transport users.
  • Option 2 The introduction of road pricing, supplemented by smaller increases to rates and fuel taxes, further government contributions and small fare increases for public transport users.

Option 1 is seen as easier to implement within the current regulatory regime, although not as effective as a tool to impact positively on congestion.

Each option is examined in terms of the screening criteria discussed above. Public feedback is sought on the preferred options, as well as other issues or considerations that need to be taken into account.

Comment

This 'discussion' is taking place within the context of an ongoing debate between Auckland Council and the Government about the need for and priority of some projects in the Auckland plan, such as the Central Rail Loop. To add to the Council's difficulties Transport Minister, Gerry Brownlee, has stated that the Government will not agree to a regional fuel tax, congestion charges (road pricing), or road tolls on roads that have already been built. These comments may be seen as an attempt to curtail the discussion before it even begins, but Mayor Brown and Auckland Council are persistent advocates for the Auckland Plan. No doubt they have it in mind that governments have been known to change their minds, and indeed, governments have been known to change.

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The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.

 

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