Rates and fuel tax or motorway user charges offered as options to raise $300m pa for 30yrs to 'fix' Auckland transport

Rates and fuel tax or motorway user charges offered as options to raise $300m pa for 30yrs to 'fix' Auckland transport



The following is a press release issued by Auckland Mayor Len Brown

A group of key transport stakeholders, collectively the Independent Advisory Body (IAB), today present its findings on how Auckland can fill its $12 billion transport funding gap over the next 30 years.

Commissioned by Auckland Council, the group was asked to investigate two possible pathways for raising $300 million per year ($12 billion over 30 years) to pay for the improvements needed to help fix Auckland’s transport system.

“Aucklanders have told us right throughout this two-year process that something has to be done about our transport system and just to get on with fixing it,” says IAB Chairman Stewart Milne.

“Our announcement today presents two options for council to present to Aucklanders for how they could raise the funds needed to deliver on the promise of the fully-integrated Auckland Plan Transport Network.”

The two funding pathways are:

·         Rates and Fuel Tax –  this pathway uses all existing funding tools and would require average annual rates increases of around one per cent (in addition to increases signalled by the council) and annual fuel tax increases of 1.2 cents per litre (in addition to increases signalled by the government) every year or;

·         Motorway User Charge – a charge on motorists each time they use the motorway network. If Aucklanders opt for this pathway they would pay an average charge of $2 when they enter Auckland’s motorway system, however this may vary by time of day or day of the week and be free at nights. This pathway has the additional benefit of influencing travel behaviour.

The IAB’s report, Funding Auckland’s Transport Future, compares the two alternative funding pathways and associated transport programme outcomes with the basic level of transport investment currently available to the council.

Detailed consideration of the economic, social and affordability impacts associated with each funding pathway was a critical element of the IAB’s decision-making and is explored in detail throughout the report and supporting documents.

“The primary purpose of our work was to identify two schemes that can raise sufficient revenue. We have done this. We were not asked to come up with a scheme that influences congestion, however a scheme that achieves both clearly has merit.”

If accepted by Auckland Council, the findings of the IAB report and the accompanying transport programme report will feed into the council’s draft Long-term Plan (LTP) 2015-2025, which goes out for public consultation at the end of January 2015.

The IAB comprises the following members:

Stewart Milne, IAB Chairman

Andy Smith, Walk Auckland

Cameron Pitches, Campaign for Better Transport

David Aitken, National Road Carriers

Donna Wynd, Child Poverty Action Group

Gary Taylor, Environmental Defence Society

Kim Campbell, Auckland Business Forum

Paul Shortland, Cycle Action Auckland

Robert Reid, New Zealand Council of Trade Unions

Shaun Awatere, Landcare Research

Simon Lambourne, Auckland Airport

Stephen Selwood, New Zealand Council for Infrastructure Development

Here's the Independent Advisory Board's full report

Here's a second release from Brown

Today marks a critical step in the most important funding debate Auckland has ever had: whether or not Aucklanders are willing to pay for the transport system this city desperately needs to keep it moving, says Mayor Len Brown.

Auckland faces a $12 billion transport funding gap to build the new roads, rail, ferries, busways, cycleways and supporting infrastructure needed to cope with a population set to hit 2.5 million in the next three decades.

Two reports were released today to Auckland Council’s budget committee. The first from the Independent Advisory Body (IAB) presents two alternative funding pathways for Auckland to raise $12 billion to achieve the fully-integrated transport network promised in the Auckland Plan.

The second report, from Auckland Council group, presents two different transport budgets: one which shows the limited number of transport projects the city can afford using current revenue streams, and a second budget that would use alternative funding pathways to build the Auckland Plan transport network Aucklanders have said they want. 

“Aucklanders tell me every day that we need to fix this city’s transport problems and I know a basic network isn’t good enough for them, so let’s debate, discuss and decide if and how much we are prepared to pay to finally fix Auckland’s transport problems.

Mayor Brown says the research from the IAB shows Aucklanders face a cost whichever direction they choose; either through the higher rates and fuel tax pathway or motorway user charge to raise the $12 billion needed to get this city moving, or through the economic and social costs of a city grinding to a halt.

