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Home / Business

Fran O'Sullivan: Auckland v Govt on push for fuel tax

Fran O'Sullivan
By Fran O'Sullivan
Head of Business·NZ Herald·
13 Dec, 2016 04:00 PM4 mins to read

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Mayor Phil Goff aims to raise money to battle congestion via a fuel tax. Photo / Brett Phibbs

Mayor Phil Goff aims to raise money to battle congestion via a fuel tax. Photo / Brett Phibbs

Fran O'Sullivan
Opinion by Fran O'Sullivan
Head of Business, NZME
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Phil Goff's bid for an interim fuel tax in Auckland will test the Bill English-led Government's commitment to sorting out transport pains in New Zealand's prime commercial hub.

The Government has been steadily coming around to the need for new funding tools to cope with Auckland's growth.

But it has been slow to take radical solutions to ensure Auckland is freed from its gridlock.

This doesn't bode well for commuters and businesses or for the Government if its intransigence is seen by Auckland voters next year to be partly to blame for their frustrations.

Goff's ambition for Auckland Council to be the best-performing council in New Zealand rests on some heroic assumptions.

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Tight spending controls are a given.

But there is a potential to clash with central Government on new approaches to investment and drumming up new funding streams.

Particularly, when the newbie Prime Minister will have to weigh the voting effect on National's chances if (for instance) a fuel tax (which the Key Government opposed) is applied, even on an interim measure, in line with Goff's wishes.

It's not surprising Goff favours user-pays solutions.

The more fundamental question is why doesn't the Government?

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But while Goff is clear that no government likes being associated with a new tax, central Government needs to actively consider the option - to help find the additional $400 million needed each year to allow for a modest growth in transport infrastructure - especially since another favoured option of a congestion charge takes much longer to implement.

Also on Goff's agenda is a targeted rate to be imposed on large-scale developments which could be paid off in 20 years.

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Goff will not be able to be easily fobbed off if the Government does not move on new options.

As a former Rogernome he is intimately aware of the pressures that central government face on the fiscal front. And the solutions at Government level.

Goff has also plundered English's playbook by adopting what looks seriously like a policy of "radical incrementalism".

In an interview for today's Project Auckland report, Goff dropped enough hints that the policy programme he intends to introduce will in time be judged every bit as radical as English's policies.

Goff will not be able to be easily fobbed off if the Government does not move on new options.

The mayor intends to force through efficiencies; not only at the council but also with the CCOs (council controlled organisations) as Herald reporter Bernard Orsman revealed earlier in the week.

At this stage he does not support the privatisation of Auckland's commercial assets. Goff makes the point that the council only has a 24.4 per cent shareholding in Auckland Airport ("half the percentage the Crown has in its energy companies").

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He quotes Treasury advice that says selling the airport stake would be a one-off and would not solve the council's debt-to-revenue problems.

He maintains nothing can be done with Ports of Auckland until a decision is made on the port's future.

His focus is on new revenues to offset the fact the council's balance sheet is constrained.

He has been smart in appointing a former Treasury deputy secretary to a powerful position in his mayoral office. David Wood, who is director finance and policy, worked closely with English on expenditure control when the latter held the Finance Minister's role.

This appointment will underline to the Prime Minister that Goff is serious when he says he will be driving through greater efficiencies at Auckland Council.

The mayor also intends to focus on accountability and make greater use of the instruments at the council's disposal. He won't be appointing political hacks to his office either, preferring to drop his predecessor's reliance on spin.

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Yesterday Acting Finance Minister Steven Joyce reasserted that the Government's fiscal priorities remained unchanged.

"We'll continue to keep a tight rein on spending to drive growing OBEGAL [operating balance excluding gains and losses] surpluses and reduce net debt to around 20 per cent of GDP [gross domestic product] in 2020," he said.

"Keeping on top of spending and paying down debt in the good times ensures we are in a good position to cope with economic shocks and natural disasters, and allows the Government to support New Zealand communities through challenging times."

Joyce will be relieved to find Auckland's mayor shares his philosophies; it's just that he also wants fuel taxes.

English and Joyce take note.

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