The sudden removal of the regional fuel tax will force Auckland Transport to take a close look which projects get to continue, with potentially $1.2 billion less coming into council coffers over the next six years.
The 10-year scheme was originally supposed to run until 2028, delivering around $150m a year into council bank accounts plus the hope of matched funding from the Government.
And new legislation dictates where the around $400m left unspent from the tax can go – namely to completing the Eastern Busway, electric trains and stabling, and road corridor improvements.
It’s a move that has left some of Auckland’s councillors feeling like their hands are tied behind their backs and unable to make the decisions traditionally in the purview of local government.
In response, councillors voted to ask the Government to stump up direct funding for the Eastern Busway – one of the big projects the unspent tax is allowed to go into.
Albert-Eden-Puketāpapa councillor Julie Fairey wrote the amendment to Auckland Transport’s recommendations to the transport and infrastructure committee on Thursday, which passed 11 votes to six with three abstentions.
Fairey said she was uncomfortable with central government telling Auckland which projects to prioritise.
“And now we are being told we have less funding, and we have to spend it on a specific project that central government prefers, which happens to align with some people’s electorate boundaries,” she said. “I find that an unfortunate coincidence.”
It’s perhaps a reference to Minister of Transport Simeon Brown, who is also the MP for Pakuranga. Brown officially opened a new section of the Eastern Busway in the heart of his electorate just last week.
Speaking on the fuel tax this week, Brown said the legislation would direct remaining fuel tax funds toward transport priorities shared by both Auckland Council and the Government.
“Auckland Council and the Government mutually agree that the Eastern Busway, electric trains and stabling for City Rail Link and road corridor improvements will be the three priorities for the remaining RFT funding.”
Other councillors expressed frustration at not having had more time to look at the options.
Waitakere councillor Shane Henderson said the tax removal was a huge gap in the public purse without much warning and decisions were being made too quickly.
“We haven’t even had a chance as a group of councillors to have a yarn about the implications of this until today. That is pretty chilling,” he said.
“This has been quite a frustrating day for me, feeling pretty disempowered, feeling like maybe I should pack my lunch up and go home, right? Because a lot of the decisions are being made for us. And when local democracy is disempowered like this, communities are further removed from the decisions that affect them.”
Auckland Transport CEO Dean Kimpton said the funding gap called for a drastic reprioritisation of future projects.
He said it was best that projects be analysed by cost-benefit ratio and strategic alignment, rather than by where they got their funding.
“We’ll be reallocating capital from one to the other where it makes best sense to do so,” he said.
“The impact, therefore, may not be limited to those projects that were being funded by it. Where those projects being formally funded by the RFT have a higher benefit-cost ratio and better strategic alignment, then it may be a non-RFT funded project that gets descoped, delayed, or stopped.”
But the directive from Government restricts how much say Auckland Transport or the councillors will have in the matter – mandating 80 percent of the $360m left over from the tax is spent on the Eastern Busway.
Around $75m has been earmarked for spending on electric trains currently under construction in Mexico, and another $75m will be left over to deal with other expenses like finishing Wellesley Street and Karangahape Road upgrades to be ready for the opening of the City Rail Link.
How the regional fuel tax has been spent
The extra cost will be removed at Auckland pumps on June 30, leaving unspent reserves of $360m.
But at the time the draft proposal of the long-term plan (Auckland Council’s budget for the next ten years) was released, it was thought the tax would hang around for another two years.
Auckland Transport chief financial officer Mark Laing said the rapid change requires a rethink of priorities.
“This then necessitates reprioritisation, but critically also we need to take into account this latest government policy statement that’s come out, which could arguably have even bigger impacts in terms of once we work through the detail in terms of what it might mean for what does get priority of cofounding from central government going forward.”
He said the situation leaves Auckland Transport with two options: reprioritise only fuel tax-funded projects or reprioritise the whole programme on the basis projects should be prioritised based on merit rather than funding source.
“In layman’s terms, we don’t want the funding to be the tail that wags the dog.”
The committee agreed, voting for the transport agency’s staff to come back with information on which projects could be reprioritised.
North Shore councillor Richard Hills said the removal of the tax would have significant impacts on Aucklanders if important projects ended up delayed or descoped.
“Overall, this has been a frustrating and disappointing experience, that a Government can just essentially make us either remove $1.2 billion worth of projects, or suddenly magically get the funding for that … assuming there will be no implication for Aucklanders,” he said.
“That is incorrect. This is far-reaching – there are dramatic implications for Aucklanders.”
