“TL;DR: The reality is that Central Government’s transport policy and direction makes zero sense for Auckland, and if the draft GPS doesn’t change from its original form, then Auckland will be on a collision course with Wellington.”
Auckland’s draft Regional Land Transport Plan (RLTP) 2024 is now out for consultation, with feedback open until 17 June.
It brings to a head the reality that central government’s unbalanced approach to transport funding is fundamentally at odds with what Auckland needs and aspires to. This is a huge concern, and something all Aucklanders should know about. Below, I step through the issues and lay out the problem in handy graphs.
What’s the RLTP?
The RLTP [Regional Land Transport Plan] details the areas that AT, NZTA and KiwiRail seek to focus on in response to our region’s transport challenges. It also outlines the proposed 10-year investment programme for specific transportation projects.
Essentially, it’s a joint piece of work between Auckland Transport (AT), the NZ Transport Agency – Waka Kotahi (NZTA) and KiwiRail (KR) – with some input (but no legal decision-making powers) from Auckland Council – about what transport projects and programmes are needed in Auckland over the next decade. That governance structure isn’t sitting well with Auckland Council at the moment.
The RLTP sets out a 10-year transport investment programme for Auckland, covering everything from the costs of providing public transport services, to road maintenance, improvements to public transport, local roads, state highways, the rail system, walking and cycling – and anything else that seeks public funding to run, maintain or improve our transport system.
The past two RLTPs, in 2018 and 2021, were each proceeded by an “ATAP“, or Auckland Transport Alignment Project. ATAP is a jointly agreed funding plan between the Government and Auckland Council, designed to provide some certainty around the level of central government funding Auckland could expect, outlining an overall ‘funding envelope’ that the RLTP programme could be sized to fit within.
This time, there is no ATAP, and no clarity about how much investment might be available. Nor is there alignment between the government and Auckland Council on the key priorities for the region’s transport system.
This has profound implications for the RLTP, as I will outline below.
What do Aucklanders want in terms of transport?
We know the answer to this one from Auckland Council’s recent consulted 10-year budget (aka the Long Term Plan, or LTP): public feedback showed Auckland overwhelmingly wants investment in public transport.
The final version of the LTP, voted on late last week, goes out of its way to boost investment in the transport system. Indeed, other areas of council funding were trimmed so every last dollar could be allocated to transport, and specifically towards public transport.
This is well reflected in Auckland Transport’s proposed RLTP programme (pages 68-76 of the draft document), which despite some unhelpful rhetoric from the Mayor about cuts to cycling and safety, is actually pretty decent overall, in the circumstances. We will dig into the details in future posts.
So what’s the issue? Take a look at this point:
The programme set out in the draft RLTP 2024 is funded through a range of sources including:
- Auckland Council – rates, development contributions and debt
- central government – funding from the National Land Transport Fund and other direct Crown funding for projects, including the City Rail Link and the New Zealand Upgrade Programme
- user pays service charges – parking fees and public transport fares.
The issue is that central government’s Draft Government Policy Statement on Land Transport 2024 (GPS) is so unbalanced – with funding allocations for the National Land Transport Fund (NLTF) so skewed – that unless it’s changed, this RLTP may be dead on arrival.
Why? Let’s go into the numbers
There’ll be a lot of number and graphs in this post, and it’s complicated stuff. So I’ll do my best to be clear about key assumptions and how the transport funding system works, and I’ll pull it all together at the end. Bear with me!
First of all, there’s a base level of investment needed to fund non-discretionary costs. The RLTP sets these out as:
We propose the following items are mandatory and should receive funding in all circumstances:
• Renewals and maintenance of local roads, rail and state highway networks to ensure they remain fit for purpose into the future
• Existing public transport services, along with improvements such as more rail services enabled by the City Rail Link and the expansion of the frequent bus network
• Completing projects that we are already committed to and are in progress, for example, The Eastern Busway and City Rail Link.
AT’s programme is funded roughly 50/50 by Auckland Council and NZTA, while NZTA and KiwiRail projects are 100% funded from the NLTF. (The government can also decide to deploy ad hoc Crown funding, as the Key government did for the Urban Cycleways Programme).
This graph shows the required funding from the NLTF to deliver the draft RLTP’s Non-Discretionary Capital programme over the next 3 and 10 years respectively. In other words, this is what Auckland has decided it must deliver:
Going back to central government, which controls half the funding available: the draft GPS sets out a range for the amount of NLTF that NZTA can spend on different types of projects, called “activity classes”.
The current draft GPS is also very stringent about strictly separating the funding pool for each activity class, which is a terrible idea, given the multimodal nature of transport design and need. Regardless, those classes are; Public Transport, State Highways, Local Roads, Walking and Cycling. Accordingly, this is how Auckland’s RLTP breaks down its funding requirements.
To help understand the extent to which each GPS activity class is likely to have sufficient funding to deliver investment in the capital programme, the draft RLTP makes a few key assumptions:
- it takes the ‘midpoint’ of the proposed range for each GPS activity class
- based on historical allocations, it assumes that Auckland receives 50% of the midpoint for Public Transport, and 35% for the other three classes. (This is important, as other parts of New Zealand also need funding from the NLTF for their projects.)
I’m going to use these assumptions throughout this post.
So, based on the assumptions above, how much funding would be available for Auckland, in each activity class?
Now, let’s show that available funding is as a percentage of non-discretionary costs over the next 3 years.
Numbers over 100% highlight that in the next three years, Auckland needs less than its ‘fair share’ (based on earlier assumptions) to fund its committed and other non-discretionary projects. This means there is some ‘head room’ in the RLTP to fund discretionary projects.