“Today’s findings from independent experts have shown us that if we are prepared to pay for it, we could invest in a transport system that would improve congestion by 20 percent over the next 10 years compared to where our traffic problems are currently heading.

“Achieving this level of transport performance will deliver economic benefits to the Auckland region of $1.6 billion in improved productivity and reduced costs.”

Auckland Council will consult Aucklanders from January 2015 on which transport budget option they want - the basic or the full Auckland Plan network - and if they choose the Auckland Plan network, how they would prefer to pay for it. The final decision will be made during the Long-term Plan 2015-2025 adoption process throughout May/June 2015.

Here's the Auckland Council's long-term transport funding report

And here's the Government's response from Transport Minister Simon Bridges

Auckland Council are welcome to have a debate about future transport infrastructure investment plans, but the Government remains sceptical about the options being presented, Transport Minister Simon Bridges said today in response to the release of ‘Funding Auckland’s Transport Future’, a report commissioned by the Auckland Council.

“We agree that Auckland must have a transport system that meets the demands of its growing population and we are committed to working with the Auckland Council to help make sure Auckland succeeds.

“This is why the National-led Government is spending more than ever before to help build the city’s transport network; around a billion dollars a year. These include very large projects like the Waterview Connection, the widening of the North Western Motorway, the electrification of commuter rail, and the acceleration of motorway projects on the Northern and Southern Corridors.

“These projects will make a big difference to congestion in Auckland. “But we remain very sceptical about the options being presented today to Aucklanders and whether the programme proposed will further alleviate congestion,” Mr Bridges says.

“Aucklanders would need a very clear sense of what results they are getting and whether the new projects would deliver tangible value for money for commuters. They also need to have the discussion about how much more Aucklanders are prepared to pay for their transport.”

‘Funding Auckland’s Transport Future’ describes two potential future transport networks for Auckland; a ‘basic transport network’ and an ‘Auckland Plan transport network’. It put forward two options to raise an additional $300 million per year that would be needed to deliver the second of these – annual increases in rates and fuel taxes or charges for vehicles using the motorway network.

“Rates issues are a matter for the Auckland Council. In terms of a regional fuel tax or an increase in national fuel tax, the Government is not supportive of new taxes or raising the national tax for the benefit of one region.

“We are also not at all convinced by the motorway charge, and we have been clear that it’s not our preferred policy. It is important to note the Auckland Motorway system has been built by taxpayers, and any revenue raised from it would firstly belong to taxpayers.

“However the Mayor is, of course, welcome to have a discussion with Aucklanders on the overall level of transport investment Auckland, on the mix and timing of additional projects, and the possible methods of paying for those projects,” Mr Bridges says.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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It is not part of the National party's DNA to let cities control urban development through their own taxes and democratic bodies. So when Simon Bridges says he is sceptical, what he means is that National is in charge and will do what they want and will completely disregard dissenting opinions. Auckland might get he odd 'bribe' of this scheme or that but no more.

This hare-brained ill -conceived plan by Len Brown to shake us down for more money , must NOT be allowed , and hopefully Simon Bridges says as much
Simply , Auckland City needs to live within its means , like the rest of us , ie , each and every denizen of this fine city .
We already subsidse the busses , and they  are already so expensive thats its cheaper to use the car

I hope by now there has been enough coverage of the fact that motorways don't belong to Auckland Council so they can't toll them. And they don't have powers to levy excise taxes on fuel. It's like me asking if everyone would like a pony; I can't possibly provide so don't waste your time thinking about it.
The very best, and I mean the very best, that LB can get out of this exercise is some backing from the community when he goes cap in hand to government and says "Please, sir, may I have some more (money, that is)".
My pick is that the process so far has been so flawed the government wouldn't even let Len make an appointment to see them let alone listen to anything he has to say.

