Revenue raised from Auckland motorists by way of "smarter transport pricing" techniques to tackle congestion would go primarily towards replacing current road taxes, not raising extra funds for the city's transport needs.
Transport Minister Simon Bridges and Finance Minister Steven Joyce announced they had agreed on terms of reference with the Auckland Council for an investigation into new transport pricing in the city.
“Smarter transport pricing could involve varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route or way in which they travel," Bridges said.
He added: "The Government has also made a clear undertaking that any form of variable pricing will be primarily used to replace the existing road taxes that motorists pay. This is about easing congestion, not raising more revenue."
$7bn Auckland transport funding deficit
The announcement was foreshadowed by Auckland Mayor Phil Goff over the weekend. Goff said the road pricing announcement would be good news for the city over the medium term, but stressed that more transport expenditure was required sooner.
Speaking to Three’s The Nation, Goff said what had been an expected $4bn shortfall over the next decade for the Council’s Auckland Transport Alignment Project, was now a $7bn gap due to greater-than-expected population growth.
“[The $4bn] was based on a 16,000 rise in population by Auckland each year. We're now growing by 45,000, so we add the population the size of the city of Tauranga every three years,” Goff said.
“And the Government knows – I've given them all the figures on that – they know that with that growth, 800 extra cars on the road each week, they've got to work with us to resolve this problem – for the sake of New Zealand as well as Auckland.”
“[T]hink about that $7 billion deficit I mentioned before. We cannot leave it like we left the City Rail Link. We'll get the City Rail Link – it'll really help – but it won't help for another five years, and in the meantime, the city is becoming more and more gridlocked. We need to bring that expenditure forward,” he said.
As well as road pricing, Goff has been pushing the government for Auckland to receive the share of rates GST paid by the city’s residents from the government.
“We need some degree of revenue sharing,” he said. “If you go to Australia and see a big city like Melbourne, where do they get their money for infrastructure? The government – the federal government – puts down to the state government a share of GST.”
He raised Auckland Council’s self-imposed debt limits as a barrier to not being able to borrow more for infrastructure spending.
“[W]e have run out of ability to borrow more. We could, of course, put it on rates, and that would be 20% to 30%. But I don't think the Minister of Finance is going to say that's a proper way for Auckland to be dealing with it,” Goff said.
“We work under a debt to revenue ratio which says that we cannot borrow more than 265% of our revenue. We’re already at about 256%. Why is that? Because we just put $1.7 billion into paying for the city rail link – the only city in New Zealand that’s paying for its own heavy rail.”
See the government's announcement below:
The Government and Auckland Council have agreed on Terms of Reference to establish a project to investigate smarter transport pricing in Auckland.
“Alongside our current multi-billion dollar transport investment in Auckland, we need to look at new ways of managing demand on our roads to help ease congestion. Smarter transport pricing has the potential to be part of the solution,” Finance Minister Steven Joyce says.
“Work undertaken last year by the Government and Auckland Council found that smarter transport pricing could help make a big difference in the performance of Auckland’s transport system,” Transport Minister Simon Bridges says.
“Smarter transport pricing could involve varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route or way in which they travel.
“It is essential that we carefully consider the impacts of pricing on households and businesses. A key factor will be the access people have to public transport and other alternatives.
“The Government has also made a clear undertaking that any form of variable pricing will be primarily used to replace the existing road taxes that motorists pay. This is about easing congestion, not raising more revenue,” Mr Bridges says.
The Smarter Transport Pricing Project will undertake a thorough investigation to support a decision on whether or not to proceed with introducing pricing for demand management in Auckland. Officials from the Ministry of Transport, Auckland Council, Auckland Transport, the New Zealand Transport Agency, Treasury and the State Services Commission will work together and engage the public to develop and test different options.
The first stage of the project, which will lay the groundwork for assessing pricing options, is expected to be complete by the end of 2017.
“Any decision on the use of a demand management tool like road pricing is still some years off,” Mr Joyce says. “We look forward to receiving advice from officials as this work progresses. The Government and Auckland Council will then consider the project’s findings.”
