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The government’s annoying funding myth

Over the last few weeks there has been a renewed media focus on Auckland’s transport issues. This has been spurred on by  two main events the first was the Green Party launching their Reconnect Auckland campaign and the second was the announcement of alternative funding options to help pay for future transport projects.  Along with that it has seen a resurgence of an annoying myth that members of the government like to perpetrate. In an effort to try and make their transport policy sound more balanced than it actually is they love to state that the government has invested $1.6 billion into the rail network. Government MPs talk about it on social networks or at meetings, Gerry Brownlee mentioned it in his recent interview on Campbell live and Steven Joyce, repeated it this morning on The Nation (on TV3).

Now $1.6 billion certainly sounds like a lot of money and of course it is. It is also true that it the amount of money that central government has, or will be spend on rail up until the electrification project has been completed. The issue I have is that a decent proportion of the money was approved or spent before the current government even came into office. So let’s look at the figure a bit more closely, the $1.6 billion can be boiled down into three key areas:

  • $600 million for Project DART
  • $500 million for the electrification infrastructure
  • $500 million for the new electric trains

As the government are using the total figure to suggest that they are investing in a more balanced transport system, the question becomes whether the money was invested by the current government or not, so lets have a look.

Project Dart

Amongst other improvements it included double tracking the western line, various station upgrades, the Newmarket Station and changes to the junction, the New Lynn trench and station, reinstating the Onehunga Line, building the Manukau branch line. Kiwirails page on the project also states:

The 2006 Budget included funding of up to $600 million for rail infrastructure improvements to speed development of the Auckland network.

So yes this was paid for by central government but as you can see, funding started before the current government came to power which was late in 2008. Of course not all funding is spent in one year and as Brownlee said the other day, they didn’t cancel it. But even if they wanted to, how much could they have cancelled anyway?  Well probably not much.

Interestingly the funding for this project was kept out of the normal transport budget and instead is listed under the finance budget. The government’s budget documents for the  2006/2007 financial year shows that the money was to be spent over a four year period and it was only the fourth year that National had any control over the budget. By then pretty much all of the various aspects to the project were either already completed or well under way meaning it was probably impossible to cancel anyway.

DART Funding

To me there is no way that the current government can claim the $600 million spent on Project DART as their spending or that they had anything to with it.

Electrification

This includes new signalling, modifying existing infrastructure like bridges and of course the wires themselves. Funding for electrification was initially included in the 2007 budget and was separate to the funding allocated for Project DART.

Electrification Funding

Now from memory the government intended to pay for the Auckland work via a regional fuel tax which would work in conjunction with one the region would also impose to fund other projects, including new trains. When National came to power they stopped the regional fuel tax and put a hold on the electrification project. They eventually agreed to let it go ahead and paid for it out of the nationwide fuel tax increase. It is however quite clear that funding for the project was initiated in 2007, over a year before National came to power.

Electric Trains

There is obviously not much point in paying $500 million for electrification without trains to run under the wires. As mentioned, the original electrification proposal was to see Auckland pay for the trains out of a regional fuel tax imposed by the regional council. The national governments cancelling of that fuel tax took that funding option off the table. When they finally agreed to let the project go ahead it was announced that the trains would be paid for by way of a loan that Auckland would have to pay back (without the extra source of funding). Worse still was that even after paying back the loan the proposal meant that Auckland still wouldn’t own the trains, Kiwirail would, however this has now changed and Auckland will own the trains directly.

Since then there has been some positive news, it was announced that Auckland would end up getting more electric trains that first proposed, that was partly possible due to better than originally expected exchange rates along with the government kicking in an extra $90 million. The NZTA are also going to contribute to the loan payments in the same way they provide money for PT operating costs however oddly it turns out that the government appears to be clipping the ticket on the loan by charging a margin on top of their cost of funding.

EMU painted 3

The first EMU will be here in a few months time

So when the government states that they have invested $1.6 billion in to rail in Auckland, it is frankly untrue. In fact the only new funding they seem to have provided is the extra $90 million they provided to buy extra EMUs and the 50% share of funding for loan repayments. Other than that all of the funding is the same as what was agreed to before they came to office.

32 comments to The government’s annoying funding myth

  • Sacha

    ‘Myth’ is too polite. It’s nothing but self-serving lying that reflects poorly on the character of those doing it – and those letting them get away with it.

    Joyce also claimed some credit on the Nation for funding the CMJ ‘spaghetti junction’ project. I believe Budget figures will show the same story as above.