The problem comes when there’s a number below 100%. The graph above shows that only 74% of the MANDATORY NLTF funding needs for public transport would be covered. This is perhaps the biggest ‘red flag’ issue, and is highlighted in the RLTP document:
Assuming the mid-point of the band, this would mean $765 million may be available from the NLTF for Auckland public transport projects. This would not be enough to fund the committed and renewal projects, let alone the new ‘discretionary’ projects identified by AT and NZTA.
Basically, based on the GPS as it is in draft form, Auckland would not be able to fund its essential public transport costs. This by itself is a major issue – and that’s before we get into all the other huge problems.
For our next step, let’s add in the discretionary projects and take a look at the overall NLTF funding situation for each activity class. Keep in mind that the RLTP points out:
For this draft RLTP 2024, there is no clear signal of how much NLTF funding might be available for Auckland activities and no ‘funding envelope’ has been identified.
Without a ‘funding envelope’ to work to, this draft RLTP 2024 includes all plausible proposals for NLTF funding from AT, NZTA and KiwiRail.[…]
As proposed project costs exceed funding, the key role of this RLTP is therefore to signal the region’s priorities for investment, particularly over the next three years, which are most important for NLTF decisions.
In the graphs below, we are now looking at what proportion of the proposed programme the NLTF might be able to fund. While in my previous graph a lower % number was good (as it indicated some ‘headroom’ for discretionary projects), in the graph below a lower % number is bad, as it indicates a lower proportion of the proposed programme is likely to be funded:
Some particularly notable findings from this analysis are:
- The most significant area of under-funding is public transport, both in the short-term (next 3 years) and medium-term (10 years). This reflects the earlier graph, where even the non-discretionary (i.e. essential) PT investment can’t be funded in the next three years. This puts critical projects like Northwest Rapid Transit, rail level-crossing removals, ferry fleet improvements and bus/dynamic lane programmes at serious risk of not happening.
- Most, but not all, of local road and walking and cycling improvements are likely to be able to receive NLTF co-funding. This means many projects in Auckland Transport’s programme which have ‘local share’ funding due to Auckland Council busting their gut in the LTP to fund transport, won’t be able to proceed due to insufficient government funding.
- While there’s sufficient money to progress state highway projects over the next three years (mostly finishing off current projects and spending hundreds of millions on business cases for future projects), there’s a massive funding gap in supporting the eventual delivery of these projects.
The RLTP further elaborates on this:
The Draft GPS indicates that the State Highway Improvements activity class has between $3,750 million and $6,250 million over the next three years, with a mid-point of $5,000 million. Assuming Auckland received 35% of this mid-point, this would mean $1,750 million is available from the NLTF for state highway projects. This would be enough to fund almost all the state highway projects proposed over the next three years.
By contrast, the 10-year cost of this programme is $16 billion, which is nearly 90% of the midpoint of the national activity class. This creates an issue as a significant proportion of the funding in the first three years is pipeline development for projects that may not be affordable for construction over the rest of the decade.
The Draft GPS states that additional funding sources will need to be made available and used to fund delivery of major projects. This could be address some of the funding issue, but the scale of new funding that might be available is unclear.
So, not only is the government’s draft GPS not funding our public transport adequately, it’s also dumping a bunch of currently unfunded long-term highway projects on Auckland…
You might look at that, and be surprised the Walking and Cycling activity class appears to be almost fully-funded over the next decade? Well, the RLTP offers this caveat:
This analysis suggests that funding for the proposed Walking and Cycling projects may be more likely. However, the Draft GPS has also introduced a number of requirements for these projects that may make them more difficult to fund. In addition, walking and cycling elements from other multi-modal projects will need to come out of this funding. These costs have not been identified but are likely to reduce the overall funding available for specific walking and cycling projects.
This just shows how much of an unbalanced mess the draft GPS is: billions would be locked in for RoNS, leaving a massive chunk of the public transport programme unfunded, and walking and cycling funding likely to be pillaged to supplement RoNS with footpaths and crossings, etc . That does raise the next question.
How does this funding situation align with Auckland’s regional priorities?
Included in the RLTP is a ranking of its proposed projects, based on how well they align with regional objectives and policy direction. It gives each discretionary project a rank in its activity class, but also an overall rank for Auckland. Ignoring stage one as that looked at non-discretionary projects (they’re all ranked ‘1’), this is the methodology that was used:
Stage Two ranked the ‘discretionary’ projects (i.e. those items where there was still a choice over whether to include the project or programme in the Draft RLTP) against regional / objectives and the alignment to the policy direction on preferred ‘investment attributes’. These objectives and policy attributes were developed with input and consideration from the Regional Transport Committee and Auckland Council’s Transport and Infrastructure Committee. The regional objectives were:
- Faster, more reliable public transport –This priority relates to the use of Public Transport network across a variety of aspects such as bus lanes, stations/stops, station access. It considers current and future demands.
- Network resilience and sound asset management – This priority reflects the Draft GPS direction for greater emphasis on Resilience and Maintenance.
- Support for the region’s economic productivity – This priority relates to the improvement of economic activity. It reflects improvements to current or future growth areas and congestion where possible.
- Improved safety and reducing deaths and serious injuries – This priority relates to the enhancement of safety across modes on the network for all users.
- Continued decarbonisation of the transport system towards the 2050 target – This priority relates to the emissions created by our transport initiatives. It reflects Council and Governments aspirations to reach net-zero carbon emissions by 2050.