Auckland Congestion Pricing Project Terms of Reference are available [here]
Read the Auckland Council's page on smarter transport pricing here:
The Auckland Smarter Transport Pricing Project is a joint project between Government and Auckland Council to investigate whether or not to introduce smarter transport pricing in Auckland to reduce congestion. Smarter transport pricing involves directly charging users for the use of roads, with charges potentially varying by time of day and/or location. The project will investigate different pricing options and test whether these could improve congestion results, taking into account the impact of these options on affected households and businesses.
At the end of the project, the Government and Auckland Council will have a clear understanding of the requirements and likely outcomes of an Auckland-specific smarter transport pricing system and be able to make decisions on whether to introduce smarter pricing.
Similar to ATAP, this is a joint project involving Auckland Council, the Ministry of Transport, Auckland Transport, the NZ Transport Agency, the Treasury and the State Services Commission. For more information see the Terms of Reference [PDF, 211 KB].
Background
In 2016, the Government and Auckland Council worked together to develop a clear direction for Auckland’s transport system over the next 30 years, through the Auckland Transport Alignment Project (ATAP). The full ATAP report can be found here [PDF, 2.2 MB].
ATAP found that, to achieve a step-change in the performance of Auckland’s transport system over the next 30 years, we need a fundamental shift to influencing travel demand, alongside substantial ongoing transport investment, and getting more out of the existing network.
In response to ATAP’s findings, the Government and Auckland Council have now established the Auckland Smarter Transport Pricing Project.
What is smarter transport pricing?
Currently, motorists pay for the use of roads through a range of methods: petrol taxes, road user charges, vehicle registration fees and rates. These charges don’t take into account the time or location of travel – for example, driving on a congested motorway in rush hour versus driving along a quiet road late at night. But the true costs of these two journeys are very different – driving at peak times adds to the congestion on the road, which impacts on (or has a ‘cost’ to) other road users. These costs impact both on the economy (for example, by adding to freight travel times) and at an individual level (meaning, for example, less time spent at home with family).
Smarter transport pricing could change this by varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route, or method of travel, or choose not to travel at all – this is known as demand management. The result is better use of the road network.
Update adds comments from Auckland Mayor Phil Goff over the weekend.
73 Comments
Does mitigating the effects on lower income households mean that a jobless person just out for a cruise at rush hour would still not be charged more because they can't afford it, while someone driving to work would be hit by substantially higher costs? Wouldn't that disproportionately hit the middle who have inflexible hours? The guys at the top tend to have somewhat more leeway as to when they get in and leave...
If my wife doesn't work and as such has a lower income could I use her car to drive around without attracting higher congestion charges? What about if I have a son/daughter in school, could I register a car in their name and not get hit with congestion charges?
Auckland does not have the infrastructure to support quality public transport. The congestion charge works well in London, because they have a heap of well resourced viable options. Tube, Train, Tram, Boat, Bus, taxis, etc...
The only thing Auckland charges will will incentivise is loopholes like sadr001 mentioned.
Bollocks Ocelot , it costs $16 for me to get from Home to North Shore hospital , a distance of around 10 kms .
It takes 2 hours involves 2 different busses and wet shoes .
The same trip costs $3 in my Diesel car and takes just 9 minutes .
Our Public Transport system in a disgrace
Sounds like you're catching a different public transport system to me. I go from constellation station to Newmarket for $6.30 a day. The furthest you could go in 10km is from the isthmus zone to lower north shore, three stages. You'd have to go five stages for it to cost you $15 a day. That's from Manukau south. Unless you're paying cash in which case it's your own fault. AT hop can be crazy cheap (unless you're going to and from the edge of two zones).
To be fair, the busway largelyis a different public transport system to the rest.
If you live on the main arterial route, preferably near a park'n'ride station, and work similarly (or central CBD/Newmarket) then the buses are excellent.
If you live in Albany and work in Hobsonville, or live in Massey and work on Dominion Road, then the buses are pretty much worthless.
Agreed, a commute by public transport takes 3 times as long and costs 3 times as much compared to my really economical small car. (Petrol: I'm not selfish, I don't want anyone to get cancer from any more diesel exhaust fumes). Sure, I do have to get up really early these days, but my boss allows me to leave early...
