Why is Len talking tolls again

Two weeks ago John Key confirmed that the government would cover half of the costs of the City Rail Link and allow for main works to start in 2018. Immediately questions began about how the Auckland Council would cover its share of the expected $2.5 billion cost. Equally quickly Mayor Len Brown was once again raising the issue of road tolling, suggesting it was needed to pay for it.

The government confirmed yesterday it would pay about half the cost of the project, allowing work on part of the project involving a tunnelling machine to begin earlier in 2018.

Mayor Len Brown believes he has the backing of most Aucklanders to introduce higher road taxes and impose tolls to pay for the city’s half of the bill.

But Mr Brown told Morning Report road tolls were part of a range of transport funding options, and in the long term could not be overlooked.

“We know that we don’t have enough money through rates and borrowings, even if we sold things like the airport shares or the port shares, it’s still not enough.

“It is a critical issue with the growth of the city with the transport investment needs that we have and the City Rail Link in the end, with the $65 billion we’ve got to spend over the next 30 years, is only a small part of it.”

Mr Brown said he could not see any other way of raising extra revenue than with a motorway toll.

Quite why Len is suddenly raising the issue of road tolls again is odd for a few reasons.

Long Term Plan

Last year the council spent a lot of effort discussing the Long Term Plan – the 10-year budget. As part of that process they presented Aucklanders with a binary choice of either a programme of works that would build:

  • a basic version funded out of rate rises of 3.5% but that built very little over the coming decades.
  • almost every transport project ever dreamed up requiring lots of additional funding and still saw congestion predicted to get worse than it is today. To pay for the up to $12 billion extra that would be needed the council proposed either:
    • road pricing on motorways
    • a combination of additional rates increases and regional fuel taxes

The important thing though is that both versions of the transport plan included the funding for the City Rail Link. That means the project was never subject to the alternative funding options like Len is suggesting now.

LTP Basic vs AP networks

To realise either of funding options for the Auckland Plan option it would have required government approval and that didn’t happen. So instead the council ended up implementing a three-year interim transport levy of $99 for households and $159 for businesses with the money from it earmarked primarily for PT, walking and cycling projects. There is absolutely no reason why the transport levy couldn’t be continued in to the future which is enough to effectively fund a sensible middle option of something between the two original LTP transport plans.

Just coming back to the CRL, the council’s own LTP documents show the project already has funding budgeted for it over the next decade. It includes the expected contribution from the government – which the council correctly assumed would be on board by then.

LTP approved capital projects list

click to enlarge

ATAP

As you know the Auckland Transport Alignment Project (ATAP) is currently going on and is reviewing options and timings for future transport projects in Auckland (the CRL and East-West link sat outside of this). In the Terms of Reference it specifically mentions road pricing, saying they will consider (I’ve underlined the important part)

all land transport interventions, including roads, rail, public transport, personal mobility services, walking, cycling, technology, network optimisation and demand management (including pricing for demand management purposes)

In other words, as part of the process they’re looking at what impact road pricing could have but not as a revenue gathering tool like Len wants but as a demand management one. The distinction between the two are important and would likely lead to quite different looking systems. As the name implies a demand management tool is really about trying to optimise the use of transport networks we have by using road pricing to keep roads from becoming congested. We’ve long suggested that if implemented it should be introduced in a revenue neutral way, lowering rates by the amount raised from the road pricing. In our view doing it this way would separate a potentially very useful tool from the more politically fraught issue of raising more money as by tying the two together it’s more likely neither will happen.

Perhaps the biggest benefit of road pricing is that it changes the question from how much traffic do we need to accommodate to how much do we want to accommodate. With it, it will almost certainly change the priority of many projects and it would kill off many projects altogether. For example, spending billions to widen or duplicate a motorway because an (unreliable) traffic model says vehicle volumes will increase in the future likely becomes a thing of the past. Every silly project that is no longer needed means a less extra funding that needs to be raised, easing pressure on Aucklanders and the government.

Of course to really implement road pricing we really need a much more complete range of good quality alternative options but if we know we’re going to do it in the future it should allow us to prioritise what is needed before that happens.

 

In conclusion, the council’s plans have the CRL clearly in the budget even if we had stuck with the no additional funding option. As such it seems that Len was perhaps trying to reignite the debate about road tolls from last year in a bit to push once again for a more build everything approach. But given the ATAP process is well under-way it seems the best option right now is to wait and see what comes from that.  The only other option for why he would suggest it is perhaps to keep the idea in the government’s head so they know the issue hasn’t gone away.