These objectives reflect the direction included in the Council’s Draft LTP and the Draft GPS. Objectives were weighted based on feedback from the RTC.
The investment attributes identified through the policy framework were:
- Complete – Finish what we have started before embarking on new large-scale investment
- Speed of delivery – A back-to basics approach of smaller scale, tactical, faster and lower cost solutions and delivery (which particularly applies to AT’s programme)
- Expenditure efficiency – Deliver value for money solutions as indicated by a project benefit to cost ratio
- Timing and urgency – The urgency of the problem to be solved
- Consideration to key outcomes areas such as Māori Outcomes was also included in the process.
These investment attributes reflected the strong emphasis in both the Draft LTP and Draft GPS on a revised approach to project delivery to support faster delivery and value for money
Discretionary projects were rated qualitatively, from zero to three, against a set of sub-criteria, by an inter-agency working group comprising representatives from AT, NZTA, KiwiRail and Auckland Council.
[…]
Stage Three considered the impact of other variables, such as dependencies between projects and the balance of the programme in terms of mix of large and small projects and geographic spread. In practice, this process was constrained by limited timeframes and will be considered alongside public feedback.
While the draft RLTP includes a worked example of the prioritisation method, it would be great to see the actual scoring of each project against the regional objectives and investment attributes. Hopefully AT will release this information at some point (in the meantime, a useful LGOIMA request for anyone who’s keen).
Note that although the prioritisation method takes into account the strategic direction of the GPS, the investments that ‘rise to the top’ are those most at risk of not getting NLTF funding.
To check this, I’ve gone through the RLTP programme in detail, to show what the discretionary programme for the next three and ten years (within total likely available funding, based on my previous assumptions) would look like if it were purely based on RLTP prioritisation (i.e. ignoring the GPS activity classes for the moment). In other words, what Auckland wants to deliver, on top of what it needs to deliver.
As the graph below makes clear, a programme purely based on AT’s own detailed prioritisation process would be strongly focused on public transport, ensuring progress on things like Northwestern Rapid Transit and rail network upgrades.
Right! So let’s compare funding possibilities, based on Auckland’s priorities and Central Government’s priorities.
First, let’s look at the total amount of funding for each activity class from the NLTF. For Auckland, I used my regional rankings prioritisation framework as outlined above. For Central Government, I worked out an estimate of how much funding would be allocated to fully fund projects using the GPS framework. I did this by using what the RLTP estimated as the draft GPS’s funding pools, and allocated these, based on the RLTP’s activity class ranking, until I couldn’t fully fund a project.
This is what we see:
If it wasn’t clear already, the difference between what’s prioritised by the RLTP process, compared to the focus of the GPS, is night and day. One values public transport, and the other? Roads – huge roading projects like the RoNS, the RoRS, and billions on a Waitemata Harbour Crossing project that’s vastly overscaled and is likely to make traffic worse.
Going further, to see which of the two priorities is actually realistic, we can compare the funding available for discretionary projects – the projects that show which future direction Aucklanders, and our governors, want to take.
When I remove non-discretionary project costs, this is what we get. Again, the contrast between Wellington’s vision for Auckland, and Auckland’s vision for itself, is night and day – especially for public transport.
The draft RLTP really demonstrates how wildly disconnected the draft GPS is from the investment priorities that arise from an evidence-based prioritisation process. In fact, as I mentioned, the draft GPS is actively detrimental to Auckland, given it wouldn’t even fund our mandatory costs for public transport in the next three years (hence the negative number), let alone support delivery of the most important new initiatives to improve people’s lives.
Another thing: major projects make up a lot of these overall costs, so let’s have a quick look. Here’s the Major Projects in Auckland’s draft RLTP:
If you’re wondering about how these appear in the regional rankings of importance to the city:
I think that graph is pretty self-explanatory, but in short: the major projects for public transport are regionally significant for Auckland, and the major projects for state highways… are not.
Before we talk about what projects might actually get funded given the yawning gap between Auckland and Government priorities, I want to point out one more thing to show how cooked the GPS is.
Auckland Council’s recently passed Long Term Plan allocates a $14 billion CapEx for Auckland Transport. Using rough estimates, I looked at which AT projects would be funded by the NLTF if we used the GPS’s activity class allocations. I included all AT projects until I reached the total NLTF allocation for that class. I also assumed all of AT’s non-discretionary public transport projects would receive funding (excluding one they are doing on behalf of KiwiRail).
We get this:
What does this mean?
Essentially if you were to apply the draft GPS priorities to Auckland’s RLTP, Auckland Transport’s CapEx would be missing $700 million (over 3 years), and $3.9 billion (over 10 years) of NLTF investment needed to match Auckland Council’s own funding allocation.
In other words: after all the work that’s gone into Auckland’s Long Term Plan, if Central Government doesn’t budge from its draft GPS there’s now potentially a $3.9 billion hole in NLTF co-funding that Auckland Transport assumes will be available, but actually probably won’t be.
This will mean we either face less in the way of improvements, or a significant rates rise – or, other things will be cut to fund our transport needs.
The reality is that Central Government’s transport policy and direction makes zero sense for Auckland, and if the draft GPS doesn’t change from its original form, then Auckland will be on a collision course with Wellington.
So: what makes the cut in the next 3 years based on these frameworks?
Under Central Government’s priorities:
- 74% of public transport non-discretionary projects, 100% for all other classes.
