Pot of gold at the end of fuel tax rainbow
Local body election year is rightly a time for big ideas to be floated and debated, and some of these will need big money.
Finding the money to deliver promises is not as easy as it may seem, and one possible source has emerged early in the piece as the line-up of major mayoral contenders get into their campaign stride.
Auckland’s unique regional fuel tax started in 2018. It is an 11.5 cent a litre impost (GST included) to accelerate major transport projects by bringing in $1.5 billion over its expected 10-year life.
Amedia report in January that $285 million – more than half of the money so far raised – was still sitting in the coffers in Auckland acted like a giant rainbow leading to the pot of gold that soon became political.
Pakuranga mp Simeon Brown, who is also National’s transport spokesman, called it a ‘‘sham’’.
Ten weeks later, both his leader Chris Luxon – from the neighbouring Botany electorate – and centre-right mayoral candidate Viv Beck announced, within 24 hours of each other, that they would scrap the tax.
The unspent tax money has also attracted the attention of mayoral contender Leo Molloy, who said under his leadership he wanted to use it to fund a 12-month trial of fare-free public transport.
Think of the regional fuel tax as being like Christmas lay-by, a savings scheme that builds up until you buy the present you had your heart set on. If you spend the money mid-year, you can’t have the present at Christmas.
Transport projects are ‘‘lumpy’’, needing large amounts of money irregularly, and the fuel tax is often just one of several sources of funding for a single project that need to be on tap simultaneously at the right time.
Some projects have slowed because of the Covid-19 delays that have hit many parts of life, and others have been slowed by the tightening of council or Waka Kotahi budgets, holding up the need for fuel tax funds.
For the 2021 financial year, it’s expected as little as $31 million will flow out while $150million flows in.
That will change. Within weeks of the revelation of the unspent windfall, a deal was announced to buy 23 new commuter trains.
That will cost $330 million, part of which will be from the regional fuel tax pot.
The Eastern Busway is scheduled to soak up $272 million of the fuel tax pot, and will serve both Luxon and Brown’s electorates.
Were the tax to end prematurely (before 2028), or be diverted to new ideas such as a free public transport trial, political consensus at both Auckland and government level will be needed for legislative change.
An equally significant issue will be how to fund agreed projects without the latter $750 million half of projected regional fuel tax income.
Beck points to fiscal ‘‘fat’’ in the council and the need for a new way to fund infrastructure.
Molloy has yet to detail what would miss out on the $250million estimated for a fare-free trial.
Labour-endorsed Efeso Collins has been against the fuel tax on equity grounds, but has not yet explained how his commitment to fare-free public transport would be funded other than savings elsewhere.
Second-time contender Craig Lord has some big transport plans. While he doesn’t like the regional fuel tax, he accepts that if it were to go, a funding gap would need to be resolved.
Eyeing up a temporary balance in the fuel tax fund is not as easy as it may look, and Aucklanders should expect a clear outline of the consequences of diverting or terminating it. Even if thatwere possible.