A number of changes (most of them really bad) are proposed to the Land Transport Management Act, with the LTMA Amendment Bill open for submissions until October 26th before a select committee then hears the submissions and thinks about making changes to the Bill. One particularly bizarre change proposed is the removal of the ability for regions to apply to the Minister of Transport to have a regional fuel tax. If that sentence sounded a bit complicated and confusing, that’s because it is. Let’s outline the current situation in a bit more detail:
- If a region feels that it needs to raise more revenue for transport projects in a different way to traditional rates, it can go through a public consultation process and then propose to apply a regional fuel tax. This tax would only apply within the boundaries of the particular region.
- The Minister of Transport can then decide whether they agree with the region’s proposition. In 2008 Labour agreed to the Auckland Regional Council’s proposed regional fuel tax to pay for the electric trains (now being paid for out of nationwide fuel tax and Auckland’s rates).
- At any time, the Minister of Transport can revoke the ability to place a regional fuel tax – just as was done in 2009 (leading to a delay of probably at least a year or two in the delivery of Auckland’s electric trains).
Now that’s the current situation. Seems a fairly reasonable process that still leaves quite a lot of power in the hands of Central Government. What the Bill currently before parliament to amend the LTMA will do is remove the ability for regions to even apply for putting in place a regional petrol tax. So even though the government already has the power to say “no” and already has the power to stop a scheme, for some bizarre reason they want to remove the ability for the regions to even propose such a scheme in the first place.
Looking through the explanatory statement of the Amendment Bill, the only reference to why this change is proposed is as follows:
This will avoid the likely costs of such a tax in a single region being spread across all regions within our nationwide fuel market, and will ensure that the additional costs of a refund system for non-transport fuel use are not imposed on productive areas of the economy.
Back in August a report was presented to the Council’s transport committee which basically concluded that there’s absolutely no merit in either of these criticisms of regional fuel taxes. Here are the key conclusions: I’ve never quite figured out why this government dislikes regional fuel taxes so much. Ultimately they are put in place by local councils and therefore it is the local council taking the political risk by imposing such a tax. Secondly, regional fuel taxes have always seemed to me like quite a fair and sensible way of providing councils with funding for transport infrastructure – as it’s typically road users who benefit from Council spending on transport and building roads out of rates is really just another way in which roads are subsidised.
I tend to think that the government dislikes regional fuel taxes so much because they give Councils a bit more autonomy when it comes to transport spending. The government realises that its transport policies are increasingly out of step with those of pretty much every local council in the country (particularly in the big cities) and it’s desperately trying to reduce the power and influence of the Councils so it can ram through its own agenda. At the end of the day that’s a pretty pathetic approach, regional fuel taxes should at least remain ‘on the table’ as a transport funding option and this part of the LTMA Amendment Bill should be deleted.
There are a few other parts of the Bill which deserve some mention and I’ll get onto those in the next few days.