Penlink gets tick along with electrification, ferries & tickets in first bite of regional fuel tax

Published 7 October 2008

The reasoning looked flimsy, but the $180 million Penlink crossing to the Whangaparaoa Peninsula was the one localised beneficiary today of the Government’s new regional fuel tax. It was to have been a toll road.


The other transport infrastructure projects to be paid for from the tax have wider scope:


·         Electrification of the regional passenger train network

·         Improving the ferry terminals, and

·         Developing an integrated transport ticketing system.


The Rodney District Council decided in 2006 to proceed with the 7km Penlink tolled road between the Northern Motorway at Redvale, over a 540m bridge crossing the Weiti River and joining Whangaparaoa Rd at Stanmore Bay.


The council went out to consultation in 2006, not on whether to have tolls but on how many collection points there should be.


Transport Minister Annette King said today: "Penlink was identified by the Rodney District Council as a priority north of the region to create a better link between the Whangaparaoa Peninsula & Auckland. It also ensures that the benefits of regional fuel levy are more widely distributed across the region."


The levy on petrol & diesel within the Auckland region will be phased in over 3 years, starting with 2c/litre from July 2009, rising to 5c/litre from July 2010 then to 9.5c/litre from July 2011 through to 2039.


The levy is expected to raise around $110 million/year once the full 9.5c levy is being collected. Penlink will get 1c, the ferries & ticket system ½c and rail electrification 8c.


Ms King said: "Regional fuel levy is an additional funding tool available to regions for transport projects they have identified as high priority, but that will not reasonably be funded from any other source in the timeframe desired.


"The Auckland Regional Council has identified the $1.25 billion rail electrification project, improving ferry terminals and an integrated ticketing system as high-priority projects to benefit the region, and an electrified rail network in particular will lead to faster, quieter & more frequent rail services for the Auckland region.


"The Government is already forecast to provide more than $1 billion in Auckland land transport infrastructure this year, but this levy will see other high-priority transport projects of the Auckland region realised much faster than they could have been otherwise."


The Government has calculated it will collect a net $95-140 million, year, after refunds & administration costs, once the full 9.5c/litre is being collected. The cost of project construction will be met by borrowing and the levy will be used to repay loans.


Initial project estimates, and funding sources, are:


·         Above-track rail electrification, $500 million, 100% regional fuel levy

·         Non-electric rolling stock, $150 million, 67% regional fuel levy, 33% Auckland Regional Holdings (ARH)

·         Rail system upgrade, $100 million, 79% regional fuel levy, 19% ARH, 2% NZ Transport Agency (ex-Transit)

·         Ferry wharves & integrated ticketing system for buses & ferries, $ 110 million, 37% regional fuel levy, 10% ARH, 53% NZ Transport Agency

·         Below-track electrification, $500 million, the Government will fund the borrowing and repay the capital cost, the regional fuel levy will meet the interest payments on this borrowing

·         Penlink, $180 million (up from the council’s estimate of $160 million 2 years ago), 80% regional fuel levy, 20% Rodney District Council.


Council for Infrastructure Development chief executive Stephen Selwood was surprised the Government rejected tolls and approved the fuel tax across Auckland to fund Penlink: "The decision to fund Penlink through public debt seems highly unusual in the light of the Government’s worsening fiscal position.


"While a coup for Rodney District and welcome news for the construction sector, the downside is that Government funding will crowd out private sector willingness to invest in the road, will unnecessarily increase public debt and will inevitably result in less funding for other regional projects.


"Penlink had long been signalled as a toll road following Government’s earlier rejection of Rodney District Council’s request for it to be fully funded as a state highway.


"The local community had agreed to pay tolls to have the road built sooner. Now, in what can only be described as a surprise turnaround, the Government has approved a regional fuel tax of 1c/litre to repay a 30-year Government loan to fund the road


"The reality is that there is a significant funding shortfall for both roading & public transport across the Auckland region. Continual rejection of alternative funding approaches, including tolls & privately financed projects, inevitably means delays in completion of other important transport connections."


Mr Selwood’s recollection of the locals’ acceptance of tolls is somewhat different from mine (Penlink will come out almost at my doorstep). The council delayed widening of Whangaparaoa Rd so long – and offered no alternatives – it created unbearable congestion in 2005.


Land development & transport planning on the peninsula in the 1970s was about building a wider & wider road, so eventually there’d be nothing but sea on either side of it. More recently the planning seemed to be an exercise in monument (bridge) building. Peaktime congestion is still extreme – fortunately, I rarely experience it – but that long-term lack of action is guaranteed to sway people’s thinking towards any apparent solution, however expensive.


Websites: Land Transport Management Amendment BillPenlink


26 October 2007: Rodney politicians see 2008 start for Penlink

24 October 2006: Tolled Penlink bridge to Whangaparaoa out for consultation


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Attribution: Government & CID releases, story written by Bob Dey for the Bob Dey Property Report.

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