Brian Rudman: Agency's $1.29 credibility toll

In 2005, there were red faces all round when Transit New Zealand admitted its calculations showed $1.35 of the proposed $1.80 car toll for the Orewa-to-Puhoi motorway would be gobbled up in administration costs.

Despite these dire predictions, Labour politicians and the road builders decided to go ahead.

To the embarrassment of all involved, the road builders' predictions have, for once, been proven accurate.

Figures for the first five months of operation of the Northern Gateway Toll Road, to June 30, reveal that, on average, it cost $1.29 in transaction costs to collect each $2 car toll.

For those paying by phone, it would have been cheaper to have waved them through for free. Each $2 phone payment cost $2.70 to administer.

Not that Transit's successor, the NZ Transport Agency, mentions any of this awkward detail in its upbeat press release.

That document prefers to emphasise that road use was 8 per cent higher than forecast and 94 per cent of customers paid their toll.

"The strong demand for the road and the high level of compliance are testament to the benefits it offers to motorists," said the agency's regional director, Wayne McDonald.

"Having achieved our initial goal of getting motorists to use the toll road, we're now concentrating on refining and improving the toll collection system."

As well they might, because under the legislation establishing the system, the Government agreed that $1.13 of the $2 collected was to go towards paying for the motorway, 65c was for transaction charges and 22c would go in GST.

In its operating report, the Transport Agency says: "This means we can claim only up $0.65 from each toll to cover our operational costs."

To make up the difference between the 65c permitted transaction costs and the actual figure of $1.29, the agency has had to dig into its own pocket.

The report says the agency "expected costs associated with establishing the tolling business would be higher than this [65c] in the first years of operation".

But that rather begs the question, why did it agree to a 65c cap for each operational transaction if it knew there wasn't a hope of meeting it?

Were the road builders trying to mislead the politicians, or were the politicians and the road builders set on misleading the rest of us?

The report says the Transport Agency set aside money to cover "high up-front costs associated with establishing the tolling business over the initial years of operation".

But how long can you go on arguing one-off set-up costs? The answer when it comes to road toll systems, it seems, is open-ended.

"Our challenge," says the Transport Agency, "is to reduce the transaction charge to our goal of $0.65 by the end of the toll road's fifth year of operation."

Note here that the cap of 65c has not-so-subtly become "a goal", to be aimed at from a level nearly double the legal limit.

To help massage the figures, the agency "agreed not to charge the Northern Gateway Toll Road the overhead costs associated with the co-ordination and management activities seated within our national office" until the fifth year of operation.

Other waived charges included the costs of ambassadors to help people at the pay kiosks, the use of security guards during the installation of closed-circuit TV surveillance, "and higher than expected maintenance costs due to the high demand placed on the kiosks".

Despite all this sleight of hand, the report concludes that the experience of the first five months shows "electronic toll collection can play an important role in bringing about the early construction and the successful operation of strategically important roads in New Zealand".

Pardon? To me, having to spend $1.29 to collect a $2 toll shows anything but this.

Even if you remove the "non-recurring" costs, the Transport Agency calculates the transaction cost at $1.06, or 53 per cent of a car toll.

This sort of charging is more reminiscent of the fees billed by cowboy charity fundraisers than the prudent taxing methods of a government department.

It's bad enough that Aucklanders have to pay an extra tax for roads that the rest of the country gets for free. But if we are to be stung twice, at least we deserve to have it done efficiently through, for example, a regional fuel tax.