- All State Highway projects; including mostly early work on a Waitematā crossing, RoNs (SH1 Warkworth to Wellsford, Mill Road, East-West Link, North West Alternate State Highway) RoRs (Drury Road work)
- Variety of Local Road work programmes
- Time of Use Charging Programme
- Urban Cycleways Glen Innes Links
Under Auckland’s priorities:
- All non-discretionary projects
- Dynamic Lanes for Buses (although most funding comes in the later half of the next 10 years)
- Avondale to Southdown (Route Protection)
- Cycleways Programme (lower cost)
- Northwest Rapid Transit
- Level Crossings Removal Takaanini Stage1
While the biggest gap between the priorities of the Government and Auckland plays out beyond the next three years (and therefore theoretically might be addressed through upcoming work on an Auckland Integrated Transport Plan), it’s worrying that the divergence begins immediately.
Those who put together the RLTP are acutely aware of the issues I have outlined in this post. This is what they have to say after the project lists:
Summary: More funding is needed for Public Transport Infrastructure
The first priority for investment in this RLTP is ensuing that our existing assets are maintained and renewed to an appropriate level and there is enough funding to continue to expand public transport services.
Beyond this, with funding likely to be limited, we need to make choices about which ‘discretionary’ projects we invest in. The ranking process shows that Public Transport Investment projects are generally the highest priority, however, these projects appear most at risk of not receiving NLTF funding.
Walking and Cycling and Local Road Infrastructure projects have also emerged as relatively high priorities but may be at some risk depending on final allocations.
State Highway Improvements are generally ranked lower than other discretionary projects. In the first three years these are most likely to receive NLTF funding, often for investment in planning phases, but funding for construction appears to be at risk over the decade.
To better deliver on regional priorities, more funding needs to be allocated to Public Transport Infrastructure projects, particularly in the first three years. This is critical to support the region’s plans for increased network capacity, improved productivity, lower emissions and compact city development.
In the short-term, the Regional Transport Committee advocates that this funding could be reallocated from some of the proposed State Highway Improvement projects. These are a lower priority, and there are questions over how much should be invested in planning for these projects before new funding sources are confirmed.
What does this all mean for Auckland?
This is what the RLTP outlines as its purpose:
The role of the RLTP 2024 is to set out the Auckland region’s transport priorities, so that Auckland’s voice can be heard when funding decisions are made by the NZTA. This Draft RLTP proposes that much more funding needs to be allocated to higher priority public transport projects.
“So that Auckland’s voice can be heard.”
At the end of the day, NZTA makes the decision on what gets NLTF funding, in Auckland and around the motu. They have to take into consideration what our RLTP says – but they also have to consider the GPS and central government direction.
…and what does it mean for you?
In short: it’s vitally important that you have your say on the RLTP, to help reiterate that Aucklanders want investment in public transport, as well as walking and cycling. Stay tuned for submission guides – and remember feedback closes June 17th 2024.
The reason I wrote this post is to show unequivocally that the draft GPS and the draft RLTP are fundamentally incompatible. I felt it was important to highlight that, in every single circumstance, central government’s priorities are not reflecting the priorities of and for Tāmaki Makaurau.
One of them has to budge.
Considering the overwhelming feedback that shows Aucklanders want more investment in public transport…
Considering the Mayor’s priorities and the Auckland Long Term Plan all point to more investment in public transport…
Considering the regional prioritisation in the draft RLTP, which itself incorporates and reflects the strategic direction of the GPS alongside that of Auckland Council…
…I think it’s pretty clear that the draft GPS needs to change and, at the very least, provide much more funding for public transport infrastructure in the next three years.
The only question is, will it?
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Great post. Good to see some of the details that are likely to get missed by most commentators.
I must say the situation with PT infrastructure is very concerning. If there’s not enough funding to cover committed and under construction projects, then what happens? Does a project get left half completed?
What a mess.
Yes like 3/4’s of an Eastern Busway, like currently is going to happen until we can get more funding.
TBH the Burswood deviation is such a load of junk; this may be a blessing in disguise.
Yes, maybe so they said stage four unfounded, I couldn’t find what stage four specifically was.
Burswood avoids trying to get a busway through several very busy signal intersections, as well as avoiding purchase of a lot of commercial properties fronting Ti Rakau Drive with vehicle accesses, besides enabling residential intensification close to the station.
Stage 4 goes from east of the Howick bus Depot to a new interchange at Botany, to be shared with Airport to Botany Rapid Transit. Hard to find a good place for PT in the middle of Motown.
Yes, thanks, good summary from what I remember reading, so the deviation is funded then as that depot is east of it.
I can understand Aucklands needs and priorities, in the South Island we have been left out of the budget(largely), and the one that has a link to Auckland is the InterIsland ferry proposal. There is no long term plan to replace the three aging ferries since the iRex project was stopped
In Picton about one third of what was to be done, has been completed. That is part of the shore infrastructure to accommodate the two larger ferries, now canned. This affects every company in the North and South Islands who use rail and ferries to move product. A vast amount of that is moved Auckland to Wellington by Rail, then onto the ferries. So there is a stronger connect between Auckland and ferries/ S. Island than many people realize.
As National Governments are brazenly truck centric, we have a problem. RONS won’t hardly be any part of solving this.
You can see in the post that, for all of Govt. trumpeting the RoNS, a huge part of the 3-yr spend will be on consultants and on providing windfall payments to landowners for property purchase. None of this generates a Benefit in travel time, safety or anything else. Te Tupu Ngatahi (Supporting Growth Alliance) has done a lot of work in protecting land to allow the opportunity to build in the future. A few of the projects covered by those Designations have gone into Business Case and Construction and help to frame land development. But RoNS, beyond Designation, are mostly a long way off being able to show a Benefit and, as for Value for Money…. Did voters really want to give the Govt. a mandate for this GPS? I don’t think Auckland voters did.
