Christmas present: new tax

Transport funding involves move toward supercity

5 Government ministers strode into Auckland today to announce a “Christmas present” for the region: an extra tax, and a shift of tax, to help ease transport congestion.

[Parked up for the announcement were, from left: Minister for Auckland Judith Tizard, Auckland mayoral forum chairman & Rodney mayor John Law, ARC chairman Gwen Bull & Prime Minister Helen Clark; and, below, the Prime Minister, Finance Minister Michael Cullen, Transport Minister Paul Swain & Local Government Minister Chris Carter.]

They also announced that infrastructure bonds would probably be coming, tolls would also be coming, local bodies would be able to run borrowing programmes and the structure of Auckland local government would change significantly.

There was no detail on bonds, tolls or borrowing. These have still to be worked out over the next few months.

There was some detail about governance. The proposal is a major step towards a super city under the Auckland Regional Council.

Auckland’s politicians still have to accept the proposals. They will accept Government money, and they may accept Infrastructure Auckland being submerged out of existence in a new holding company. But some, particularly Auckland mayor John Banks and Manukau mayor Sir Barry Curtis, have been fighting for different kinds of super city, where the territorial bodies are fewer but have more power and the regional council is stripped back.

Local politicians I saw wandering about after the dual Eden Park functions – the politicians were addressed, then the media got a turn – seemed happy enough with the offering.

Rodney mayor & mayoral forum chairman John Law said nobody liked tolls, but if that was the only way to get better roads from Orewa into Northland, he believed Rodney people accepted it. He expected Alpurt – the motorway extension north to Puhoi – would be brought forward, starting work at the end of next year. “It has been decided, subject to funding.”

Auckland’s congestion is described as unique in the country, caused largely by the high population growth of recent years & accompanying influx of Japanese import cars.

Returns from the new road tax, however, will be split 35:65 Auckland:rest of the country, and the rest of the country will get its split on a population basis, not according to prioritised need.

That amounts to $72 million/year for Auckland, $135 million/year the rest of the country for 10 years from 2005, plus gst, and presumably with inflation changing the numbers over time.

The handout – “We’ll tax you more, than hand the extra back to your local politicians” – seems based on the principle that, if a problem festers enough for complaints to become loud, a tax to fix it will be readily accepted.

I arrived slightly late for this announcement, coming from a dental appointment, so I understood the principle very well. I also know it’s not a proper basis for carrying out repairs.

Auckland will also get $90 million/year for 10 years (again, from 2005) in a diversion of excise back to transport from the Government’s general coffers.

The additional excise will put 5c/litre plus gst (total 5.625c/litre) on petrol. Smaller diesels (under 5 tonnes) will pay a similar amount through higher road user charges, amounting an RUC hike of about 24%, depending on vehicle size.

The Government put these increases at about $83/year for an average vehicle on petrol, at 30 litres/week, or $6.22 (including gst)/1000km for a 2-tonne diesel.

Finance Minister Michael Cullen said the diversion of excise duty to the Government’s general coffers would be cut from the current 18.475c/litre to 15c/litre.

The Government wants local bodies to respond to its package by the end of January. It will formally sign its financial contribution in its December budget policy statement on 18 December. The governance changes will take effect from July, on the basis of legislation introduced in April, and the excise & RUC changes will take effect in April 2005.

Also: On the road to a supercity

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