Aucklanders will have to pay higher rates or miss out on major road and public transport improvements if the Government goes ahead with cancelling the Regional Fuel Tax (RFT) this year.
Today, the Minister of Transport, Hon. Simeon Brown, announced that the Government intends to enact legislation to repeal the Land Transport Management (Regional Fuel Tax) Act, with the RFT scheme ending on 30 June 2024, four years earlier than planned.
A Curia Market Research Poll commissioned by the Office of the Mayor in November 2023 found that 44 per cent of Aucklanders want to keep the RFT, while only 26 per cent were in favour of cancelling RFT projects, and just 22 per cent favoured increasing rates to make up the shortfall in funding. *
“While I acknowledge that the National Party campaigned to repeal the RFT, and they are making good on their election promise, this decision will have unintended consequences unless the Government is prepared to foot the bill for upcoming transport projects,” Mayor Brown says.
The cancellation of the Regional Fuel Tax will leave a shortfall in transport funding for Auckland of $1.2 billion over the next four years. Furthermore, the loss in revenue will mean that Auckland Council’s debt-to-revenue ratio will increase, meaning the council has less ability to borrow when it needs to. *
The Government has been advised that, when the scheme ends on 1 July, there will be around $350 million of unspent money held in reserve. However, these funds will only be enough to complete the next stage of the Eastern Busway (including the Reeves Road flyover) and fund the purchase of electric rail units for the City Rail Link.
“The money set aside has been fully allocated to projects that are under construction. It just isn’t spent until contractual milestones are met. That’s standard practice when you’re building something,” Mayor Brown says.
“Auckland Council will have no choice but to pause any further work on projects funded by the RFT, including those already contracted, to see how we can fund them in the Long-term Plan.”
RFT-funded projects that could be cancelled include planned improvements to major roads such as Glenvar Road and Lake Road, as well as the fourth and final stage of the Eastern Busway and work to progress the proposed Airport-Botany Busway.
“I must be honest with Aucklanders about the financial constraints we are under. As a direct consequence of the Government’s decision to cancel the RFT, some of these projects may very well be cancelled altogether,” Mayor Brown says.
“I remain determined to keep rates under control and I’m simply not prepared to pass the cost of these projects on to struggling Auckland households. I’ve already proposed to cut spending on cycleways by $141.5 million and raised pedestrian crossings by $80 million. I’m quite happy to talk with the government about what else we can cut.”
“But this is a problem that can’t be solved just by making cuts. Every Aucklander agrees that our transport system is a mess and it’s going to cost a lot of money to fix. That money must come from somewhere. Unfortunately, the Government has just made it a lot harder for us,” Mayor Brown says.
* Notes for editors: Auckland Council Group has a policy of limiting debt to less than 270 per cent of revenue, with a target of 250 per cent. The loss in revenue from the RFT will mean overall revenue is lower and debt is higher as a percentage. We estimate that this will reduce the council’s ability to borrow by $810 million a year and make it more difficult to fund renewals.
The poll of 2,000 adult Auckland residents was conducted in October 2023 and has a margin of error of +/- 2.2 for a result of 50 per cent. Results were weighted to reflect the overall Auckland population in terms of age, gender, and council ward.
