Herald on Auckland transport funding

April 30th, 2013 at 1:00 pm by David Farrar

The Herald editorial:

The first of the group’s two recommended solutions to plug a $10 billion to $15 billion funding gap in the council’s 30-year integrated transport programme fails to meet that criterion. This option suggests that from 2021, the money should come from hefty increases in rates, a regional fuel tax, tolls on major new roads, further government contributions and small public transport fare increases. The financial burden would, in effect, be widely spread. An advantage of this approach is that it would be reasonably simple to implement. But that does not outweigh the fact that much of the funding would be drawn from homeowners.

Neither home owners or taxpayers should be primarily funding roads and public transport. The users of roads and public transport should fund them.

The second option is better targeted. It envisages the introduction of road pricing supplemented by smaller increases in rates and fuel tax, further government contributions and small public transport fare increases. Motorists would be levied to use existing roads through motorway tolls, or charged to pass through cordons on other congested arterial routes. This would be more expensive to implement but the approach has several benefits, as well as drawing most of the funding from the major beneficiaries.

Most importantly, it would prompt immediate behavioural change by drivers, a feature not associated with the other option. Virtually overnight, there would be less road congestion.

Claiming overnight cures to congestion is silly, but the point about behavioural change is important.

The Super City was established ostensibly to provide the people of Auckland with strategic direction and leadership. If the council can convince them to supply the bulk of the funding on the basis that there will be a dramatic improvement in traffic movement, the Government should get out of the road.

The best way of achieving that outcome would be through a referendum run as part of October’s local-body elections. It cannot be a yes or no vote on the public paying more for transport. Such a vote would always see higher charges rejected. The question would have to be carefully tailored so as not to simply provide a chance for the venting of spleen. In essence, it should be boiled down to a vote on what is preferable – increased rates or road pricing.

I agree with a referendum, but disagree that you only ask people how they want to pay, and not how much they want to pay?

Why not do a referendum on the City Rail Loop, with funding options for it? Tell Aucklanders the cost of it, and get them to vote on say one of say these options:

  1. Fund $2.9b CBD rail loop by rates impost of $250 a year for 10 years
  2. Fund $2.9b CBD rail loop by a petrol tax of 25c a litre for 10 years
  3. Fund $2.9b CBd rail loop by road charges of $4 a day (assume 300,000 vehicles charged)
  4. Not build CBD rail loop

Not quite as simple as that, but Aucklanders should get to vote on how they pay for the CBD rail loop, if they want it.

Petrol Tax

December 20th, 2012 at 3:19 pm by David Farrar

Petrol tax should not be used to fund the Government’s general spending. Most people would agree on that. For several decades petrol tax was a great revenue earner for the Government. It was impossible to avoid, had low compliance costs and only four companies had to pay it.

National in the late 90s changed this. Previously almost half the petrol tax went into the consolidated fund. It then made a decision to dedicate it to the land transport fund. What this means is that petrol tax is an imperfect form of user pays.

Again I think most would agree those who use the roads should pay for them. Why should someone who works from home pay the same towards road maintenance as someone who spends four hours a day driving on them?

In a perfect world we would have GPS chips that monitor every road we drive on, how congested it is, is it peak time etc and we’d get charged directly for our road use. However that technology is a wee way off, and there are huge privacy issues around that. So we have petrol tax as an imperfect but pretty good rough system of user pays.

This then leads to two issues around petrol tax. The first is whether it is set at the right level to fund the various land transport projects, or are they making a profit from it?

I asked for a copy cashflows for the National Land Transport Fund for the the last three years.  The net revenue from petrol tax, road user charges and vehicle registration fees was $2.51b, $2.63b and $2.69b in the last three years. The expenditure or distributions were $2.93b, $3.03b and $2.67b. This means that spending was greater than income by $420m, $400m and $20m surplus last year. So over the last three years $800m deficit.

That makes it clear to me that the Government is not using petrol tax to fund non-transport projects. If transport expenditure is needed, of course motorists should pay for it. I actually have a view that the petrol tax level should not be set by Government at a set level, but automatically increase or decrease to fund all transport projects that have a positive business case.

Now the second issue is what transport projects are funded from the land transport fund. The Greenies want nothing spent on roads, and it all spent on rail. There;’s never been a road they have supported. Some think there should be no subsidy for public transport – that passenger fares should pay for public transport, not road users.

I think the current mix of both road and public transport is pretty good. The NLTP plan has $12.3b invested in land transport of which $1.7b is for public transport. Some people would have you think there is little funding of public transport.

Funding roads

July 21st, 2012 at 10:00 am by David Farrar

CBS reports:

Bay Area drivers could one day be tracked using a GPS-like device in their cars and taxed per miles driven – a scenario which is part of a proposed long-range study aimed at finding ways to reduce traffic and pollution, while also raising revenues.

Members of the Metropolitan Transportation Commission and the Association of Bay Area Governments are scheduled to vote on Thursday on whether or not to authorize a study of the proposal. Under the plan, drivers would have to install  trackers in their vehicle and officials would tax drivers for every mile they travel.