Did Auckland voters give the Government a mandate for this GPS? Yes, they did, being frustrated [understatement] after six years of the previous lot delivering bugger all [another understatement].
Eastern busway, third main, Pukekohe electrification, Puhinui Interchange, CRL restored to original plan, hundreds of electric buses, Te Huia and on and on.
What have the Romans ever done for us, lol.
But it’s all so piece meal, so inadequate, so much less than what’s needed. Or what was promised. Much of it was farcical. Light rail… cycling over the bridge… whole chunks of the train network closed for months. Actually farcical is itself an understatement.
Yes, it’s all important stuff and all needed. It just needed one or two flagship projects (light rail, active mode crossing) to headline that it really was the transformational approach they promised. Without that it all kind of gets lost in the day to day. Shame, really.
For some reason they listened to the highway builders at NZTA who told them they should build a brand new harbour bridge just for bikes, but nothing else, and instead of the light rail they’d promised they should spend twenty billion bucks on a metro line from Kingsland to wesley.
It’s almost as if new Zealands finest highway engineers might not be the best people to listen to about transformational moves for cities.
“whole chunks of the train network closed for months”
Lol blaming that on the last government when it was caused by several factors over multiple decades of several governments.
The uniquely daft thing about the rail closures was that the tracks were replaced in 2021-2022 then in 2023-2024 the trackbed was replaced.
Yeah, sure was a waste.
I think Kiwirail have finally figured things out.
Auckland voters never gave the Government a mandate for jumping backwards fifty years. We rely on the goals of extremist politicians being tempered by existing legislation and regulations. Much of the draft GPS would require RCAs to break other laws.
Thanks Connor for a great post which really demonstrates the differing priorities between Central Govt and the needs of Auckland and of Aucklanders. I recognise and agree that the initial three years of funding for the RoNS programme will deliver very little in a material sense. But when I put my more cynical hat on, there, sitting on the shelf will be a series of plans and business cases for a future Govt to pick up and run with…… perhaps not all at once but they would the there and very tempting for some……
Good article apart from the Auckland vs Wellington spin. While Wellington based civil servants (those who are managing to hang on to their jobs) may be having to implement the National Party’s imbecilic GPS, let’s be clear that this is predominantly an assault by Auckland origin Ministers on the Auckland Council and AT’s plans.
Are the denizens of Canberra and Washington as thin-skinned? It seems to be the price of being a political capital, is all.
The new Zealand government is in Wellington. Yes this is an Auckland vs Wellington issue!
Excellent article thank you
Auckland needs apartments, trains and less cars. It is very simple, but we are fighting almost a century of cars.
Also we are fighting this weird house thing that Auckland and Aotearoa seem to believe.
Apartments are easier to warm, can easily have hundreds of families within them, they are essentially a modern version of a Maori Pa, and they should be what we all want for our tamariki.
Real cities around the world do this, and many do it beautifully. We do not need to be Hong Kong, or Tokyo, but we could at least aim for Melbourne, or one of those pretty European cities.
The lack of ambition, since we lost Efeso, is sad, for us who love public transport, and cities. In him we had someone who believed in a real future, a real man amongst so many useless of us. We are back to the same petroleum sniffing losers that think they are leaders. Boring old farts, boring young farts, neoliberalised numbers monkeys, who use words as weapons but barely know what they mean.
I cry for my children, who will be STEMed, as I was, to be a boring person. We need TOI, art, music, because this current generation in power threw their toys out of the cot and never found them again. Sad.
And trains, we really need trains that run on tracks.
bah humbug
What NZ needs at the moment is a cap on local government spending. Councils seem to think an increase at the rate of inflation is the default or start point and anything over that is optional. They get away with it because renters don’t get to see how ridiculous rates have become so the elected twits see spending more as a path to reelection.
Currently the Reserve Bank is engineering a recession that will have long lasting effects because of persistent inflation driven in part by local government rates increases. It’s time the Government put a stop to local government wasting money on ‘nice to haves.’
‘Nice to haves’ is a loaded term. What do you mean specifically? The unnecessary things like more road capacity, sprawl and more parking? Or are you using it in the populist anti-safety way that is being bandied around, typically used to dismiss the importance of infrastructure to provide basic freedom of movement and a fundamentally healthy environment where children can develop normally?
Rates increases, and overspending are actually different topics.
Of course local government need to stop the overspending that has arisen due to the expansionist land use and car dependent transport policies. Roads and sprawl infrastructure are extremely expensive. Stopping that spending is the only way to rebalancing the books and to a thriving city.
But there’s nothing wrong with rates rises. We have to get out of the mindset that debt is a good way to invest in infrastructure. No longer is it true that growth in GDP will ensure that it’ll be easy to pay off that debt.
Raising rates balances the taxation system by
– providing revenue for local government, which hasn’t been getting sufficient share of taxation revenue, and
– providing a wealth tax, which is missing from our system.
It’s up and down the country Heidi. Whanganui wants to waste ratepayers money on a hotel. Wellington wasted it on a town hall that should have been knocked over or left for nature to knock over. Auckland Council impoverished itself with CRL debt and wants to waste money on a stadium.
