Revenue raised from Auckland motorists by way of "smarter transport pricing" techniques to tackle congestion would go primarily towards replacing current road taxes, not raising extra funds for the city's transport needs.
Transport Minister Simon Bridges and Finance Minister Steven Joyce announced they had agreed on terms of reference with the Auckland Council for an investigation into new transport pricing in the city.
“Smarter transport pricing could involve varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route or way in which they travel," Bridges said.
He added: "The Government has also made a clear undertaking that any form of variable pricing will be primarily used to replace the existing road taxes that motorists pay. This is about easing congestion, not raising more revenue."
$7bn Auckland transport funding deficit
The announcement was foreshadowed by Auckland Mayor Phil Goff over the weekend. Goff said the road pricing announcement would be good news for the city over the medium term, but stressed that more transport expenditure was required sooner.
Speaking to Three’s The Nation, Goff said what had been an expected $4bn shortfall over the next decade for the Council’s Auckland Transport Alignment Project, was now a $7bn gap due to greater-than-expected population growth.
“[The $4bn] was based on a 16,000 rise in population by Auckland each year. We're now growing by 45,000, so we add the population the size of the city of Tauranga every three years,” Goff said.
“And the Government knows – I've given them all the figures on that – they know that with that growth, 800 extra cars on the road each week, they've got to work with us to resolve this problem – for the sake of New Zealand as well as Auckland.”
“[T]hink about that $7 billion deficit I mentioned before. We cannot leave it like we left the City Rail Link. We'll get the City Rail Link – it'll really help – but it won't help for another five years, and in the meantime, the city is becoming more and more gridlocked. We need to bring that expenditure forward,” he said.
As well as road pricing, Goff has been pushing the government for Auckland to receive the share of rates GST paid by the city’s residents from the government.
“We need some degree of revenue sharing,” he said. “If you go to Australia and see a big city like Melbourne, where do they get their money for infrastructure? The government – the federal government – puts down to the state government a share of GST.”
He raised Auckland Council’s self-imposed debt limits as a barrier to not being able to borrow more for infrastructure spending.
“[W]e have run out of ability to borrow more. We could, of course, put it on rates, and that would be 20% to 30%. But I don't think the Minister of Finance is going to say that's a proper way for Auckland to be dealing with it,” Goff said.
“We work under a debt to revenue ratio which says that we cannot borrow more than 265% of our revenue. We’re already at about 256%. Why is that? Because we just put $1.7 billion into paying for the city rail link – the only city in New Zealand that’s paying for its own heavy rail.”
See the government's announcement below:
The Government and Auckland Council have agreed on Terms of Reference to establish a project to investigate smarter transport pricing in Auckland.
“Alongside our current multi-billion dollar transport investment in Auckland, we need to look at new ways of managing demand on our roads to help ease congestion. Smarter transport pricing has the potential to be part of the solution,” Finance Minister Steven Joyce says.
“Work undertaken last year by the Government and Auckland Council found that smarter transport pricing could help make a big difference in the performance of Auckland’s transport system,” Transport Minister Simon Bridges says.
“Smarter transport pricing could involve varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route or way in which they travel.
“It is essential that we carefully consider the impacts of pricing on households and businesses. A key factor will be the access people have to public transport and other alternatives.
“The Government has also made a clear undertaking that any form of variable pricing will be primarily used to replace the existing road taxes that motorists pay. This is about easing congestion, not raising more revenue,” Mr Bridges says.
The Smarter Transport Pricing Project will undertake a thorough investigation to support a decision on whether or not to proceed with introducing pricing for demand management in Auckland. Officials from the Ministry of Transport, Auckland Council, Auckland Transport, the New Zealand Transport Agency, Treasury and the State Services Commission will work together and engage the public to develop and test different options.
The first stage of the project, which will lay the groundwork for assessing pricing options, is expected to be complete by the end of 2017.
“Any decision on the use of a demand management tool like road pricing is still some years off,” Mr Joyce says. “We look forward to receiving advice from officials as this work progresses. The Government and Auckland Council will then consider the project’s findings.”
Auckland Congestion Pricing Project Terms of Reference are available [here]
Read the Auckland Council's page on smarter transport pricing here:
The Auckland Smarter Transport Pricing Project is a joint project between Government and Auckland Council to investigate whether or not to introduce smarter transport pricing in Auckland to reduce congestion. Smarter transport pricing involves directly charging users for the use of roads, with charges potentially varying by time of day and/or location. The project will investigate different pricing options and test whether these could improve congestion results, taking into account the impact of these options on affected households and businesses.
At the end of the project, the Government and Auckland Council will have a clear understanding of the requirements and likely outcomes of an Auckland-specific smarter transport pricing system and be able to make decisions on whether to introduce smarter pricing.
Similar to ATAP, this is a joint project involving Auckland Council, the Ministry of Transport, Auckland Transport, the NZ Transport Agency, the Treasury and the State Services Commission. For more information see the Terms of Reference [PDF, 211 KB].
In 2016, the Government and Auckland Council worked together to develop a clear direction for Auckland’s transport system over the next 30 years, through the Auckland Transport Alignment Project (ATAP). The full ATAP report can be found here [PDF, 2.2 MB].
ATAP found that, to achieve a step-change in the performance of Auckland’s transport system over the next 30 years, we need a fundamental shift to influencing travel demand, alongside substantial ongoing transport investment, and getting more out of the existing network.
In response to ATAP’s findings, the Government and Auckland Council have now established the Auckland Smarter Transport Pricing Project.
What is smarter transport pricing?
Currently, motorists pay for the use of roads through a range of methods: petrol taxes, road user charges, vehicle registration fees and rates. These charges don’t take into account the time or location of travel – for example, driving on a congested motorway in rush hour versus driving along a quiet road late at night. But the true costs of these two journeys are very different – driving at peak times adds to the congestion on the road, which impacts on (or has a ‘cost’ to) other road users. These costs impact both on the economy (for example, by adding to freight travel times) and at an individual level (meaning, for example, less time spent at home with family).
Smarter transport pricing could change this by varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route, or method of travel, or choose not to travel at all – this is known as demand management. The result is better use of the road network.
Update adds comments from Auckland Mayor Phil Goff over the weekend.