Ownership is a problem for LennyBoy
Just goes to demonstrate geniuses at work
No street smarts at all
Turn it around the other way
Assume Auckland "owns" the urban streetscape
Charge a toll to get off the motorway and enter the local streets

Problem is Lenny has basically hung his hat on Auckland as a monocentric city. He wants everyone to come to Queen St every day he just hasn't worked out how. He can't put a congestion charge on the only logical spot, downtown Auckland. It would work against his vision.
There were other options. Auckland was multicentric already before amalgamation. It would have been way cheaper but less glorious to enhance what was already happening.
Politicians. Can't live with them but they are everywhere.

“These projects will make a big difference to congestion in Auckland. “But we remain very sceptical about the options being presented today to Aucklanders and whether the programme proposed will further alleviate congestion,” Mr Bridges says.
Building more roads in response to congestion is often likened to dealing with obesity by loosening your belt
Aucklanders should be very worried about all this spend when it's debatable they will deliver the benefits promised. 
Let the roads grind to a halt, property go through the roof...and then 'pop' as the provinces are rediscovered. 

Precisely , we will never see the benefits ...... money if FUNGIBLE meaning it gets collected and goes into a single pot from which all expenses are paid .
The rate at which those drunken sailors running the city of sails throw money around , it will be squandered in no time al all an everyting but transport infrastructure .
Seriuosly , that train rail loop makes no economic sense whatsoever , it only goes on the tracks , and serves a tiny part of Auckland , and will be idle for 20 out of 24 hours a day .
Busses are far more flexible , efficient and less costly

Thank you. Busways as already mentioned, and bus fleets are easier and cheaper to update and keep currnet r.e efficiency and have the potential for vehicle to grid power generation. Electrification of rail to Pukekohe? How about a dedicated busway with express schedules that stop only once.
Whay cant the council hit on an idea that will actually get support of the majority of the ratepayers?

Why does Len Brown torture himself (and us) like this?
My first question after a couple of paras was where is NZTA and the government in all this? The question was answered later on : not invited to the party. Ironic given that the government pulls all the strategic strings in transport around Auckland. See Brendon above for why any exercise in transport planning that doesn't involve the government is a waste of time and money.
A few really important questions leap out:
1. Where did LB get his population projections from. Extrapolating the last five years growth stats indicates a population in the range of 2.02 - 2.06 million after 30 years, about 20% short of his number. Auckland will get there if it starts growing at the same rate as Carterton; maybe they could use a trans-gender mayor instead of LB.
2. How do Auckland Council know what Aucklanders want? Councils are notoriously bad at identifying market needs mainly becasue they don't want to spend the money on real research. They rely instead on the hopelessly flawed "consultation" process.
3. How much ratepayer money was thrown down the toilet by this pointless exercise?

In our home Len Brown  would not even be allowed to control the TV remote .
And we have him running the city ?

Oh, and I love Len Brown's planning methodology for anything: "The answer is give us some more money; now, what was the question again?"

Len Brown wants you and me in the smelly , rickety,  aged,   drafty , cold  noisy Birkenhead bus with tens of millions of Kilometres on the clock, belching smelly fumes  , so he can get to the city , dray , secure and warm with an  open road for his chaffeur driven luxury European Limosuine

Len Brown doesn’t have a European Limo, he has a gas guzzler black Holden Calais V6.  Although while ago he was looking at a Lexus 600h as an official mayoral car , a cool $200K+ luxury Hybrid until NZ Herald found out about it..  
Quite a few other mayors around the world are quite happy with their Toyota Prius but Len doesn't think it has a good roomy back seat for other activities he is in to!

He would have clawed back some respect form me if he had actuially seemed to have thought about it, out of his options the Skoda Superb was the bext all round option - Ive been in a taxi Superb, it had more than enough room in the back to get a leg over..

Pushing people off motorways onto side roads is a horrible idea - except for those like kaper above who are OK paying an extra $1000 a year ($2 * 2 * 250) to keep the peons away - I guess there were a lot of people like kaper on the committee! I want HOT lanes - high occupancy toll roads where buses and carpools are free and people like kaper get to pay a high price to use them as an individual. Convert all T2 and bus lanes to HOT lanes and watch the revenue roll in! This could be done for most current non-motorway T2 lanes without government permission. Would be even more effective if all motorways had a lane converted to a HOT lane. Encourages the use of carpooling and public transport while also bringing in revenue.

