Auckland Council says there are no plans to end the controversial tax early. So what should happen to $200m plus freed up by Govt funding?

The Auckland fuel tax will continue until 2028, despite the Government stepping in to fund several of its major projects.

The 11.5 cent per litre levy was introduced by Auckland Council in 2018 to pay for some of the biggest transport upgrades needed for the growing city.

However, a number of the plan’s major projects have since received Government funding, leading some to question where the extra money will go and whether the tax needs to continue for the full 10 years.

“Aucklanders have stomached the regional fuel tax because they know that investment in Auckland’s transport system is sorely needed to get the city moving,” says NZAA spokesperson Sarah Geard.

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“They’re no doubt feeling incredibly frustrated that congestion is continuing to worsen, and are likely questioning whether the money is being spent on the right projects.”

When it was introduced in 2018, the fuel tax was projected to generate around $150 million a year for a total of $1.5 billion over 10 years. Along with central government and developer contributions, the programme was set to add $4.3 billion to Auckland’s transport infrastructure.

Then in 2020 the Government announced it would fund at least four of the transport projects proposed under the fuel tax.

These included major roading and highway upgrades such as Penlink in Whangaparāoa and Mill Road between Manukau and Drury. The Covid-19 shovel-ready fund also contributed money to the Downtown Ferry Terminal and Puhinui interchange projects.

All up, this accounts for more than $223 million that was previously coming from the fuel tax.

The Penlink upgrade between Whangaparāoa with Auckland’s northern suburbs was one of the fuel-tax projects to receive government funding. Photo: Lynn Grieveson

However, council says the savings are offset by increases in funding for other projects like bus priority improvements, the Eastern Busway, and road safety.

Despite the extra money, Mayor Phill Goff says the fuel tax needs to continue as planned.

“Without the RFT [Regional Fuel Tax] and the subsidies it unlocks, there would be a $4.3 billion hole in Auckland’s transport programme,” he says.

“Any loss of RFT funding would also compound the $750 million drop in council income caused by Covid-19.”

Since the tax was introduced, Auckland Council has netted more than $376 million in revenue. As of December 2020, $197 million of that remained unspent.

A report to the council’s governing body argued that the spending programme was always expected to ramp up over the 10-year period, with any unspent money being ring-fenced for further transport upgrades.

The new plan sees funding increases of $80 million extra for bus priority works, $79 million for the Eastern Busway, $14 million for improving airport access, $14 million for ferry network improvements, $22 million for road safety and $19 million for road corridor improvements.

However, it also sees decreases in funding of $11 million for electric trains and stabling, $39 million for active transport (walking and cycling), and $34 million for network capacity and performance improvements.

Council polling found a majority (35 percent) in favour of the changes, with most keen to disincentivise personal use vehicles and reduce emissions.

However, some were unhappy with the reduction in funding for walking and cycling. Others were concerned about the increase of funding for road corridor improvements, interpreting it as encouragement for car use.

The new fuel tax funding plan sees a reduction in money for active transport, including cycling and walking. Photo: Lynn Grieveson

“Some of the connections they are making are quite good, but they are not spending the money they have on walking and cycling,” says Andy Smith, Auckland spokesperson for walking advocates Living Streets Aotearoa.

Smith says he wants to see more of the money used for improvements to Auckland’s mobility infrastructure, such as wider and better maintained footpaths, wheelchair access, and increasing pedestrian crossings at intersections.

“Every road is a public space, not just a conduit for cars. We need to learn to share them,” he says.

However, the council says the reduction of funding for active transport doesn’t detract from the walking and cycling improvements made through other projects.

Goff also backs the funding changes as being in line with council’s commitments to move investment toward public and active transport.

“Its hard to see this as being anything other than very much focused on mode shift,” he says.

Waitematā ward councillor Pippa Coom says she would like to see more of the public’s feedback included in the plan.

“It concerns me that we go through a consultation process and then we don’t take on board that feedback,” she says.

When the fuel tax was introduced in 2018 it drew criticism from some councillors who felt it would unfairly burden those who could least afford it with higher costs at the pump.

A 2018 report for the Independent Māori Statutory Board found that lower income areas in South Auckland would likely experience “above average inequitable impacts” if the fuel tax was introduced.

Several councillors from South Auckland voted against the tax with Manurewa ward councillor Daniel Newman calling it a “wholesale redistribution of wealth from some of the poorest people in Auckland”.

The new funding plan is expected to receive final sign-off later this year.

Ben Leonard writes on Treaty issues and the environment.

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