So long as you can deal with the privacy issue, I think this is the future. Those who use the roads should pay for them. Petrol tax is as close as we can currently get to making users pay, but being able to charge based on actual usage would be better. You could even have some roads cost more to use at various times.

Labour on road charges

June 14th, 2012 at 1:00 pm by David Farrar

Phil Twyford says:

The Government’s decision to  increase petrol tax and road user charges are outrageous examples of tax and spend at a time when the country is being asked to tighten its belt, says Labour’s Transport spokesperson Phil Twyford.

Phil Twyford said Transport Minister Gerry Brownlee today confirmed increases in petrol excise duty of two cents a litre and an equivalent increase in road user charges of an average of 4.1 per cent. The increases are expected to bring in an extra $90 million in 2012-13 and $100 million a year after that.

“The increases will hit motorists at a time when Kiwi families are struggling to make ends meet. Businesses are working overtime to keep afloat and the last thing they need is an increase in transport costs.

Roads should be funded on a user pays basis, and petrol tax and RUCs are the way this is done. I’d like to see us over time move to actual usage charging and congestion charging but there are some privacy issues around that.

It is worth recalling that Labour increased the petrol excise tax by 11.2c when in office – and off memory this was not all spent on transport, but some went to the consolidated fund.

Likewise Light RUC charges went up 66% under Labour, so the crocodile tears over a 4% increase are quite amusing.

I’ve said for some time that I think petrol tax and road user charges should in fact be automatically set to fund all transport projects which meet a certain minimum benefit to cost ratio.

Land Transport GFS 2012

July 28th, 2011 at 3:40 pm by David Farrar

The Government Policy Statement on Land Transport Funding is well worth a read. Only 32 pages.

It sets out long-term funding for both road and rail. Predictably the Greens (and sadly Labour also) have criticised it because they hate roads. The Greens do not accept that one needs both roads and public transport. They think it is a choice, rather than being complementary. I guess in their ideal world roads would be so congested and unsafe that no one would use them, and hence save the planet.

Their reaction to the policy statement would have you think Steven Joyce is scrapping all public transport funding. Instead the true situation is:

  • increasing the funding available for new and improved State highways by $125 million for the first 3 years
  • increasing the funding available for public transport services by $140 million for the first 3 years

So of the new funding, 47% goes into state highways and 53% into public transport. Truly the Greens won’t be happy until it is $0 for highways.

Just out of the National Land Transport Fund (petrol tax, road user charges, vehicle registration and licensing fees), public transport will receive between $750m and $1.1b in the next three years. Also up to $90m for dedicated walking and cycling programmes.

But that just the public transport funding from the NLTF. The Government has directly invested $2b into Auckland and Wellington rail.

So it is amusing to hear Labour and Greens call Steven anti-public transport. I think he has provided more funding for it than any other Minister. The Greens just seem to hate the fact that any money goes on highways, as that are by definition evil.


Putting petrol taxes in context

March 17th, 2009 at 11:00 am by David Farrar

I have long advocated roads should be user pays and until we get the technology to monitor and charge actual road usage, petrol tax is the closest we have to it.

People are focusing on the 6c/l extra petrol tax that will be in place in two years time, but overlooking that in many areas petrol prices would be increasing by up to 13c/l. A regional tax of up to 10c/l and an increase in national petrol tax of 3c/l.

Personally I think the level of petrol tax should vary automatically to fund all road projects that pass a certain benefit:cost ratio.

Tolls for new roads

August 25th, 2008 at 7:44 am by David Farrar

Maurice Williamson on Agenda yesterday confirmed that National would look to speed up construction of new roads with private-public partnerships and tolls.

The party’s transport spokesman, Maurice Williamson, said yesterday that commuters could face bills of up to $50 a week for tolls of $3 to $5 a trip on new motorways or similar “roads of national importance”.

But he believed that most people, if given a choice between tolls or queuing on free roads, would gladly pay.

Also free roads are not free. They are just funded through petrol tax. I think it is vitally important that users of roads pay for them, and tolls are better at doing that, plus will allow for some roads to happen, which would not have happened otherwise.

He believed an obstacle to public acceptance of tolls had been removed by a new law requiring all money raised from fuel taxes to be paid into the national land transport fund.

“I think New Zealanders will now say, ‘Well okay, if it is going to provide a solution to a problem I face and you are not stealing my petrol tax, well then I’ll go for it’.”

Another policy Labour stole from National!

Transport Minister Annette King accused Mr Williamson of not thinking his toll plans through properly.

She said that even if the $365 million Albany-to-Puhoi toll road, to open early next year, had “maximised” use, a $2 toll would still pay only half its cost.

So what? Half is better than none.

But she said the Labour-led Government believed strongly there was a place for PPPs.

But I thought they were evil privatisations in drag?

Mr Williamson listed these possible candidates for tolls:

  • Auckland’s next crossing of the Waitemata Harbour (expected to cost at least $4 billion).
  • Auckland’s motorway tunnels through Waterview on the western ring route ($1.9 billion).
  • A 19km motorway extension to Warkworth or beyond ($1 billion-plus).
  • Completion of the Waikato Expressway on State Highway 1 ($1 billion).
  • Kopu Bridge, on the way to Coromandel Peninsula ($32 million).

Don’t forget Transmission Gully!