Memo to self:

  • demand for 'occupants' which will pass a camera test, may be high after HOT proposal pushed through.
  • draft body-lease arrangements with local undertakers
  • re-watch 'Weekend at Bernies' for practical usage tips
  • consider enrolling in a Polytechnic taxidermy class
  • investigate fully-encrypted Apple Pay for transacting fees

You can be doing all that right now with the many existing T2 and T3 lanes. The only change is that there is now a toll option for those wishing to use the lane as an individual (who would also need to install the appropriate GPS equipment in their car first). Hurts no one (so long as the toll is high enough to keep congestion almost as low as is currently the case in these lanes) and brings in revenue - why wouldn't you allow it?

Avatar , what planet are you on ? You want tolls "high enough " for what ?
Have you ever tried to run a business , or just pay the wage bill every fortnight  ?
Imagine what this is going to cost Couriers , who will pass the costs on to everyone else
Another new tax is the last thing we need

You misunderstand me. The tolls are only for individuals who want to pay to use the high occupancy lane - all the regular lanes are still there. Have you not seen all the underused T2 and T3 lanes around Auckland? Allow a few high flyers on there as well (or indeed couriers where time is money) - hurts no one and brings in revenue. They work very well in California and we have somewhat similar traffic issues to them.

Plus, it doesn't have to be rolled out all at one. Try a pilot on the Remuera road T3 lane (a high density of wealth in that area). I figure an extra car a minute on that lane wouldn't hurt its congestion (but I'm not a roading engineer - they would know). If you had that for two hours a day and charge $10 per car (remember this is entirely optional, nothing is changing for anyone else or the existing bus or 3+ passenger cars) that would be an extra $300,000 a year in revenue - should at least pay for the extra sensors (and the cameras are already there enforcing the the T3 lane). May not get that many people opting in of course (and the price would need to be thought carefully about), which is why a pilot would be a good idea. 

Avatar I like your 'thinking out of the box' approach. I would charge all non-PT users to avoid Waymads 'Weekend at Bernies' effect.

I thought the life-size sex dolls were the preferred 'passengers'. Of course Len Brown won't need one because he has a chauffeur.

I'm happy to see that you have 'got' my memo.
Countless thousands haven't.....

Len Brown may not need one but he might have one anyway.....
Sorry for lowering the tone but I couldn't resist...

Pity there is no vote down option on this site :-)
We all thought it but no-one else would say it out loud.

I notice that someone from Child Poverty Action Group  is on the panel for this dumb idea .
Just how does anyone think a new tax  that will hit the lowest earners the most , will ever alleviate child poverty ?
I can assure you that this toll will never be paid by me , I need my car for business , so the Toll  will be a tax deductable business expense charged to my practice .
People on low incomes will never be able to avoid this tax , but those of who are better off , will

The problem is that people on low incomes WILL avoid this tax by not using motorways, which is worse for them and for the rest of us as well! Thoroughly agree on the dumb idea comment though. 

Anoying that the  Council seems to have required the Independent Advisory Body to choose between 2 apalling options rather than the council simply opting to cut its wasteful extravagant spending on its many discretionary activities - or of course the CRL.
The potential admin costs of collecting tolls as well of the inconvenience to the motorists who have to pay them seem likely to make this option ridiculously inefficient.

Thank you Robt.
You are 100% correct , the wasteful expenditure is a major source of concern ofr all of us

A committee of 12 people (at least) work together for how long, and costing how much, to conclude “put up the rates or toll the road”…  WTF.  The council have how many staff…  and they couldn’t think of those 2 ideas on their own.  The second idea is pointless because most of the revenue will be soaked up by admin and AR costs, see the Northern toll road example. 
Interesting that there wasn’t a third option…  stop letting so many people in. 

There is an elephant in this room: development contributions.
If upgrades to roading are required to cope with population growth then development contributions are the standard way of funding those upgrades.
Why aren't Auckland Council using the standard funding mechanism? Probably because their charges are already ludicrously high and pushing them higher will just feed the housing bubble. Which may put people off living in AKL. Which may slow population growth down. Which may mean that they don't actually need any of these projects. Darn.

