Friday, March 24, 2006

Joel Cayford: Levies the way to fix Auckland transport

Ministry of Transport road pricing proposals have again focused attention on how to fund Auckland transport, who should pay, and what is top priority.

Visiting Deloitte's experts say that with the best will in the world, Auckland can't expect revenue from road toll or area cordon systems for at least five years. Experts also advise against such road pricing schemes where public transport alternatives are inadequate.

There is only one conclusion. Auckland needs to make public transport investment its top transport priority now - whether road pricing is implemented or not - and bridge the funding gap.

Earlier this month, Auckland Regional Council announced a $700 million gap between Auckland's public transport funding needs over the next 10 years and what the council could afford through reasonable rates and returns from the Ports of Auckland.

This gap could be met if the Auckland Regional Council imposed a compounding 17 per cent rate increase for each of the next 10 years, or by selling the port.

Neither of these options would be accepted by the public. Nor, it seems, would more fuel taxes.

There is a popular myth that Auckland motorists already pay their way and that the Government should not divert fuel taxes into the consolidated fund.

Although greater transparency in fuel tax expenditure would be appreciated, motorists need to bear in mind the enormous subsidies that make using the car so cheap relative to public transport.

National statistics put the cost of road accidents in New Zealand at $3.4 billion a year, with a road fatality costing $2.84 million at June 2004 values.

At 4 per cent of GDP, this puts our country at the OECD high end, almost double the British figure. This cost is carried by everybody, not just motorists.

Cheap parking is another huge subsidy. In Auckland, most parking charges do not equate to the actual cost of providing a central-city car park, which is conservatively estimated at $7500 a year based on average primary rental rates for commercial land.

The Ministry of Transport is to be commended for including the simple technology of parking levies among its other more technically complex road pricing proposals.

Parking levies rate well as a revenue-earning tool and could be implemented relatively easily.

Many cities throughout the world, including Melbourne, charge an annual levy on commuter car parks to fund public transport systems.

Levy revenue would go a long way towards meeting the costs of new vehicles, drivers, diesel, and maintenance as new bus, train and ferry services are rolled out.

For example, a nominal parking levy of $1000 a year on commuter car parks would raise $50 million a year to devote to better, bus, ferry and train services that would benefit Auckland, Henderson, Takapuna and Manukau city centres, and reduce congestion on surrounding roads.

Although such a scheme would go some way to meeting Auckland's public transport funding gap, considerable funds are needed for capital investment.

A regional infrastructure levy on development could be put in place easily through a small change to the Local Government Act.

Between $10 million and $70 million could be raised each year from this source for public transport projects. The basic legislation is in place and the collection mechanism exists.

For the past two years, city councils throughout the country have been empowered to collect local developer levies that fund city infrastructure.

A charge is made on each new housing unit as a contribution to the cost of additional infrastructure that includes water, wastewater and stormwater pipes, and roads.

On the North Shore, development levies range between $10,000 and $20,000 for each housing unit, depending on location. Greenfield sites demand more new infrastructure but sites within built-up areas can be connected to existing services.

This same system should be applied to regional passenger transport systems and perhaps to regional state highways constructed to accommodate growth.

For example, the northern busway is needed to accommodate demand from greenfield development at Albany, and rail extensions are needed for the increase in commuters from the west and south.

Yet the costs of these projects are borne by all ratepayers and taxpayers - not those giving rise to the demand.

City councils could collect regional development levies at the same time as city development levies payable when a building consent is issued.

Getting the economics of transport right will go further than funding public transport - it will also be fundamental for implementing Auckland's growth strategy.

Perverse incentives such as cheap car parking and cheap motoring, and everybody subsidising growth-related infrastructure will only perpetuate the status quo.

If we want to be in a different place in the future we need to change direction now. Parking levies and regional development levies would be a good start.

* Joel Cayford is chairman of the ARC transport policy committee and the Auckland regional land transport committee.

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