Diesel particulate pollution is not a big problem on a small windswept island, unlike e.g. paris and london. So you could argue you are being selfish running petrol when the co2 emessions are greater than equivalent diesel engine. And that your doing it just because small petrol cars are cheaper for you to purchase and operate than the diesel option.
Certainly far more pollution than public transport, and think about all the people delayed by the congestion you cause. All those people from walkworth who now have to get up at 5:30 so they get a clean run before people like you clog it up. Very selfish indeed
You completely miss the point.
It is about a user pays system, instead of common goods.
Auckland, like everywhere without tolling, suffers from the common good problem whereby marginal costs of usage of roading infrastructure decrease in usage. Thus, building more roads and not charging users an amount consistent with their the true cost of usage will simply incentivise overuse.
This is exactly why building new roads, without some form of tolling, has never reduced congestion.
A user pays system with exemptions for those who "can't afford" it ( such as my wife and future children ), based on the Q&A link provided at the end of the article.
I'm entirely in favour of user pays congestion charges, I'd happily pay $5 - 10 each way if it saves me 20-30 minutes of commuting. ( my current commute is about 10 min either way due to the hours I work but if I had static hours I'd certainly pay to save time ).
My concern is that the exemptions mean that congestion is not materially reduced but I would still be required to pay the congestion charge.
This is great news and long overdue.
We have to provide incentives to change behaviours otherwise nothing will change and a charge at times of congestion provides that:
Pick up another passenger to share the charge
Travel on public transport to avoid the charge
Travel at a different time
Queuing theory shows that marginal traffic increments can have disproportionate effects on capacity as we all observe when Varsity / schools are closed and traffic flows a lot more freely in AKL.
The technology to do this is economic and exists today.
We have to first optimise the capacity within our existing resources and this is the way to do that.
Then and only then should we be thinking about capacity additions.
Glad to see someone mention queuing theory. The entire point of any behaviour-altering action is to move volume lower down the ultilisation curve, with the explicit aim of getting below the 'knee of the curve'. That's exactly why a small reduction in a heavily loaded system that has crept up above the 'knee', can have such immediate effects if the 'knee' is thereby not reached.
For an erudite discussion on this, see https://www.cmg.org/publications/measureit/2009-2/mit62/measureit-issue…
And it's also worth recalling that the first big usage (and hence spur to development) of queuing theory was the telephone system, around a century ago......
We do take a long time to learn fings, eh?
JB you are delusional mate , this is a TAX plain and simple , and Auckland city should be living within its means , like the rest of us .
They can start by cutting staff headcount which has exploded since we became a Unicity
We have so many staff at Auckland Transport earning over $100 k a year its not funny , and I would like to know what they do all day ?
Did you know this little city runs a fleet of 800 vehicles , and they dont own any busses or refuse vehicles or parks vehicles which are all outsourced to private firms .?
WTF do they need so many cars for ?
They need to cut their cloth instead of shaking us down for congestion taxes and and resorting to taxing tourists who stay here as if they are some kind of cash-cow .
The other issue is that inward migration is at a level that we actually cannot cope .
Probably half of these people will be doing property speculation in any spare moments they have...
I used to work for a company in Ak where at least 3 of the managers had "investment" houses in QT.
And no doubt other houses in Ak. I wonder if their mind was on work at all?
Yah, and on a slightly related note, Watercare are increasing water charges by 2.5% and wastewater charges by 3.3% on average (http://www.watercare.co.nz/about-watercare/news/Pages/Water-and-wastewa…).
Thankfully, they do take the time to tell us that:
a) they do not make a profit;
b) they receive no funding from rates;
c) they pay no dividend to the council.
Another cost increase significantly above wage inflation for the middle class to bear, as well as transport costs. These days, I am finding more frequently that my cup of cynicism runneth over.
And the head of Watercare was on a salary of $900, 000 per annum , i would pick he was the highest paid official in NZ
How can any public servant on the planet earn so much when all decisions are taken by committees .
Its little wonder that a city water meter costs $14,000 to install when the pipes cost under $3 per meter and the unit costs about $300 .