It leads to persistent inflation because when prices go up for other goods we can buy less of them or substitute. They don’t let us do that with local government charges. The scam is they spend out money to try and make themselves popular. If we changed it to a poll tax people would barricade the streets and throw out these idiots. But they can sneak it all through because not everyone sees a rates bill. These people are ruining our economy and get to carry on doing it. A 3% annual sinking lid on Councils would fix them.
They may not see a rates bill but they pay huge rental prices. I think most connect the dots. Regardless Auckland needs more funding and control of its money. Give us the GST from our rates would be a start and we really dinners some form of wealth tax. This was the prior governments biggest failure in my opinion, maybe it was seen as too much in Green Party territory.
*need some form of wealth tax
Grant property taxes are literally a wealth tax!
And in NZ an extremely well targeted one at that. Most of people’s wealth being tied up in unproductive land / mouldy building speculation. The wealth divide in this country is mostly whether someone is a property owner or not. Rates are basically the only little thing that pushes back on this.
And you support getting rid of that, taxing wealth (inevitably exempting most property) and sending that inequality source to the moon. Cmon guys
Not sure how you thought I disagreed with you yes, more land tax. I agree more on land value to stop speculation etc.
” Auckland Council impoverished itself with CRL debt and wants to waste money on a stadium.”
I notice that the new CEO at Eden Park, is now proclaiming that it is “New Zealand’s National Stadium”, as part of its lobbying to get taxpayer money for its proposed development.
See: https://edenpark.co.nz/edenpark_media/eden-park-2-0-the-future-of-our-national-stadium-unveiled/
Perhaps it is time to convert Eden Park into high density housing.
Auckland in particular, and all other Councils, need access to money from sources other than rates. Not many other revenue options for most. Govt is still dreaming up how to capture wealth from development. Any other ideas, apart from mortgaging NZ to foreign investors? Maybe a regional fuel tax? Oh, no, wait….
There are two ways to balance a budget. Increase revenue or decrease spending. The first seldom works because people find other stuff to spend money on. The second almost always works.
Unfortunately the current government is focused on slashing and burning the public service. The real problems are all sitting in Council offices (and AT offices) up and down the country.
No, they just need to raise rates.
Why are we looking to confiscate every last remaining cent from anyone’s productive activity, and then let property owners capture nearly 100% of their unearned land rents. Then wonder why nobody wants to build anything (businesses, buildings, products or otherwise) and property prices go up to infinity
There isn’t going to be as much productive capacity once the Reserve Bank’s recession kicks in. They are doing it because rates and rent don’t respond to interest rates. https://www.rbnz.govt.nz/hub/news/2024/05/official-cash-rate-to-remain-restrictive (4th paragraph).
The system we have rewards local politicians who dream up knew ways to spend money. It would be better to reform that system and allow people to actually have jobs.
lmao, just the opposite miffy. NZ is way undertaxed at the local level, and property taxes chronically underused. There needs to be huge rate hikes, and ideally a shift from CV to LV rating to get rid any economic activity suppression or pass through to rents from property taxation.
The sooner we can raise rates the better. To claw back as much of the depreciation that the previous couple generations of property owners have pocketed.
This is why I’m disappointed about the latest watercare news. They were finally going start charging at a rate that was sustainable long term and now they’re just going to give boomers the get out of jail free card and rack up some debt for the kids.
Yup.
This is a very detailed article that would have taken a long time to write – well done to Connor Sharp. The bar charts comparing Auckland’s intentions and the ludicrous funding priorities of the GPS are very clear; a succinct way to show that, if you want to understand a city (or country’s) prioirties, look at the budget and/or the funding rules.
Is there a metric that describes the level of mobility in a city.
How slow or how fast is Auckland? Are we getting better ?
How much does it cost to move around ?
Can i book more than 1 meeting in the city and get there on time ?
How mobile are we ??
It will always take the same time (or a bit longer) to commute by car. If you provide more capacity, more people willing to spend more time on the road will appear to fill up the space/time. There is no point trying to improve that – it’s a willingness to pay. Just give alternatives to people (bus, train, bike).
Great post Connor. I was thinking how it’s good that the fares and concessions for people under 25 changed on 1 May 2024 yet the Auckland Regional Fuel Tax is ending on the 30th June 2024 so that we wouldn’t of got too many if any switching from using public transport to their car in this age group (not that there is that many these days). Actually it would affect families choices too as PT with the children maybe too much more to make them switch. These groups may just adjust their budgets/expectations of PT costs.
I don’t think this was by design but rather just the government desperate for funding (ie delay tax removal) until time of use charging becomes available.
To be quite honest I don’t think that fuel tax is overly noticed as the fluctuation of fuel prices is so wild these days so it’s pity it will be removed so soon.
The root of this (I think) is that councils do need to raise rates and pay for things themselves. LGNZ and others are praising localism but just want more funding from central government so they don’t have to do the hard yards.
I’ve been thinking about how they could make it politically easier to raise them. Income taxes for example are handled nearly automatically and the government (functionally) raises them every year. Whereas rates are entirely the opposite.
I think advertising rates changes in real terms for a start would be good. Another would be sending out bills monthly, encouraging direct debit or card payments like electricity retailers do. Rather than the usual quarterly manual payment today.
Splitting water into separate bills seems to make it much easier to increase charges for those systems (ie watercare)
I was thinking there was a good post on this blog about land value based tax, but can’t seem to find it, maybe it was on another site. Anyway, if I had my way this is what I’d do this – implement all on the same start date:
1. Have a land value based tax, ie rates, but also set at a higher dollar value.
1a. Farm land (etc, what else?) excluded or at a substantially lower rate.
