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Congestion charges for infrastructure will need council justification: Key

Wednesday 27th January 2016

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Prime Minister John Key said Auckland Council would need to “justify” introducing congestion charges or motorway tolls to help fund the region’s transport infrastructure, including the $2.5 billion City Rail Link, which the government helped bring forward today.

In his first speech of the year, the Prime Minister provided certainty to funding the rail project previously labelled “Len’s train set” which will allow it to start two years earlier, in 2018, as government funding would have started in 2020.

The government will work with Auckland Council to finalise details of how the project costs will be shared, though Key later said that a 50:50 split was likely to be fair. How the rail link will be owned and managed is another issue, given the rail network is currently owned by the government.

Key also announced plans to fast-track the East/West Connection between the southern and south-western motorways which is estimated to cost over $1 billion. The announcement follows the Reserve Bank calling on the government to increase its infrastructure spending to help boost the economy and reduce pressure for lower interest rates.

Key said he didn’t think there was a need for a stimulus package, given robust business confidence, despite Fitch Ratings downgrading its outlook for GDP growth this year to 2.4 percent.

“We’re not doing this to be stimulatory. This is about future growth opportunities,” Key said.

The Auckland Council has been investigating how revenue from congestion charges could help meet the city’s estimated $10 billion to $15 billion transport funding shortfall over the next 30 years, which includes a second harbour crossing.

Key said Auckland Council had a number of options to meet its share of the infrastructure bill including more borrowing and selling assets and would need to convince Aucklanders of the merits of congestion charging. “I’m not the mayor of Auckland and never want to be and that will be up to the mayor or future mayor to deal with. We’d need to see the justification,” Key said.

Auckland mayor Len Brown said council polling had shown 57 percent of Aucklanders would support congestion charging if it helps unlock Auckland’s traffic problems.

“I believe we can [justify it] because we do so on the basis there is a price for congestion,” he said. “London introduced congestion charges, Singapore did and that has worked very well as a de-congester,” he said.

Brown said the council could meet its half of the CRL bill primarily through user charges and its balance sheet, as the project is being built over four to five years. 

In 2013, the government agreed to jointly fund the rail link with Auckland Council but not to provide its share until 2020. It would consider an earlier business case and construction start date if it became clear that Auckland’s CBD employment and rail patronage hit thresholds faster than growth rates at the time suggested.

The two thresholds were rail patronage hitting 20 million trips a year before 2020 and a 25 percent increase in Auckland CBD employment over the 2013 level – half the increase predicted in Auckland Transport’s City Centre Future Access Study. Neither threshold has been met at this stage although rail trips are forecast to hit the 20 million mark by the end of this year. Patronage increased 22 percent in 2015 to just over 15 million trips a year.

The rail link will connect Britomart Station in downtown Auckland with the existing western line at Mt Eden station, allowing trains to run both ways through Britomart, and preliminary work began in December, with the council's long-term plan passed last year based on construction beginning in 2018. 

Key said the East/West Connection was now being considered a project of national significance, which he justified on the basis it was a major freight hub for Auckland rather than just serving around 130,000 residents in the area.

The local community would still be able to object to the project but it would be dealt with under a nine month fast track process.

The government plans to fund the connection through the Land Transport Fund to allow construction to start as early as 2018 rather than the early 2020s, he said. 

Key also detailed up to $115 million of funding for four road projects, two in Taranaki, one in Gisborne and one near Blenheim.

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