Media Release
12 February 2012
Auckland transport funding solutions must deliver national dividend
"The Auckland Council today released a discussion paper outlining options for funding Auckland transport. The paper
correctly acknowledges a deficit of at least $10 billion on Auckland's major projects and identifies 14 funding options
the Council is considering. But of these, only one option answers the three essential questions required of any
transport funding solution: does it raise sufficient revenue? does it incentivise the "right" behaviour? and, perhaps
most importantly, does it add to productivity and better living standards", says Stephen Selwood CEO of the New Zealand
Council for Infrastructure Development.
"It is pleasing to see the Council identifying for the first time the major city shaping projects which represent the
bulk of Auckland's transport funding gap. The city rail loop, an additional Waitemata Harbour crossing and the AMETI
(Auckland Manukau Eastern Transport Initiative) project are all familiar, but it is especially encouraging to see
official momentum building for a south western corridor linking Onehunga and East Tamaki. This project, potentially
delivered in concert with the more PT-oriented AMETI, is vital to ensure freight and other commercial traffic can
continue to operate in and out of the Penrose-Southdown area.
"But major investments like these come with major costs and the Government's commitments to Christchurch and the
council's limited funding mechanisms will not allow these projects to proceed in the absence of new funding tools.
"The funding options discussed in the paper include: greatly expanding three traditional council mechanisms (rates,
development contributions and parking charges); two newer variations of council charges (targeted rates and tax
increment financing); establishment of one or more of four broad-based taxes (regional income tax, regional payroll tax,
regional fuel tax and regional GST); three tolling options (one focused just on new roads, one on the motorway network
and another on congested points); and two new options (visitor charges to be levied on Auckland accommodation and an
airport arrival tax). One omission from the list is the potential to raise funding through partial asset sales, such as
Ports of Auckland and shares in Auckland Airport. This would only make sense if the returns from investment in transport
exceed the dividends received from ownership of those assets.
"It is positive that most the options have been opened for public discussion - that's exactly why the Super-Council was
established.
"The Ministry of Transport's most recent transport release, the Briefing to the Incoming Minister, establishes at the
outset the importance of an efficient and productive transport system for economic performance. This emphasis is not yet
strongly evident in the Council's discussion paper and the importance of freight, commercial traffic and of establishing
a funding system which benefits the regional and national economy is not adequately addressed.
"Moreover, there are weaknesses in arguments for regional fuel, sales, income and payroll taxes. Most notably, these
solutions will result in an almost immediate request from other regions for the same treatment.
"Several other options can only proceed in tandem with others - tolls limited to new projects and parking and rating
options will be politically untenable given the size of increase required (for example, $6-$8 per trip will be required
on a new harbour crossing).
"A low-level variable toll on the motorway network remains a simple and effective option. It has the potential to raise
enough money to bridge the funding gap, it incentivises the right behaviour through higher tolls at peak and lower tolls
off peak, and it is politically feasible if the benefits of investment and demand management achieve the efficiency and
productivity goals that the Government is seeking. Any final decision is going to need the support of central government
and this will not be forthcoming unless the solutions contribute positively to the national economy. These are the
issues that must be resolved," Selwood says.
ends