New Legislatiion May Cost Ratepayers Millions
New Legislatiion May Cost Ratepayers Millions In Lost Revenue.
Statement from David Thornton
NEW TRANSPORT FUNDING LEGISLATION MEANS A REDUCTION OF $129 MILLION OVER NEXT THREE YEARS IN FUNDS FOR TRANSPORT AND STORMWATER.
Ratepayers in the Auckland region are about to be ripped off by new legislation which comes as part of the so-called 'Transport Package' of additional funding from the Government.
When the Government announced on December 12 its $1.6 billion 10 year funding plan to help solve Auckland's traffic problems it also stated that funding was conditional, on new governance arrangements for Auckland.
That legislation, the Local Government (Auckland) Amendment Bill 2004, submissions on which close today, includes, according to ARC tax advisers, provisions which could reduce, by millions of dollars, funds available at the moment from Infrastructure Auckland [IA].
IA's income dividend from its 80% shareholding in Ports of Auckland is currently not subject to income tax. Under the new legislation, these shares are transferred to the new Auckland Regional Holdings [ARH], making Ports of Auckland a subsidiary of ARH - whose dividends would not be exempt from tax.
In addition the new legislation requires that the ARC needs to spend only 85% of its income from ARH on transport and stormwater - as compared with the current situation where 100% of net income is for transport and stormwater.
The tax situation and the 85% rule, together, mean that over the next 3 years a substantial amount of transport funding will be lost to Auckland.
Infrastructure Auckland's current Long-Term Funding Plan forecasts dividends from Ports of Auckland of $263million over the next three years - only $134 million of which will be available for transport and stormwater - a net loss to ratepayers of the region of $129 million, or almost 50% down on what would have been available from Infrastructure Auckland under the present structures.
This would be a raw deal for ratepayers who might have to make up for this loss with higher rates.
This loss must be prevented by changes
to the Bill during its progress through Parliament.