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Smart solutions to transport funding shortfall

Region will deliver smart solutions to transport funding shortfall

Auckland’s greatest challenge is to find $4 billion to complete its transport network by 2010, Auckland City Mayor John Banks told the 3rd Annual New Zealand Land Transport Summit in a keynote address today.

“Let’s not keep using the shortage of money as an excuse for delaying progress. Instead, let’s get smart and find the money.”

Mr Banks said the region’s mayors are looking at options for Auckland to meet the funding shortfall. These include obvious proposals such as local councils forming public-private partnerships, a regional petrol tax, tolls and borrowing on the region’s rates and assets to underwrite the cost of raising the required capital.

More innovative suggestions may include an Auckland Bond issue, with capital raised as key components of the network reach a “buildable” stage with returns serviced by tolls or other user pay concessions.

Another possible option is to take a “network approach” to understanding the costs and benefits of both the regional motorway and agreed public transport networks and develop a viable network funding model.

“These ideas, let me reinforce, are at a preliminary stage. Some might emerge as serious options, others disappear. However one thing is for sure, it is now up to Auckland to develop a funding model so we can do the job ourselves, and do it properly.”

Mr Banks said the region’s mayors are looking at Auckland for the answers not Wellington as has been past practice. The answers must then be communicated clearly to the capital and these include proposing substantial changes to the land management transport bill.

“Without substantial changes to the detail, the good intentions of the legislation to encourage private sector investment and additional sources of skills and capital to be applied to improving the nation’s transport infrastructure will, in my view, be undermined.”

Mr Banks said the bill in its present form creates a new tier of multiple consultation. The result will be further delays, a lack of willingness by the private sector to participate and greater costs for public sector, communities and road users.

He also criticised what he described as a two-tier approval process that requires approval first by road controlling authorities with the Minister of Transport having the “last say”.

“It is difficult to believe that potential investors will be prepared to spend millions of dollars on developing proposals in which the Minister of Transport will, as a necessary part of consideration, be guided by political matters.”

Mr Banks believes a better option would be before tenders are offered, the public road controlling authority be required to obtain a preliminary recommendation of approval from the Minister of Transport. Giving the Minister the “first say” would give the authority and potential investors certainty. He said the bill also lays out a set of restrictive conditions on which routes can or cannot be tolled. He reiterated that a network approach and determining a single funding model around Auckland’s entire state highway and selected arterial road networks should be adopted.

“We need to ensure we can have this debate, and it is not constrained by laws that eliminate innovative and pragmatic options before they can be entertained.”

Mr Banks said persisting with the current funding regime and not allowing the new transport legislation will deliver on the shared vision of network completion by 2010 would be stupid.

“A pay-as-you-go basis spread among the different local bodies of the region and Transit New Zealand has tied the region to an inflexible and limited source of capital, offered on a part-project by part-project basis.

“We must get organised to deliver sufficient funding to complete the core networks as soon as possible with cash flow determined on a ‘build as becomes buildable’ basis’.”

He said Auckland is at crunch point and if the region is not ruthless in shifting from planning and process to design and construction – to get a network with options in place in the next five to 10 years – systemic failure is a distinct possibility.

“Let’s get organised and do it,” Mr Banks concluded.

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