16 July 2012

Next steps for critical transport projects

Alternative options for funding critical transport projects such as the additional Waitemata Harbour Crossing, City Rail Link, Penlink, rail to the Airport and the East-West Link will be considered by Auckland Council on Thursday.

“If and when these projects proceed, Auckland will be required to fund part of the cost alongside government contributions.”

“Auckland Council is considering a number of funding options which can be used instead of loading all the burden on to Aucklanders’ rates bill,” says Len Brown.

“While the proposal does not rule out other funding mechanisms such as tolls or fare charges, it does identify three options that need additional work, as a result of public feedback. The proposal is for council to consider doing further work around regional fuel taxes, congestion and network charging and additional car parking charges.”

“I remain open-minded to a number of funding options. What is certain, however, is that Council must consider new ways to fund these major transport projects in a way which is affordable and fair for Aucklanders.”

The report follows a discussion document released earlier this year entitled “Getting Auckland Moving”. Eighty-five per cent of submitters felt additional funding was required to address the region’s transport infrastructure challenges.

“Alternative funding options are required because we face a $10-15 billion funding gap between Auckland’s future transport needs and what rates and taxes can cover. Auckland’s congestion will significantly worsen as the region’s population continues to surge. Auckland and the government need to invest in a mix of road and rail projects to provide the region with a transport system which will cope with a population of two million plus."

The five most popular options were tolling on new roads, regional fuel taxes, congestion charging, development contributions and additional car parking charges. As tolling of new roads and development contributions are permissible under existing legislation, it was felt they did not require the same level of investigation.

The report proposes that further investigation of the three funding mechanisms take place with the aim of taking a funding proposal to government in 12 months recommending relevant legislation be changed. A consultative working group comprising council, government, community organisations, business and transport groups will be set up to consider and develop the proposals.

“The citizens of Auckland will be given the chance to have their say before any final decisions are made. It is important that we develop fair and affordable funding options for further consideration,” says the Mayor.

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Questions and Answers

16 July 2012

Alternative Transport Funding Options

Why do alternative transport funding options need to be considered?
Transport funding from sources such as fuel tax and diesel vehicle charges are not growing as quickly as the demand for transport system capacity, driven by population and economic growth. This has created a growing acceptance among diverse organisations, such as the Auckland Council, Auckland Transport, government agencies and private sector groups, that the current mix of transport funding mechanisms is insufficient to meet Auckland’s future transport needs. It does not mean that Auckland Council or government will not continue to include taxes and rates in the funding mix.
Which projects would alternative funding cover?
The Government Policy Statement revenue and expenditure assumptions do not include funding for the Alternative Waitemata Harbour Crossing, the City Rail Link, Penlink or the East West Link. These projects, along with the government’s highways of national significance and the need to rebuild Christchurch means there is a funding shortfall of $10 to $15 billion in the foreseeable future.
When is this alternative funding needed?
It will be needed over the next three decades, beginning in 2015 to ensure Auckland’s transport system capacity requirements can be funded.
What kind of support is there for alternative funding?
Eight-five percent of the 161 submitters felt congestion in Auckland is unacceptable and 80 percent felt additional funds are needed to address the problem.
What were the submitters’ most preferred funding options?
The five most preferred options were tolling on new roads , regional fuel taxes, congestion charging, development contributions and additional car parking charges.
What were the least favoured options?
Tax increment funding, targeted rates on city centre properties, general rates on all properties and network charging across the entire roading network were the least favoured options.
What other options were suggested by submitters?
Public private partnerships, sale of council assets, infrastructure bonds, a poll tax and an Auckland transport lottery were other suggestions made by submitters.
Why does the report not focus on the options with the greatest support in the submissions?
Largely, the report does focus on those options supported by submitters. Options such as tolling of new roads and development contributions, however, are already permissible under current legislation and are relatively well understood. As a result, they do not require the same level of examination as the remaining three preferred options. They could still however make up a significant component of any final funding package. Officers have recommended that the investigations address the interrelationship of both network and congestion charging. That is the two aspects of what is know as “road pricing” should be examined as an continuum.
What will happen if we do not develop alternative funding options for transport capacity
Auckland’s quality of life and economic growth are likely to suffer significantly. Population will continue to grow, meaning more and more people and commercial traffic competing to use transport system capacity that has not grown fast enough to cope. Public transport in the form of buses is likely to require a larger share of existing road capacity, crowding out motorists and affecting the quality of the region’s commercial centres.
What else is being taken into account?
An important part of the process will be the comprehensive assessment of the equity, or fairness, effects of different funding mechanisms, both current and proposed, to allow the council to compare the fairness of the distribution of costs of any funding proposal with the status quo.
What next steps are being recommended?
Investigations, stakeholder collaboration and system design are required on selected options so that council is in a position to go the government in the second half of next year with a developed funding proposal, which would form the basis for changing necessary legislation.
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