Its a disgrace that a monopoly exists on water connections
In the electricity industry, if they have to call for power savings to save their bacon (no power cuts), then the power companies involved are required by law to give all of their customers a cash refund. Alas, Watercare had to ask the public recently to save water and were they penalized in this way? Nope. Its a council organization of course!
The first stage of the project, which will lay the groundwork for assessing pricing options, is expected to be complete by the end of 2017.
So, by the end of this year they will have completed the beginning of the thinking about how to start the scheme, if everything goes according to schedule.
At that rate, we should have something in place by 2030.
No not groundwork. But groundwork for assessing options. So by the end of the year they will have finished thinking about how they should think about options. Next comes thinking about the options. Thinking about how to implement the preferred scheme comes much later. I think 2030 is optimistic. If its not a new motorway, any transport spending is a can to be kicked by this government.
I live in an established suburb with existing services and infrastructure. The addition of infrastructure and services that are not around me adds nothing to the value of my land so logically I have no costs to share. That said, I expect my land value will go up as people seek to avoid the congestion charges. Until we take away the need to travel to the CBD for higher paid work we are urinating in the wind here. In the meantime we seem set to keep inflating the value of central Auckland suburb land. Although a beneficiary of that trend I'd rather see values remain stable or go backwards for a decade or so.
You live in a suburb that value of which is increasing because of the development of the city around it. if there was no city around it, it wouldn't be valuable. As you note, you'll also benefit from the congestion charges without paying anything toward them - so a split between rates and congestion charges would be fairer.
To your point, most affected people will be driving on established roads too. So why tax them and not you, if these things being established is the criteria?
Alternatively, maybe a better route is to intensify the inner suburbs and use more public transport as that's far more efficient that public transport from dispersed suburbs.
The Unitary Plan is operative (for the most part) so the intensification possibilities are set for the foreseeable future. Based on what I've seen so far I wouldn't hold out much hope it will deliver anywhere near what Gen Zero et al thought it would, in the short/medium term, in the Central city suburbs. If I was young again I would repeat what I've already done, make my money offshore. It's a more positive option than hoping the Auckland market will sort itself out. Clearly every knee jerk reaction is just confusing things more.
Yeah, I agree you've got better chances of making a good income offshore, but for many Kiwis that's not going to be an option so much, and I do think we have a responsibility to manage housing outcomes a bit better than has been done in the last 20-30 years - following the earlier periods where it was done at least a little better.
Land Tax looks a likely candidate to encourage intensification. More dwellings per meeting reduces the burden per person.
The Unitary Plan is supposed to allow most with the desire to subdivide to do so. That was politically fractious enough. A land tax is political suicide if its aim is to coerce people to subdivide their properties or sell up. Change will come with its own pace. None of us are taking the land with us when we pop our clogs.
Why not put up the rates Phil - brilliant way to fix Auckland property prices and population growth - regions here we come!!
“[W]e have run out of ability to borrow more. We could, of course, put it on rates, and that would be 20% to 30%. But I don't think the Minister of Finance is going to say that's a proper way for Auckland to be dealing with it,” Goff said.
For the life of me , how will this ever reduce congestion when so many of use have to use our vehicles for business ?
We have an utterly hopeless inefficient and ridiculously expensive public transport system that even Auckland Transport staff and officials do not use
And, who is actually going to have to pay this?
Not me , its a Company expense .
The ordinary worker will pay , those already disadvantaged by high rents and minimum wages
So we should never invest in public transport unless we can magically build enough train lines for everyone at once? Gee all those other cities that have good public transport and can handle many more people than Auckland without all the problems, they are pretty stupid eh.
Of course the council won't contemplate cutting any of the funding poorly spent on all manner of things that don't need to be provided by a council e.g. on many social services that central government already takes responsibility for and in which the council services inefficiently overlap and duplicate the government's work. Also the very generous subsidising the council kindly makes to various organisations (disproportionate to any benefit they provide) on behalf of many struggling ratepayers who never benefit from the council's excess of generosity yet have their money forcibly taken from them.
Why don't the people who lived in NZ at the end of the last Labour government 9 yrs ago pay off the 10 billion dollars that the country owed at that date and all the people who have moved to NZ during Nationals rock star economy of the last 9 years pay the dept that National has stacked up? We could call it 'user pays'.
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