A simple suggestion, cut out the waste and the waste of space..
len can work from home, use Skype, or cheap local calls and be simply ignored, until someone with more brains takes over.
No need for a chaffauer, no need of a gas guzzler, no need of of a a waste of space on the roads at all.
Extrapolate this method of communication and we can all stay at home, not waste our time, effort and money on roading, but use the information highways to obviate the need of most travel by people who have no idea that they are not needed on site anymore.
In fact most of these wastrels have not been needed for some conderable time and expenditure.
Did anyone take anynotice of the IRD wasting 500 bucks on Head phones to reduce noise pollution, per head. When a simple  5 dollar earphone and microphone combined would have done the trick. I would happily inform them how to order in bulk from Alibaba to save even moreof our hard earned tax dollars, never mind the added costs of working in an office..
Another suggestion would be to out source the IRD to China as well, then we would have no need of more and more staff here, imported from elsewhere and no need of more and more roads to gad about on.
We must make better use of brains and the internet. Gas guzzlers and ear plugs at someone else's expense seems rather old hat to me. especially to get to work, by people we never needed in the first instance.
Plus why we need so many IRD to not catch the PI tax dodgers astounds me....what about you.
I could name a few who make and break the rules to avoid paying their fair share.
But stating the obvious, does not get you anywhere, these days, so I will hold my breath on that one.
Taxing ones brains is bad enough, not taxing the obvious is appalling.
And a super fund is is a super way to go, so everyone should all by property and rent out to each other, nary a tax man needed, ever, as no one would live in their own home they own, but rent from each other.
Super I say...but credit where credit is due.
Fast broadband, the answer to all our prayers....Sparks will fly...over this one.

O' how I do love living in Taupo.

Look at what happened with PPP tunnel projects in Australia. So many drivers avoided tolled tunnels they had to block side roads to force people into them
Also, can't remember the exact percentage, but a huge percentage of the Northern toll road at Orewa goes to admin. A small regional fuel surcharge would be much fairer and cheaper to administer

Just wondering, who owns the Auckland Habour Bridge, the govt or Auckland Transport?  If it's the NZ Govt, legally can AT places toll on something that it doesn't own? 

Govt and no. It's really simple.
The only meaningful part of this 'story' is Simon Bridge's response.

I'll repeat some of the comments I made in http://www.interest.co.nz/property/72451/new-environment-minister-and-housing-minister-nick-smith-argues-rma-reform-focus-hous
NZ is luckly in that many of its systems are reasonably economically efficient. Roading is definitely not one of those.

The roading system is designed to meet peak hour travel demand. This causes huge over expenditure on the roading system, or where budgets are constrained, excessive congestion.

Peak hour travellers currently do not pay for the use of the roading system directly except through congestion.

All road users pay petrol tax and all ratepayers rates which fund transport infrastructure. They are subsidising the peak hour travellers.

Peak hour travellers in the main cities should be paying electronic congestion tolls similar to those that exist in Singapore and some other Cities around the world. This is no different to paying for peak air travel or peak period power as some industries do by paying the spot price. The tolls can be varied every three to six months to manage the congestion levels.
In this way:
1) Congestion is removed / managed - peak travellers have travel time reliability
2) Some non time critical travellers choose to move outside the peak hour
3) Some travellers choose to move to public transport - this will in the long term reduce the subsidy required for PT. This will include a move to park and ride where feasible. This can be a very efficient travel mode where the PT is high frequency and the destinations concentrated.
4) The peak transport system users pay the most towards building new transport infrastructure to relieve congestion (when this is needed - eg through population growth)
5) Some users will choose to move location - thus the effect land development. As a general long term effect it will encourage more housing density around high frequency PT nodes.
6) The tolls can be hypothecated to transport. This means that the excise tax on petrol could be lowered all things being equalled. Transport funding for new major infrastructure from rates for the main roading system could also be dropped.
7) Some people will choose to walk and cycle - healthier for all.
8) I agree that tolls are disproportinally harder on those at the low income end.  The effect should be considered and adjustments made, probably at the national level to best address the issue. 
NZ cannot afford to keep building very expensive highway infrastructure that serves only unfetted peak demand - especially with our very high house (land) prices (most major roading upgrades need additional land).  It is far more economically efficient for the country to toll congestion down to manageable levels.  The Government's current policy position would seem to be at odds at improving economic efficiency and productivity for NZ.

