An annual $400 million revenue flow for Auckland transport would unlock billions of dollars of private capital looking for an investment opportunity, writes Stephen Selwood

Over the last decade, some clever policy decisions and corresponding investment have conquered electricity blackouts and have positioned New Zealand as a world leader in ultrafast broadband - two other mega-problems now thankfully more a memory than a crisis.

But the other longstanding infrastructure problem, transport in Auckland, shows no signs of abating.

In fact, latest evidence shows things are going to get worse unless we find new ways to fund desperately needed investment. By the middle of next decade, the morning peak will begin sooner and finish later, and if you think you'll be able to get the kids to sports practice after work, then you'll have to think again.

Long queues and stop-start traffic will not just dampen the Auckland economy and reduce recreational and other opportunities, it will force cars, trucks and vans on to local roads, broadening a problem previously confined to the strategic network.


Positively, for the first time we now have local and central transport authorities in agreement over the scale of the problem as well as how to address it.

Less positively, that solution, a shift from fuel taxes to a full road charging system across the entire road network, where drivers pay per kilometre travelled at different times during the day, may be up to a decade away.

In the meantime, the root cause of Auckland's transport problems, a lack of funding to spur investment, remains.

That gap is now estimated at $400 million per year.

Every year we defer a funding decision, that $400 million increases further and hundreds of millions more in productivity and reduced liveability is lost to congestion.

Frustratingly, the solution to increased funding and better traffic flows is already in our hands - motorway network charges.

Aucklanders have already said that they are willing to pay for better transport outcomes.

An independent survey of 5000 Aucklanders undertaken by Colmar Brunton on Auckland Council's behalf at the beginning of 2015 identified that 57 per cent preferred motorway charges to fund additional transport investment compared with less than a third (31 per cent) who supported increased fuel taxes and additional rates increases.

A unique benefit of a motorway charge is that we don't have to wait a decade to solve this problem. Number plate recognition technology is already here in New Zealand; it is proven and is cost effective.

A 2014 study by Auckland Council estimated capital and set-up costs for a motorway user charge system would be around $110 million. Ongoing operating costs were estimated at 10-12 per cent of revenue, significantly less than one-off toll systems.

The real upside from motorway tolls is that charges can be designed to increase the number of vehicles using the motorway network.

When roads become congested they operate inefficiently. This is especially true of motorways. Accelerating the speed of vehicles enables more cars to fit through the same width of road.

However, paradoxically, fewer vehicles will also use a motorway when it is free-flowing. Safe following distances and driver caution reduce the number of vehicles which can use a corridor.

The optimum speed which allows the greatest number of cars to move through a corridor is between 60 and 80km/h.

If you can maintain that speed, you can get more, not fewer, cars off local roads and to their destinations faster, providing better levels of service to road users and to local communities.

So the secret to providing better services and raising the money needed to support future transport investment, is to increase the toll when traffic is heavy and reduce it when traffic is light to keep traffic moving at between 60 and 80km/h.

This will maximise both the capacity of the network and revenue.

Under such a system, the price would be pushed real-time to mobile phones as well as to roadside variable message signs on routes to the motorway.

All other roads would continue to be "free", providing users the option of paying the price for an improved level of service or opting for an alternative route, time, or mode.

Road users would effectively choose the price by their behaviour.

Requiring revenue to be reinvested in the transport network would mean that users would not be paying for roads they had already paid for, but contributing towards the ongoing expansion of the system as a whole.

The $300-$400 million per year revenue stream generated could immediately unlock many billions of dollars of private capital looking for an investment opportunity in New Zealand.

ACC, the Superfund, iwi and others have been calling out for investment opportunities at home, but instead we've chosen to constrain growth rather than use private sector resources to unlock it.

A motorway tolling scheme would enable major new infrastructure investment to proceed in the short term. This investment could lift productivity and unlock land for housing, addressing the city's other big challenge, and would provide the bridge to an eventual national road pricing solution such as that proposed through the Auckland Transport Alignment Project.

The only thing holding us back is our collective will to act.