Petrol price hike part of transport package

1.30pm - UDPATE

Finance Minister Michael Cullen said the $900m Government contribution to a 10-year, $3 billion roading package announced today would be achieved by reducing the contribution to Government funds from petrol taxes.

The Government announced a rise in tax from April, 2005 on petrol and diesel, additional revenue from tolls and borrowing on new roads, and a 35-65 per cent split on the allocation of the funds between Auckland and the rest of the country.

The new package would see money raised by Auckland motorists spent in Auckland, said finance minister Dr Michael Cullen.

That would mean reducing the funding for the Government coffers for spending other than on roading and transport to allow the Government to put more money into fixing increasingly congested Auckland roads.

Petrol prices will increase by 5.6c a litre in 16 months to pay for improved roading, with a third to go to Auckland, the Government announced today.

The increase, which includes GST, will be matched by an equivalent rise in road user charges for light diesel vehicles. Together they will raise an estimated $207 million a year, which will contribute to a $297 million annual investment in new transport initiatives.

Funding will also come from a specific funding allocation of, on average, $90m a year over 10 years for Auckland's needs and future revenue from tolls and borrowing.

The package announced today, said Dr Cullen, would make Auckland Mayor John Banks very happy.

Mr Banks has been a vocal critic of the imbalance between the road tax raised in Auckland and money spent on roads in Auckland, saying the city's traffic congestion cost the entire country $1bn in a year in wasted fuel, time and resources.

Earlier this year he said 35 per cent of all road charges were raised in Auckland but only 25 per cent was spent in the area.

Dr Cullen said today's announcement was a "huge switch in terms of balance between the funding going to road transport and diversion into the Crown account".

He said the new package now meant the money raised in Auckland would be spent in Auckland.

Prime Minister Helen Clark said there had been an historical under-investment in roading in Auckland.

"I think he can be very happy Auckland is now getting its fair share of transport funding," Helen Clark said.


Today's package contained little detail of new roading proposals, particularly for Auckland, but by the end of January the Government and local authorities are expected to sign off the package and between now and the end of February will work on detailed proposals.

Officials were due to report to the Government in March and by the end of June new legislation will be passed to put the new package in place, including giving roading authorities the power to put tolls on new roads.

The new package also includes a new transport authority, the Auckland Regional Transport Authority, which will be set up from July next year.

It will be answerable to the Auckland Regional Council and take overall control of all the region's transport needs, including roading, buses, rail, ferry, pedestrian and cycleways.

Helen Clark said for years Auckland roading woes had not been just a result of under-funding.

"Auckland's governance, somewhat wrecked at the start of the 1990s, hasn't been adequate for seeing through an integrated land transport planning and delivery function," she said.

Transport minister Paul Swain said the package was a great day for Auckland and a great day for New Zealand.

"This is another step in a package of measures this government has taken in order to address the significant under-funding and under-resourcing of transport infrastructure in New Zealand over many decades.

"The Government has identified that transport is a key to New Zealand's economic development and if we are going to get ourselves in the top half of the OECD we need a proper, functional, modern transport system," Mr Swain said.

Dr Cullen said the five cents a litre petrol increase would cost the average household $1.60 a week and the increased road user charges on diesel vehicles would cost a two-tonne vehicle about $7.21 for every thousand kilometres.

He said local authorities would also continue to make a financial contribution to roads through rates, tolls and parking charges.

None of the figures in the package announced today included toll revenue but Dr Cullen said there would be tolls on new roads and that would give transport funding a significant, additional boost.

Investing for growth - a transport package for New Zealand