2. Tax any accumulation in value upon selling, family home or not.
3. Significantly decrease income tax so in general you come out even but it should encourage good use of land, discourage land banking & bring down house prices.
4. Consider increasing GST to 20% to encourage saving not spending & increase tourist income.
5. Consider excluding GST on non-processed foods (maybe like the proposed fruit & vege policy that didn’t quite eventuate) to encourage healthy eating and help off-set the GST increase particularly for those on lower incomes.
6. Remove exception of religious organisations from rates, but provide 50% discount. This should encourage better land use ie a more compact form, less car parking.
7. Central government should continue to receive GST from rates so it’s kept simple and they continue to get a central fund benefit. Hopefully they will spend it on things like an ongoing regional rail & electrification program, shift our spending from roading to more public transit & active modes, more sustainable freight methods.
Obviously the devil is in the details as to what percentages & thresholds etc. Start with smaller percentages with a set out plan to increase some and decrease the others so as to not create an immediate perverse outcome.
Land value rates / tax is the ideal. But it is a distant goal imo that will be incredibly hard to win politically.
One scheme I have been thinking may be more viable is doing apportionment within commercial / urban center zones (maybe THAB too) by land values within those zones.
Ie: all the land zoned “city center” pays $x in rates under todays CV system.
Now we portion that area’s $x rates burden within the city center by land value.
Would effectively bring land value rating to the land in our cities that are most in need of it and most severely underutilized. But would not threaten inner suburb landed detached homeowners (or many homeowners for that matter). Apartment dwellers would mostly win as their apartments are mostly already well utilized land.
Could be quite popular.
Agree, Jack. Other thoughts on making higher rates more popular:
1/ Use deliberative democracy to ascertain what the public actually think, rather than continue to listen to what the BAU-supporting commentators say.
2/ Run an information campaign explaining the benefits of, and need for, higher rates and the whole impoverishment cycle that sprawl + low rates has trapped us in. If there’s a difference between public sentiment and media narrative (as per point 1), highlight the difference and let the public know who is putting words in their mouths, and how to dispel myths.
3/ Target the campaign towards the younger generations and those in the older generations who are rightly disgruntled that we don’t have a capital gains tax and that local successive governments have aimed for low rates instead of updating basic infrastructure responsibly for decades.
You are NZ’s own Baby Reindeer!
Rates are an appallingly unfair system for paying for local Government. NZ needs to ditch this envy tax in favour of a council tax that all adult citizens pay. It is batshit crazy that only home owners and businesses pay for everything and yet anyone over the age of 18 can vote on how to spend the revenue.
Capital Gains tax is also unfair. It is double taxation at its worst. Why should the average hard working Kiwi have to pay an inflation tax against his or her home, the building he or she saved taxed income to buy. Meanwhile the loudest mouths refuse to save a penny and moan about paying rent.
I agree that local Government needs to raise more revenue, that is clear, but the simple way to do this is make everyone pay their fair share.
That would be a great way of encouraging our young earners to emigrate.
A uniform citizen tax, regardless of any ability to pay, would financially cripple students, and people in their first jobs.
The effect would be to further multiply the increasing distortion that inherited wealth is having in our society.
Limiting everything from educational, opportunity, healthcare availability, and housing availability.
In short, inherited advantage, would overide both ability and work ethic.
This is grossly economically inefficient, as born poor, would very much limit lifetime achievement, therefore economic contribution to our society.
A capital gains tax is hardly unfair, in particular if you make exclusions for the first/family home. There’s nothing hard working about pumping equity gains resulting from a speculative bubble into more housing, it’s pretty much the opposite – real money going into a static, unproductive asset on the bet that the speculative bubble keeps growing.
“Why should the average hard working Kiwi have to pay an inflation tax against his or her home, the building he or she saved taxed income to buy”
Good point that it would provide good reason for homevoters to not juice the shit out of the housing market at every opportunity. Case for cap gains tax gets stronger and stronger.
I recently purchased a slightly under median priced house, in a cheap city, over 20% deposit, have the best mortgage rates on the market. I pay $600 a week in interest. Conversely rates (which include all water charges) cost $60 a week. Rates are peanuts, and it’s laughable when previous generations complain about interest costs in the 80s or whenever while complaining about rates today. They could double them easily and not do much damage.
The loudest mouths are the people paying those peanuts in rates while expecting young folk to spontaneously turn into an ATM and buy their mouldy shitbox off them.
More seriously, the primary goal when designing a tax system (ie raising revenue for council) is to avoid distortions. To collect money while not influencing people’s economic decisions in ineffecient ways. Rates are among the best way to do this. As mentioned poll taxes will create a population exodus but most infrastructure costs are fixed (and in desperate need of renewal), and most services are extremely unpopular to be scaled down, costs would not decrease.
‘Encouraging our young earners to emigrate’ – you mean to a country where they have to pay for local Government, regardless of their housing equity?
You people have obviously never studied economics
“It is batshit crazy that only home owners and businesses pay for everything and yet anyone over the age of 18 can vote on how to spend the revenue.”
Renters effectively pay for rates through their rents.
I think a land value based tax, could have a lower rate for existing held land/homes at the time of the tax implementation or exclude existing homes so as to not be to punitive on older folk who have their home and have paid higher income tax all their lives and now have no real income stream. Though this should encourage them to move out of their large house lot (ie maybe large section) into say an apartment which would have a lot cheaper land tax. This frees up that land to be put into more efficient housing of say 3,4-5 families, eg in effect often your children or grandchildren.