  • But they have generously budgeted a whole 39million OVER THE NEXT THREE YEARS for public transport infrastructure in Auckland. Yet a record how many billion on roads? Matt have you got that figure handy, I think a bar graph could be useful to illustrate the famous balance and multi-modality of this bunch of confused exaggerators.

    Very irritating to have Brownlee add hundreds of millions to the cost of the CRL on Campbell Live too. They know what they’re doing, their inaccuracies are too consistent to be mistakes.

    • The graph below? It is important to remember that the rail projects do sit outside of that funding, still even if you included it, PT doesn’t even come close to the roading budget.

      • No I’m thinking of the road capex spend versus the Transit capex spend over the next three years.

        • TheBigWheel

          I tend to agree this amounts to blatant lying. If I were armed with both Matt’s chart and the one that Patrick refers to I’d be happy to pen a letter to my MP Simon O’Connor.

        • This one?

          TheBigWheel – Simon is one who has raised this lie before.

          • TheBigWheel

            Thanks.. I’ll add my voice nonetheless.. shucks it’s so political. I don’t frankly get why the Nats feel the need to be so anti PT and anti intensification. In the long run such an approach will fail as the city grows.

  • Good post. I tweeted to him saying that he was wrong as well, it is so clear.

  • obi

    “So when the government states that they have invested $1.6 billion in to rail in Auckland, it is frankly untrue.”

    It is true. The Government of NZ has invested this money. Unless you want to quibble about the word “invested”, since some of the spending isn’t likely to show much return. It’s like saying the government pays out billions of dollars in superannuation each year… You don’t argue that this is untrue because national superannuation was enacted in 1975.

    If Brownlee had claimed that the National-led government had spent $1.6 billion above what the previous government had planned to spend, then you’d have a point.

    • But Obi that’s exactly what they say.

    • Obi, they are claiming it as theirs, from the Campbell live interview the other day, Campbell was hitting Brownlee up about not liking rail and he says
      “No no no, we’re funding aah $1.6 billion to expand the rail network in Auckland.”
      You can listen to it yourself, it’s at roughly the 13 minute mark http://www.3news.co.nz/Campbell-Live-tests-Aucklands-pubilc-transport-efficiency/tabid/367/articleID/296090/Default.aspx

    • Sailor Boy

      It depends whether he says the NZ government or the government.

      ‘The government’ mean the current National led coalition government.

      • obi

        He is a Cabinet Minister. He speaks on behalf of the government of NZ. That includes all government programs and expenditure, not just ones that were initiatives of his party. If he is asked a question about government support for some sector of the economy, then of course he is going to talk about all the relevant programs and expenditure rather than just new initiatives. Because he is the Minister responsible for the government agencies, the budget allocations, and the outcomes. Also because governments are free (within reason) to cancel the programs of previous governments. This is the difference between Cabinet Ministers who are responsible for the Government of NZ, and opposition spokespeople who are only responsible for press releases and policy papers.

        Just as an aside… None of this is really government investment in roads or public transport. We’re talking about a centrally managed hypothecated account (NTLF) collected from fuel taxes and road user charges that is used to fund roads and public transport. The government is just deciding how to allocate the money. So really it is motorists investing in roads or public transport. However there is another funding source for public transport that isn’t banked in to the NTLF… fares. If the government really wanted to “invest” more in public transport, then the easiest way would be to place fuel taxes, road user charges, and fare revenue on an equal footing by banking fare revenue in to the NTLF before redistributing it to public transport projects and operators. That’d show far more “balance” in transport funding, if balance is something that interests you.

  • I also wonder if part of the problem for Auckland public transport is that the Minister of Transport is also in charge of the Christchurch re-build. The government has managed to find an extra 10 billion to throw at that (because of what? – are we ensuring a Rolls Royce project?) while they are looking to serve up a Suzuki (motorbike) style public transport system for Auckland. It is nothing short of disgraceful.

    • This started before Brownlee was minister so I don’t think it has anything to do with him being from out of Auckland or that he is also in charge of Christchurch. It was Joyce who started it.

    • Greg N

      The $10b additional costs for Christchurch is a total that includes private and public money.
      The governments portion of that is per-Treasury figures about $3.5b not the $10b total and that is spread over a decade or more, so the “annual” figure is about $350m per annum extra of Government spending.

