Scrapping the regional fuel tax will kill off billions of dollars worth of transport projects, says an Auckland councillor.
Prime Minister Christopher Luxon and Minister of Transport Simeon Brown confirmed yesterday that the Government would end the city’s tax of 11.5 cents per litre of fuel on 30 June.
Brown said the Government would consider law changes to bring in other tools such as time-of-use charging, value capture, tolling, and public-private partnerships.
But Auckland Mayor Wayne Brown said scrapping the tax would leave a shortfall in the city’s transport funding of $1.2 billion over the next four years.
Auckland councillor Richard Hills, who chairs the planning committee, told Morning Report the tax cut would feel “quite good” for individuals, but it would also lead to big cuts to long-promised transport projects, which would ultimately affect all Aucklanders.
The money generated by the tax had gone towards “significant and important projects across the whole city” that were planned to help fight congestion, Hills said.
“Locked-in” projects such as bus lanes, roading upgrades, cycleways, safety projects and bus stations would still need to be funded somehow, he said.
“This money does need to come from somewhere… There is an issue that we have limited ways as a council to raise money and this kind of removes that pretty quickly without anything to replace it.”
Other projects, however, would be on the chopping block with the scrapping of the tax.
“Glenvar Road, Lake Road, Lincoln Road – big corridor projects that have been promised for a long time, upgrades down in Drury and growth projects, so in areas where there’s new housing – roading and intersections there. There’s a significant list of projects that this tax helps cover… so we are stuck and so that’s why you see the mayor is quite exercised about this,” Hills said.
The removal of the tax had left the council with an “almost $2 billion hole” just two months before it had to pass its 10-year plan, he said.
“Under the Super City legislation that was set up, we’re sort of given the powers and the responsibilities of state governments in Australia, but we still have the funding tools of small district councils, so we’re expected to fund 50% of all major and all small renewals, transport projects from about a 3% revenue base, compared to the Government. So it already quite a difficult situation.”
Hills said if the Government had worked with the council on other funding tools ahead of scrapping the tax, the transition may have been easier.
“The fuel tax was one option we had… If the Government had worked with us on other funding tools that could replace this, and it was a smooth situation… but now we’ve got the situation where we’re either going to lose those projects or have to increase rates quite considerably.”
New transport policy set to be released
Transport Minister Simeon Brown said a new Government Policy Statement on transport would be released “shortly”, and would tackle the matter of other revenue sources such as congestion charging and other local roading improvements.
The tax was introduced by the Labour government in 2018, to be paid by fuel distributors for fuel stations and commercial users in the Auckland region, with the aim of funding transport projects that otherwise would take longer or not take place.
The funding is collected by Waka Kotahi, the Transport Agency, then is sent on to Auckland Council minus a service cost.
National had argued the funds from the tax were largely not being used, with more than $327 million of the $700m taken remaining unused by May last year.
A statement from the Government on Wednesday clarified about $780m had been collected through the regional fuel tax as of September last year, with about $341m — the equivalent of two years of revenue — remaining unspent.
Luxon said they had discussed the matter with the mayor and signalled the $341m remaining from the tax would be ring-fenced for spending on the Eastern Busway, the CRL electric trains, and road corridor improvements.
The tax applies to petrol, diesel, and biofuel variants and had been due to expire on 30 June 2028.
Some uses of fuel — for commercial, charity and government organisations using machinery and search and rescue vehicles, or international vessels including superyachts, for example — were eligible for rebates.
The Government’s statement also confirmed its legislation would fully remove the framework for such fuel taxes, meaning they could not be brought in for other regions.