KEY POINTS:
Regions will be able to impose a regional fuel tax to get transport projects done faster under today's budget.
The budget also sees a $145 million boost for highways over 2006-08, improvements to Wellington and Auckland rail with the electrification of the latter being partly funded by the new fuel tax.
The first region to be able to benefit from the fuel tax would be Auckland where a 10 cents a litre tax on petrol and diesel could raise $120 million a year and support a debt of about $1.5 billion over 30 years.
All regions would be able to impose the tax -- for example Wellington could use it to advance Transmission Gully -- but the money could only go towards new projects.
Finance Minister Michael Cullen and Transport Minister Annette King said regions would have to get government approval for proposals first.
"While approval will be subject to evaluating the merits of a particular proposal the Government is strongly committed to working positively with regions around the country," they said.
The ministers said the fuel tax could be backed by government spending.
"A regional fuel tax will allow the Government to support Auckland's transport priorities, which includes electrification of the Auckland rail network, other public transport initiatives such as additional buses and integrated ticketing, the Western Ring Route and Penlink."
The maximum fuel tax is not set yet but would be around 10 cents a litre. A maximum of 5 cents per litre would be available for roading projects. It would be collected from oil companies.
In the 1990s regional fuel taxes of 2 cents per litre failed because oil companies spread the cost nationally. The ministers said the higher rates would make this less likely but there could be some "price spreading".
Electrification of Auckland rail would cost more than $1 billion and the Government would raise infrastructure bonds to pay its share. The project should be completed by 2013, rather than in time for the 2011 Rugby World Cup as this goal was seen as too risky in terms of sourcing material and trains.
The budget provided $600 million over six years for urban rail in Auckland and Wellington, and an additional $50m for general track improvements nationally over 2008-10.
In Wellington the funds would got towards replacing infrastructure, extending double tracking to Waikanae and enlarging Johnsonville line tunnels.
Auckland would also get funding to increase use of public transport.
Ms King said the additional money for highways would ensure the State Highway Construction Plan was delivered even if there were increased costs.
Last year the Government increased the road budget to $13.4 b.
"I am delighted that we are now reinforcing certainty in the sate Highway Construction Plan."
The ministers said the Government was looking at using all fuel excise duty on transport, including public.
"This would mean that the Crown would no longer retain any revenue from the sale of petrol for general government revenue and would ensure that every cent of excise duty collected from motorists is used for land transport projects."
The Government is presently spending more on transport than it gets from fuel tax, road user charges and motor registration fees.
- NZPA
