Editorial: Losing money to make money

The Northern Gateway toll road. Photo / Paul Estcourt

The serial toll dodgers on the Northern Gateway route thumbing their noses at the charge for using the stretch of motorway will raise the hackles of those who pay their way.

Figures obtained under the Official Information Act show that one driver owes almost $1050 in tolls and fines and the top 10 owe more than $6500 between them. Yet the New Zealand Transport Agency (NZTA) has not referred a single case to the courts, relying on letters and debt collectors to try and get the money.

It may seem obvious to say so, but it is worth observing that a toll is only a toll when it's in the bank account of the organisation charging it. Until then, it's nothing more than a series of pretty blue-and-gold notices along the side of the highway.

The ratbags who think they are getting away without paying are only fooling themselves, since the costs of recovering the money will eventually fall on them. If they don't pay within five days, they get a reminder, but by that time the $2 (the fee for a car) will have turned into $4.20. If they ignore it for another 28 days, a $40 infringement fee gets added on. So $2 is now $44.20. Drivers who think that it makes sense to let small debts multiply by a factor of more than 22 before paying them may not be quite as smart as they think.

Still, even if the process by which the NZTA chases up defaulters is not exactly mercurial, it will catch up with most of them in the end. And the fact of the matter is that the compliance rate is more than 96 per cent, which is not a bad result.

But the relatively small numbers of serial defaulters obscure a more deep-seated failure of the entire system: the process by which the NZTA collects tolls from the rest of us who are happy - or at least prepared - to pay them.

In the 23 months and a few days between the road's opening and the end of last year, the tolls paid off more than $11.3m of a 35-year $159m loan it took to complete the $356m project - which is more or less on target. But the actual amount collected in tolls in that time was more than $20m, including GST: almost 75 cents of every transaction is swallowed up in collection costs.

That's the thick end of 40 per cent, although the figure is not quite so bad since some of those transactions involve trucks, which pay $4 and anyway the collection cost has dropped slightly since the first year. But whatever way you crunch those numbers, it's not a good look.

The system was set up to have almost that level of leakage: the Government set a transaction cost "limit" - which presumably means a target - of 65 cents. But NZTA has never got anywhere near that and the agency is covering the difference from a $3.3 million "residual project" fund set up when the road was completed under budget.

It would be an exaggeration to say the toll system is a waste of time and money - although none of the above takes into account the massive capital cost of the gantry-mounted number-plate recognition system. But the Government's decision to turn its back on the regional fuel tax regime that the Labour-led administration had begun to establish looks more shortsighted by the day.

The Minister of Transport Steven Joyce's objections to regional taxes to fund transport infrastructure are nitpicking: chief among them is so-called "price spreading", by which a fuel company spreads the cost of the tax across its national network, eroding the regional nature of the tax. But it is hard to see fuel companies in the provinces getting away with charging motorists to pay for Auckland's problems.

Before the Government put an end to the idea, Canterbury, Bay of Plenty, Waikato and Wellington were all considering implementing regional fuel taxes to fund local transport projects. Instead, more toll roads are being proposed: the 23km Eastern Link in Tauranga will have tolls of up to $5. This despite the fact that the region's existing toll road, Route K, which opened in 2003, still runs at a loss.

It is idle for drivers to say that they don't use the new highway so shouldn't have to pay for it. Extending such an attitude to its logical conclusion, only sick people should fund hospitals. Regional assets are regional responsibilities, although central Government contributes funding to reflect the fact that progress in one area can have knock-on effects for the economy as a whole.

Put simply, if tolling is the answer, we're asking the wrong question. Funding processes that see more than 37 cents in the dollar going down the drain are never going to make sense.