Council's transport spending to fall by 46% in 2018

11 JULY 2017
FOR IMMEDIATE RELEASE

Despite the higher rates, Auckland Council is slashing its spend on transport, with a projected fall of 46% in 2018 and other years in the next decade forecast to see the Council spend one-third less than current transport spending. The modelling is contained in the previously secret analysis of Auckland Council’s financial plans which was prepared for Government Ministers by the Ministry of Transport.

The briefing papers, obtained by the Auckland Ratepayers’ Alliance under the Official Information Act, are available at www.ratepayers.nz/transport_spending. The papers show that Auckland Council’s annual transport spend of $796 million is forecast to decline to $432 million in 2018.

Commenting on the report, Jo Holmes, a spokesperson for the Ratepayers’ Alliance, said, “At the very time Aucklanders are demanding more transport spending and better infrastructure, the Council is cutting funding. It appears the only plan it has is a hope that the Government are forced to pick up the bill.”

“Transport is a core spending area and the most urgent investment needed in Auckland. Instead of getting back to core services, these documents show that the Council is reducing both the proportion of its budget and the nominal amount that is spent on transport.”

“Back in 2015, we were told that the 9.9% rates hike and transport levy was needed to boost transport spending. These documents show that ratepayers were lied to, with funding of Auckland’s transportation remaining stagnant since 2008.”

“Not only was Len Brown’s transport levy not even used to fund transport infrastructure, now Phil Goff’s Council claims its removal is the reason for reducing transport spending.”

“With the last Council having borrowed up to their eyeballs, the only one way out of this mess is for the Council to do what they promised in the lead-up to last year’s election: reprioritise spending to core areas and cut the extravagance, waste, and ever increasing areas Auckland Council is spending our money on."

Q&A

What do the Government papers show?

• According to financial analysis of Auckland Council, conducted by the Ministry of Transport, over the next decade, average transport spending by the Council is projected to be 13% lower than 2017 levels, at an average of $690 million annually - despite a rapidly growing population and rating base. Some years are projected to see Auckland Council spend a third less than the 2016/2017 financial year.

• In addition, the documents show that the total funding shortfall for planned projects under the ATAP (agreed between Auckland Council and central government) is $4 billion over the next decade, at the very time the Council is planning to reduce its transport spend (Mayor Phil Goff has subsequently claimed this shortfall is now $7 billion).

• In the next three years, central government's funding share is expected to exceed 70 percent for the first time.

What is the ATAP (Auckland Transport Alignment Project)?

• It is a planned approach between the Government and Auckland Council for the development of Auckland’s Transport network. The ATAP is designed to provide the city with a strategy to keep up with city’s rapid population growth.

Has the cost to run the network gone up?

• Per capita operating expenditure for Auckland’s transport network has remained constant since 2008: costing around $1,200 per resident, or 2.5 percent of regional GDP.

Has the Council not budgeted for future operational costs?

• The Council has assured the Government that despite the rates increase being less than the expected 3.5 percent (The Council increased rates by 2.5 percent), there would not be a reduction in transport expenditure.

Who pays the largest share of Auckland Transport Expenditure?

• The Councils contribution of total transport spending was 58% in 2000, with the remaining 42% coming from the Government. In 2016, the Council's share had fallen to 44%. However, by 2018 their contribution is projected to drop to just 23%. The Government will increase its transport spending in Auckland from $1.01 billion in 2016 to $1.48 billion in 2018 while the Council's will fall from $780 million to $432 million.

What is Auckland Council using to justify their decreasing transport expenditure?

• Auckland Council is using the removal of the Interim Transport Levy as an excuse for decreasing funding. The levy currently costs $114 per year for residential ratepayers and $183 for business ratepayers. It generates over $60 million in revenue per year, which goes towards public transport. However, transport spending has not increased whatsoever since the introduction of the levy in 2015. In fact, when the levy was introduced in 2015 the council's transport spending fell by $136 million.

• Another reason the council is using to justify their declining contribution is their increasing debt, which is projected to keep worsening until 2022/23 before easing off.

What is the cost of poor transport infrastructure?

• In a 2015 report, the OECD estimates the city loses $1.25 billion a year in lost productivity because of insufficient transport infrastructure and congestion.

ENDS

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