Taxing land should encourage investors & even home owners to invest in more productive assets. Not sure how or if other assets like gold/silver etc would be handled, is it easy to have registries for other commodities? Our main issue is high house prices so that’s what needs to be targeted.
Was thinking about the fact that if we think rates are too low now, what motivations would we have to make local govt set it higher that would be politically feasible? Well perhaps the central government should allow local govt to carry on with “their” current rates system based on CV (house value included) and wack on top this new land tax portion that local government collect on their behalf. Obviously they could give back to local what ever amounts that seem right, but it could be perhaps all the GST from both rate “sets” that would be used. So you would implement this at the same time as dropping income tax rates.
So you want to encourage investment in commodities rather than a roof over your head? Do you understand market volatility? If the average Kiwi invested in Gold, Oil, Softs, FOREX or the stock market, the average Kiwi would have no savings at retirement age. Retail and DIY investors have shockingly high failure percentages because most people have no idea of how to manage risk. While your parents understood how to pay their mortgage every month, do you think they understood stop losses, standard deviation, VAR, margin calls etc??
There is such a thing as Kiwisaver and any other managed finds. You don’t have to do the work of an expert investor. Sounds like we would have to have a capital gains tax on these too for it to work. Think I need to read that tax working groups report that looked into all this for NZ though they may have been instructed to consider the family home excluded from any capital gains tax.
Congestion charging and bus lanes are expected on the existing bridge before billions are spent on a Waitemata Harbour Crossing project.
The need for expansion and development is driven by population growth. With our low birthrate this is driven only by net migration gains, and this has been out of control since covid. A sustainable limit needs to be set, and criteria adjusted so that it isn’t exceeded.
I’d disagree with a blanket increase in rates. However it is arranged, substantial increases need to be placed on new residential subdivisions at the city limits. There also needs to be a plan matching population growth, to increase it on land in town centres and adjacent to railway stations and frequent transit network, where apartment should be built, with selected areas scheduled over time.
Fundamentals need to be put right, solving transport, costs, etc.
For the longest time, I couldn’t work out the govt rationale for scrapping the Auckland Regional Fuel Tax.
If they’d left it in place, it wouldn’t have been any skin off their noses… A separate funding source not dependant upon govt coffers… Sounds like an ideal arrangement right?
It took me a bit but I’ve finally worked out what the go is… It’s control.
If Auckland Council have a separate funding source, they can use it however they want. So far, a great deal has been spent on Public Transport; Northern Busway, Eastern Busway, CRL etc.
The Nat govt is big business friendly. Spending oodles of money on the general populace doesn’t aid big business so clearly it’s a waste of time & money.
By cancelling the ARFT, they can bring Auckland back into line with their transport strategy… That being motorways & other large projects that aid big business.
I’m kinda selfish as a ratepayer… I wanna see at least some of benefits that I’m bring forced to pay money towards. Helping the fat cat CEOs line their pockets even more? Not something that I’m interested in.
I think there were two main reasons for the Government to scrap the Auckland Fuel tax.
1/ As you say it was a dimunation of their control.
With a secure funding source Auckland could be just too independent.
2/ The government, and their industry sponsors/donors were scared it was infectious. Other regions too might, want more autonomy to substitute increased public transport provision instead of multilaning more and more roads.
The vast majority of the NLTF funding comes from road users. Therefore, the vast majority of NLTF spending should go toward road users. This is the very definition of a fair and balanced policy.
If you want road users to fund other modes, instead of those other modes funding themselves the same way roads do, then that would be the very definition of an unfair and unbalanced policy.
New Zealanders rock up to petrol pumps every week and donate $100+ into the NLTF in addition to fueling their vehicle, and they don’t complain. I’m sure the users of other modes are quite capable of taking the same mature approach, if indeed they really believe in their personal transport choice decision making.
That is too simplistic and also a myth that roads are self funded from road users (mainly fuel excise duty, road user charges and motor vehicle registration and licensing fees).
The GPS that has just been consulted on has $6.2 billion of the $20.2 billion total revenue (2024-2027) as crown grants or loans. That is a sizable portion, 30%, that you could argue could be spent on any mode by that logic.
“Rail provides benefits to road users in the form of reduced congestion, fewer crashes and offset carbon emissions. This was quantified in the Value of Rail study which gave a number of $1.7-2.1 billion per year. Contrary to the GPS, this makes it look sensible to fund rail improvements from income generated by road users because road users clearly receive a significant benefit from both freight and passenger rail”
comment from a previous relevant post:
https://www.greaterauckland.org.nz/2024/03/05/the-governments-ideological-transport-policy/#comment-599900
and below that:
“Agreed it is hypocritical nonsense for National to say that rail, coastal shipping/the inter-islander, public transport, active mode infrastructure must pay for itself while it is giving tens of $billions of taxpayers money directly to the roads of national significance.”
Check the graph from the GPS on this post also, direct link to the graph:
https://i0.wp.com/www.greaterauckland.org.nz/wp-content/uploads/2024/03/GPS-24-27-PT-Funding.png?ssl=1
We do have taxes on alcohol and tobacco, too, right? Would you want to see this revenue invested into better tobacco plantations and more wineries, breweries, distilleries and liquor shops? We could hire a consultancy to come up with fancy new bottle and glass designs that make drinking more fun. Also, have people thought about coloured cigarette papers and more council-emptied ashtrays? That would make smoking more fun and more convenient.
If your answer is ‘no’ to this, you might realise that the income from one revenue source should not be spent entirely on catering to that revenue source in order to have fair and balanced policy.