      As for Suzuki Motorbike style PT system – historically thats true, and there has always been a “Christchurch quake” type reason why Auckland could never get the PT projects it needed.
      But I spoke to the mayor on Friday (3 May) at his Ellerslie “Mayor in the Chair” session there.
      He said the days of piecemeal, “smell of an oily rag” type PT projects/spending are over for Auckland, and that the CRL and other items are going to be funded and built, no two ways about it.

  • pete

    Is this a surprise to anyone??? The old line “How can you tell when a politician is lying …”

  • Also remember that Kiwirail’s track access fees have been cranked up to over $20m annually for passenger services.

  • Jon Reeves

    With dodgy numbers like these being talked about, it sounds like the need of an investigation by Tony Randle.

    Ok ok …. Just kidding.

  • I need to to thank you for this good read!! I absolutely
    enjoyed every bit of it. I have got you book marked to check out new things you post…

  • patrick m

    “None of this is really government investment in roads or public transport. We’re talking about a centrally managed hypothecated account (NTLF) collected from fuel taxes and road user charges that is used to fund roads and public transport.”

    There is a big problem with this statement – While this may be true of funding for SOME motorways, the local roads are directly subsidised by rate payers which is infact a further indirect subsidy for State Highways and said SOME motorways. So if this money didn’t come from ratepayers then these so called motorways/state highways COULD NOT be funded from the NTLF.

    So it reads to me that your stating, as road users maintain this hypothecated account this money should be solely spent to the benefit of said road users. Balance in transport funding should be taking into account this past 60 years worth of Rate payer subsidy. After all fares fare :)

  • snow flake

    I must say I have come to be a little disappointed with the credibility of some of the facts presented here.

    First I was disappointed to find that the decline in PT here in Auckland was mainly due to the harbour bridge being built, as shown with your own graphs and data.

    And now we have this post claiming that the governments has only put $90 million into rail. This is a complete lie given the government put forward the money for the full $1.14 billion cost if electrification. Even if the council buys the train through a loan.

    The next lie we have is this claim that only 3% of the transport budget is going to PT when you know that PT funding is included in the other 97%.

    So as much as these posts are interesting, the scale of the lies is getting well out of hand.

    • Perhaps it’s time you read the post again. The point was not that the government wasn’t paying for electrification but that it was approved before the current government came to power. Same with DART, yes some spending happened under the current government but it was funding that had been approved previously. Further it isn’t 3% of the transport budget but 3% of the money allocated for new infrastructure.

      As for the comment about the harbour bridge being the reason for the decline in PT use. It is absurd as I explained yesterday. Don’t worry though, I will show you again tomorrow.

      • snow flake

        If that were the intention of your post Matt you would have done well to mention that, however the general theme was that in the 5 or so years national has been in power only $90 million has been spent.

        Over this same period we have seen $1 billion come off the cost of the western ring route and $2 billion added to the cost of the CRL. Both factually correct yet never mentioned as they don’t paint the desired picture.

        I am keen to see some better numbers on the harbour bridge however, as based on that graph there was a 5 million increase in patronage while the tram lines got removed rather than the 40 million reduction.

      • snow flake

        Air, the tram lines were all gone 4 years before the harbour bridge was opened and showed a 5 million increase will that was going on. The two main reductions happened when the SH16 causeway was opened along with the harbour bridge.

    • Ari

      Snowflake, I can’t take you seriously some times. Half the time you appear to be trolling. The harbour bridge opening also coincided with the removal of the tram network and the opening of large chunks of the motorway. It is pretty widely accepted that several factors combined to a massive decline in PT usage.

      • It also makes no logical sense, why would opening a bridge to a mostly undeveloped part of the city impact on the PT use of the developed part of the city.

        • snow flake

          Maybe the fact that the bridge was at capacity within 10 years goes some way to explain it, such as almost the entire Northshore was required to take PT before then.

  • Mr Anderson

    Snow flake = Contrarian

    “Contrarianism is different than mere dissent and authentic disagreement in various settings such as academic, policy making, personal, social and more; sometimes a contrarian position is taken to gainsay and nay-say another person’s statement, and, as is evidenced in the word “gainsay”, the motivation is not to give an accurate counterpoint, but rather a misguided attempt to appear “better” by using a contrarian argument.”

    http://en.wikipedia.org/wiki/Contrarian

    • @LostInPoker

      Mr Anderson I love the reply and how well you have descibed what “snow flake” appears to be doing and their motination.But Im from a simple more straight forward part of town .here we just say snow flake is Shit – Stirring ! But I Thank You for the education. .

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