The IAB report is a particularly nasty scam. It diverts attention away from the real problem to fake problems and then presents Aucklanders with some fake options.
I have read the IAB's final report and have come away appalled by it.
A. Population Projections
The first problem is that AC have opted to use a 2006 set of population projections issued by StatsNZ. Fair enough, that's common practice in councils, except that StatsNZ own data show that those projections are already in tatters. In 2006 Stats projected a growth rate of 1.4% p.a. for AKL until 2031. In practice, over the last 5 years AKL has only achieved 1.2%. Doesn't look big but the difference when compounded over 30 years means a 20% difference in final population (2m v. 2.5m).
In transport planning that difference in population will have a profound effect on what congestion problems AKL might face and when.
It's also not a good look to use population projections that run out in 2031 while crafting a a transport plan through to 2045.
Auckland would have been better served if AC had found the money to pay a professional demographer to give them some more realistic numbers.
Before we even start there are doubts over whether the problem is going to be as bad as AC say and, therefore, whether all of the proposed programme is necessary.
B. Funding Shortfall
I reserve my harshest criticism for the way they calculate and present the funding shortfall.
B.1. Govt & Council Budgets mingled
The report mixes govt and AC budgets together as though they were one. They never are, ever. Read Vote Transport and you realise that the govt is not facing a funding shortfall. They plan to operate within their fiscal envelope and will only build what they can fund.
What we really need is just the AC budgets. From the number presented it looks like AC and the govt fund AKL transport about half each. I am surprised the govt share is so high but it goes to show how important the motorway network is to AKL. The govt share may include some FAR subsidy to AC.
B.2 Opex/capex mingled
We actually don't need to consider opex. The Local Government Act requires the council to balance its budget. It can debt fund capital works but not opex. It must adjust its combo of rates, PT charges, parking charges/fines to cover the cost of simply owning what it already has. By definition there is no funding shortfall in opex.
What I would like to know is the transport opex per capita over time in real terms if this plan is implemented but this info isn't provided.
B.3. Renewal and new expenditure mingled
There is a bit of a subtlety here that some capital spend is renewal (replacing like for like) and some is for new stuff. The renewal spend is usually funded out of depreciation. So the $17b shown as Council capital funding is probably a transfer from opex to capex (totally orthodox accounting so no problem there). For timing reasons councils often have to debt fund part of their renewal programme so some of the funding shortfall identified could be going to renewal works but we don't know cause they didn't tell us.
But we should take that renewal spend out of the picture because AC would be doing that work even if their population remained static.
B.4 Development contributions not mentioned
The report says that the prorgamme set out is required to cope with growth in Auckland. The default mechanism for funding growth related works are financial and development contributions  - levied on new sections.
It is curious that this option does not get a mention except as a source of funds. Before I would consider fuel tax hikes or tolls I would want to know why development contributions are insufficient to fund the work required.
C. What is going on here?
Strip away all the irrelevant bits of the funding shortfall equation and the problem can be reduced to:
AC wants to build $15b - $20b of new roading and PT infrastructure and has only $4b available from development contributions to fund it.
Their plans and dreams exceed their abilities by 400%-500%.
If you look at the numbers the way they present them you would be fooled into thinking that they are just short and a bit of goodwill on behalf of the govt would balance things up. No, this is a massive imbalance.
The real problem is whether they are pursuing an affordable vision for the shape of the city over the next 30 years. That one number, opex on transport per person or rateable property over that period will tell you whether they are pursuing options that are more expensive in real terms than others.
If Auckland Council are going to present options the first place I would look would be the true impact of densification strategies on infrastructure costs.

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