By Ken Shirley*
It is no secret that I have been one of the most outspoken critics of Auckland’s Regional Fuel Tax (RFT). Supporters of the tax may simply put that down to self-interest due to my position as a representative of the road transport industry. However, I invite them to consider the tax against what I consider are the preferable alternatives to it.
Firstly, it is worth stating that along with most other people involved in the transport industry I fully understand the need to invest in Auckland’s transport infrastructure, including the provision of better public transport. New Zealand has for many decades neglected its infrastructure needs and the pressures that sustained economic growth has placed on what is a fairly stretched transport network.
As Auckland expands rapidly, it is essential that significant investment is made to helping people and goods move around and through the city. Unfortunately, however, Auckland Council and the Government have chosen as one of their funding tools probably the least practical and most complex mechanism they could possibly have come up with in the RFT.
The problems with the tax have been well-traversed over the last few months so I won’t dwell on them too much here, but the whole scheme can be summarised as inefficient, difficult to administer and economically regressive. It will also, by necessity, be full of loopholes and exemptions (think boaties and off-road vehicles for example) and will in all likelihood result in major inequities between those who are in a position to work around it and those, particularly people on fixed incomes, who can’t.
So, what are the alternatives?
The first thing that should have been considered, and I know this will draw the ire from my friends on the left, is a realignment of Auckland Council’s considerable asset portfolio. Auckland Council is sitting on billions of dollars’ worth of assets in the Ports of Auckland alone. A partial sell-down of the Port could free up significant capital for Auckland to invest in assets that its ratepayers will directly benefit from, including new transport infrastructure.
The fact is that the RFT is only predicted to raise $1.5 billion over 10 years. Selling a minority of POAL will raise many times that and will provide the capital in a far shorter timeframe. It is also fair to say that an injection of private capital and partial private ownership would have a very positive outcome for the Port too. You only have to look down the road at the Port of Tauranga to see what this has done for that organisation, now the largest and arguably best performing port in the country.
In the medium to long-term variable road pricing or congestion charging should also have come into the equation. Not only could this be developed to raise the necessary revenue but it is far fairer than the RFT and has a direct relationship with traffic congestion. As long as the system devised is fair and equitable across all road users then using pricing to help raise revenue for the city’s much-needed transport projects as well as helping to manage demand on the busiest routes at the busiest times is a win-win. Conversely the RFT will of itself do nothing to ease congestion.
Congestion charging is used fairly extensively overseas meaning that the infrastructure required for it can be obtained fairly easily, basically off the shelf, and it is also future-proofed for the EV revolution in a way that the RFT, by definition, could never be.
Finally, if the Government had the political courage they would have been far better off just increasing the general fuel excise, which is applied as a one-off transaction at the refinery, and specifically target that small component to Auckland’s transport needs. Yes, there would be some squealing out of the provinces but most people these days understand the economic importance of Auckland to the country and with the Government constantly raising general excise anyway a few cents extra would hardly have them marching in the streets.
The fact is that easing congestion in Auckland brings benefits to all New Zealanders from the perspective of the freight task.
Regardless, it is likely that fuel companies will spread the cost of the RFT around the country to even-out the impact it has on the Auckland retail fuel market anyway. The Government and Auckland Council will pretend that the money comes directly from Auckland but the reality is that they have almost no control over that.
With the legislation being rushed through Parliament and an implementation date of 1 July the time for Government to consider these more practical alternatives has probably passed. Unfortunately, come 2021, when the legislation allows, the RFT will almost certainly be extended to other local authority areas that have just as much need for transport infrastructure as Auckland does.
In summary the RFT is a sham. It is all about political posturing, not prudent public policy.
*Ken Shirley is the Chief Executive of Road Transport Forum NZ, the national body representing the commercial road freight industry