Finance Minister Steven Joyce is spelling out why the Government is rejecting Auckland Mayor Phil Goff’s proposals to fund transport in the city.
Joyce finds himself caught in a political vice.
On the one hand, he is under pressure from business to bring forward Government agreement to congestion charging.
On the other – and this is evident in the terms of reference for the congestion charging inquiry —the Government is aware that any move to charge what in effect will be road tolls could backfire on them politically.
Key said tolls of $50 a week were simply unacceptable. “It won’t be happening.”
Leader John Key was quick to slap him down saying he had got “over-excited”.
It is a view they have long held in Auckland.
Prior to the 2008 election, Transport spokesman Maurice Williamson’s suggested that motorists would be willing to pay tolls of $3 to $5 a trip if it meant shorter travel times.
But meantime Joyce is maintaining the pressure on the Auckland Council to cut its costs. And he is signalling that he expects rigour from the Council as it commits to future projects.
Though the Auckland Transport Alignment Project has largely settled on future transport priorities for the city, he appeared to suggest that some of those priorities could be re-litigated.
“I would signal that some of the projects that we collectively have all committed to, including the CRL, don’t really stack up on a traditional cost-benefit basis,” he told Parliament’s Finance and Expenditure Committee.
Joyce and the Government place a great deal of store on the congestion charging project to manage demand on the city’s motorway system.
But at the same time the Cabinet has been wary of the political implications of it for some time now.
For that reason, the terms of reference for the joint Government- Council study to be conducted into it includes as its first objective a requirement to ensure “key impacts of pricing on those using the transport system, businesses and households, including fairness, equity and distributional impacts, are understood and appropriately addressed.”
The Government’s caution is reflected in the deliberate pace with which it is moving to introduce the system.
The first stage of the inquiry is to report in November this year, and then the are further inquiries to be carried out after that.
Joyce said on Tuesday that “any decision on the use of a demand management tool like road pricing is still some years off.”
But yesterday, the Auckland Employers and Manufacturers’ Association CEO, Kim Campbell, called for the project to be speeded up.
“We believe, by addressing this issue sooner rather than later, we will see an uplift in the city’s productivity. It’s no secret that business is suffering as a result of the worsening congestion on Auckland’s roads,” he said.
Meanwhile, the AA and the EMA have called on the Government and the Council to agree on short-term measures such as phasing traffic lights to provide some relief.
The Government is also adamant that any congestion charge be revenue neutral.
The Terms of reference emphasise this; “The project must consider the implications of any potential pricing initiative on the current land transport funding system of fuel excise duty and road user charges
“For the avoidance of doubt, this means the potential for any demand management pricing initiative in Auckland to replace or offset (fuel excise duty) and (road user charges) in Auckland.
This means that congestion charging revenue will not add anything to the Auckland Council’s Budget. The Government is highly sensitive to the argument that if it were to portray the charging as a revenue raiser, it would contradict its own commitment to reduce taxation.
In fact, Joyce made it clear yesterday that the Government is unlikely to provide much financial assistance to the Council at all.
He rejects Goff’s proposal that Auckland should receive a share of GST.
“We have a very good accountability system in New Zealand where central Government is responsible for the collection and allocation of taxes and local Government is responsible for the collection and allocation of rates and in my view that has been an enduring system which mean people know which mean people know which buggers to kick out if they aren’t happy with the allocation of either of those things and it’s very straightforward,” he said.
Joyce says the simplest thing the Council can do is cut costs.
He points out that it is growing its revenue anyway. Two years ago its revenue was $3.5 billion; now it is $4 billion.
He says his Government’s own experience can provide a model.
“Remember we were in deficit and we just held our cost structure and tightened right down on it and made sure that we weren’t spending more than we earnt, and as a result, we created a surplus which we are now investing in infrastructure.”
He says the Council will already get two-thirds of its transport infrastructure spend over the next ten years.
“The Government is already paying two thrids of Auckland’s transport costs over the next decade; the Council is paying about a third and we will probably end up paying more because it is a growing city, the same as we are round the rest of the country and we’ve got a $32 and a half billion spend and some of that has yet to be allocated.
“Their revenues are rising but so is their expenditure.”
He argues that the Council should try to control that expenditure and thus have more money available to service debt.
That would allow the Local Government Risk Agency to raise the Council’s debt limit which would mean it could borrow more for some of the projects it wants the Government to fund.