Categories

Archives

The regional fuel tax

One aspect of the government’s proposed changes to the Land Transport Management Act (LTMA) is the repeal of a provision which allows regional councils to introduce regional fuel taxes. Already the process to create a regional fuel tax seems quite complex, as the government was able to unilaterally cancel the Auckland scheme back in March 2009, delaying projects like electrification, Penlink and integrated ticketing – which had been banking on that money. However, it seems that transport minister Steven Joyce isn’t content with his power to remove schemes, he wants to also banish the ability of council to even propose them.

An article in today’s NZ Herald highlights that Joyce’s determination to rid the legislation of regional fuel taxes runs against advice from Treasury:

“Despite his perception of Treasury support for the overall purpose of the amendments, Mr Joyce acknowledged it would have preferred a more thorough legislative review…

…He said the Treasury had concerns about removing the existing legislation’s regional fuel tax provision without replacing it with an alternative funding mechanism.

Although the Treasury appreciated regional fuel taxes had some practical limitations, it believed retaining legislative provision for them “would send an important signal to the regions about being accountable for funding their transport decisions”.

But Mr Joyce said that would result in much higher prices and hand authority to local councils to spend Government taxation.”

I have somewhat struggled to understand why Joyce is so opposed to regional fuel taxes. They are obviously something that regional councils (including Auckland Council) would impose, so if they were wildly unpopular people could simply vote in a future local government election for people who proposed to get rid of the scheme. Furthermore, when the ARC implemented the old fuel tax scheme it went through a highly complex and detailed public consultation process – and was actually (and amazingly) quite popular!

I can only surmise that Joyce doesn’t like the ability of regional fuel taxes to give local councils more independence in how they fund transport projects and how they raise funds. Similar to his opposition to road pricing schemes, the only logical way to make sense out of how Joyce can both want local government to fund a greater proportion of public transport projects and simultaneously take away their ability to do so, is that actually he’s not particularly interested in seeing those PT projects proceed. Even if central government doesn’t have to pay for them.

I have noted in the past that I think central government has far too much power, compared to local government, when it comes to transport funding matters. People simply don’t vote, in national elections, on transport matters (I may be an exception to this rule) whereas they very much do have transport in the top of their mind when voting in local government election. A regional fuel tax would recognise the greater connection between local government and transport policy, giving them the ability to fund additional transport projects through a scheme that they take the political risk over.

Sure, regional fuel taxes have some issues in terms of whether particular petrol stations fall one side of the region’s border or the other, but I suspect the fuel tax would need to be set incredibly high for people to bother travelling many kilometres out of their way in order to avoid the tax. Furthermore, if all the regions took it up then the border issue would go away. In the USA there are a million different local taxes and they seem to survive.

So all up, removing the ability of local councils to put in place a regional fuel tax is an incredibly anti-democratic move whose only justification seems to be a desire to see transport decisions become even more centralised.

24 comments to The regional fuel tax

  • Matt L

    It is interesting that just one week after an election that we are getting info coming out about Joyce ignoring advice and just doing his own thing.

  • Stu Donovan

    Has Steven Joyce ever taken advice onboard? Say what you want about Labour, but Annette King wa s afar more competent and respectful transport minister than Steven Joyce. The latter’s legacy seems destined to be white-elephant holiday highways that people look at and woder “why?” – not unlike Muldoon’s “Think Big” projects.

    • obi

      “not unlike Muldoon’s “Think Big” projects”

      Note that Think Big was predicated on the idea that petrol was about to run out and become impossibly expensive in the process. In that regard it is similar to the more recent Peak Oil panic, which is used as one reason for building grand public transport projects. That was 30 years ago, petrol is cheaper in real terms than it was then, the total number of kilometers driven each year is much greater than in 1981, and the only constant are the people predicting impending doom. Of course many of the Think Big projects collapsed because petrol prices reduced and made them non-viable.

      Think Big didn’t build any roads. However it did electrify some of the main trunk railway line. But only some of it, and to a different standard as the existing electrification in Wellington. I think the electrification was supposed to make rail freight self sustaining. There is an enduring myth in NZ that just one last bailout and capital injection in rail will make it financially sustainable. It’s a myth that has been around since the 1880s, and one that this government have bought in to.

      • Patrick R

        Here’s a chart with inflation adjusted oil prices, probably a more accurate reading would be that we are heading yet again, for the third time, to world economy breaking oil prices: 1979 $111; 2008 $129; 2011 $101 [today]

        http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_chart.asp

        Yes Think Big was wrong then, but Stu’s point is not that the RoNS are like that programme in what is built but rather in that it is just as wrong headed. Furthermore the fields that saved the west from the 1980s; North Sea [peak year 1999] and Alaska, are now in serious decline and no amount of fracking or Tar Sands will match the world’s current appetite as the giant Saudi and Russian fields also head that way.

        That the OPEC crisis was overcome with other sources after 1979 is does nothing to support an argument that there is a limitless supply of affordably recoverable oil. The Tea Party Republicans do believe this however and if only the devil in the form of President Obama wasn’t in the White House the US would not need to import any oil. Geology and the current oil price- in the midst of a recession- argue otherwise.

        Still, of course the future is unwritten, so perhaps we should be attentive and cautious. http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/

      • Stu Donovan

        Obi, I’m afaid to say that you’ve gone off on a tangent. I am simply pointing out that the RONs are similar to the “think big” projects because informed analysis will show that the RONs are (by and large) a gigantic mis-allocation of NZ’s scarce capital resources. What motivated either the RONs or think big is not the core issue.

  • But Mr Joyce said that would result in much higher prices…

    The thing that really annoys most is the constant misrepresentation by Mr Joyce. The regional fuel tax available to the council was only ever going to be up to 4.5c a litre. An additional 5c a litre was to be the Government’s to spend on yet more motorways. Instead it was replaced by a nationwide 3c a litre petrol tax increase in October 2009.

  • From November 2008 to June 2012 the National Government’s debt is forecast to hit $38.8 billion dollars, hence the necessity of the flogging off of the silverware (and look at all the vampires lining up to get their snouts in the trough).

    The RoNS is forecast at however many billions ($25billion+ ?). They’re Steven Joyce’s baby.

    There is simply no way that the country can afford to build the RoNS as proposed without racking up huge amounts of intergenerational debt. Pig-headed Steven Joyce may be the last person in the country to wake up to the fact that the RoNS are simply unaffordable and he will drag us down deeper than the floor of the Marianas Trench to build them, but when the inevitable happens and he gets sacked or National get thrown out of office in 2014 and the RoNS are inevitably cancelled then if I and every other not insane transport commentator on the blogs has the world hugest gloat then it will be completely understandable.

    The fool will get his comeuppance.

    • Stu Donovan

      Completely agree. My gripe with Steven is not political, it’s personal. I am personally affronted by his ignorant assaults on the processes governing transport funding in NZ. For me the most annoying thing is the way he prattles on about the need for transport to support economic growth, while stubbornly squandering money on largely uneconomic highway projects, even at the expense of highly beneficial local road projects (before we even start talking about PT/WC).

      Word on the street is that someone else in the the National Party was responsible for identifying the RONs. This chap subsequently sold the RONs hospital pass to Joyce, as the incoming minister who knew nothing about transport. Joyce subsequently went big with the RONs plans and now has to stick to the original line, else he is outed as the ignorant “fool.” So the answer to what’s now driving the RONs programme is really just “Steven Joyce’s ego.”

      Logic and rational thought has long since left the building …

      • “someone else in the the National Party was responsible for identifying the RONs.”

        Anyone know who?

        • Matt L

          Probably Bill English

        • Stu Donovan

          I don’t know for a fact, but I do know who is said to have some up with the ideas. Email me, so I can tell you without being hit with defamation charges.

        • Stu Donovan

          But no, it’s not Bill English – and no-one that high up. It’s a long time National Party member who works for a major regional council in NZ and thinks he knows a lot about transport, when he does not.

          I suspect that deep down Bill is actually anti-RONs, because he probably knows that they are an economic lemon. And as finance minister he has his finger on NZ’s spiralling debt, which could be addressed by slowing the RONs programme.

          • The Trickster

            Dammit, I also want to know now too!

          • Stu I don’t have your email address, and the name would probably be meaningless to me, so I don’t really have to know.

            Maybe we could ask the guy, and if he is proud of his RoNS plans he should have no problem it being public knowledge.

            Maybe he’ll even post a comment here to say who is the “brains” behind the RoNS.

          • Jennifer

            My understanding is that it is Bill English (rather than Steven Joyce) who is primarily behind the reluctance to advance funding for PT projects, viz CRL.

          • Patrick R

            Yes, Dipton is a great place to understand cities from.

  • One seriously have to be suspicious of what is motivating Stephen Joyce. I can’t beleive ha can be such a negative (PT) pratt.

  • “Sure, regional fuel taxes have some issues in terms of whether particular petrol stations fall one side of the region’s border or the other”

    In Auckland’s case that is all but irrelevant. On the north side, it is a 15km trip from the border to the nearest gas station outside Auckland, 19km from the nearest sizable settlement and a full 52km from the city fringe. On the south side it’s more like 20km. A few folks from Wellsford or Pokeno might do the border run but few Aucklanders are going to make a 100km round trip to save 5c a litre.

  • Rtc

    It’s quite similar to National kegs skating to remove a council’s ability to blanket protect trees – and I wouldn’t be surprised if they legislate to remove auckland’s ability to maintain an MUL.

  • Rtc

    *legislating (damn autocorrect!)

  • Bob Scott

    Interestingly, I saw an article in the Herald yesterday (I think) about petrol retailers bleating about falling fuel sales in Auckland. They cited the switch to smaller, more fuel efficient cars and the “increasing use of public transport in Auckland” as the reasons for their woes. Poor things.

  • Matt

    I think Joyce is now so wedded to the Roads of Dubious Significance that he’s protecting their imagined viability at any cost. Allowing money to go into making public transport better would reduce road use further, right at a time when the evidence is coming out that population-adjusted traffic volumes have been declining for quite a few years. Keeping the vehicularly-oppressed under the thumb is a certain way to ensure that there’s no greater erosion of the supporting demand for his precious monuments.

  • Patrick R

    For anyone interested -OBI- here’s a brief and up to the minute view on the current state of the US and its relationship to oil availability and price: http://gregor.us/oil/the-end-of-growth-in-the-united-states/

Leave a Reply