Dialogue: City needs a transport solution it can bank on

DAVID THORTON* says Auckland's long-term transport needs would be catered for best by turning Infrastructure Auckland into an investment bank.

When Infrastructure Auckland was set up two years ago, it was heralded as the solution to Auckland's traffic congestion.

This new organisation, the successor to the Auckland Regional Services Trust, started life with a huge asset base of shares, property and cash, estimated at the time to be worth just under $1 billion.

Legislation setting up Infrastructure Auckland specified that these assets should be used only to fund capital expenditure on transport and stormwater projects - with the emphasis on transport.

Two years later, those assets have dwindled to just over $800 million, yet less than $8 million has been given away for transport and stormwater projects.

Losses on the America's Cup Village have been widely reported, and Infrastructure Auckland acknowledges the fall in the stockmarket value of its shareholding in Ports of Auckland.

Neither of these situations can really be blamed on Infrastructure Auckland, which inherited obligations from the regional services trust, especially for the America's Cup Village.

Neither can Infrastructure Auckland be blamed for holding on to those Ports of Auckland shares, because by law they cannot sell more than 24.9 per cent of them without formal public consultation.

Infrastructure Auckland's long-term funding plan forecasts spending of $675 million over the next five years, 85 per cent of which will be allocated to transport - all for capital projects.

The legislation establishing Infrastructure Auckland was drafted on the premise that the assets would all be spent within 10 years. And what happens then?

The whole of Infrastructure Auckland's capital could have been spent on transport infrastructure; operators could have been put in place to run an integrated public transport system - and then it might have been found that ongoing subsidies of up to $100 million a year would be required to attract and keep passenger loads at levels which would really reduce traffic congestion.

The regional passenger transport plan clearly anticipates ongoing subsidies for a public transport system. So where will that money come from?

Presumably the present income from tax on motorists - via central government/Transfund - will continue.

Auckland Regional Council rates will also probably continue.

But the vastly expanded public transport system being planned will need a lot more money than those two sources are likely to provide. New sources of income will be needed.

Already being widely tipped are congestion charges - maybe $20 a day to bring your car into central Auckland. Another policy being discussed is a reduction in the number of carparks, with parking charges for those remaining set at $25 a day or more.

And the proceeds from these charges would go towards paying subsidies for the operation of a comprehensive public transport system.

Theoretically, these sorts of charges on car usage would lead more people to use public transport, with the increase in passenger numbers leading to reductions in the level of subsidy required. That, in turn, should mean less money would be needed from congestion levies and parking charges, which would fall anyway as fewer people would be taking their cars into central Auckland.

Wonderful - in theory. And certainly such deterrents to car use are reported to have worked in some large cities in the United States, Asia and Europe.

However, it will take many years for such a funding plan - even if acceptable to the public - to take hold and provide surety of long-term income. Auckland does not have that time.

Already in place is a regional passenger transport action plan which sets out clearly the vision and strategy for a totally integrated public transport system. All that is needed is the will to implement it - and the money to build and support it.

The latest step in that plan has seen the release of the ferry strategy, which sees a potential to increase passenger levels to substantially above the present annual 2.5 million figure. Again, money for capital and operating subsidies looks likely to be a stumbling block.

At long last there seems to be some sympathy from central government towards Auckland's transport funding problems and talks are going on between the Government and Auckland local body leaders. While these revolve largely around rail lines, it is to be hoped that long-term funding is not being overlooked.

And funds could be available which, if applied more sensibly, would provide ongoing and reasonably secure income annually. Those funds would come from turning Infrastructure Auckland into an investment bank.

In the past financial year, Infrastructure Auckland reported a profit of more than $60 million from interest, dividends on investments and property dealing. This figure is similar to the surplus recorded for the previous year.

The bulk of that surplus will go into Infrastructure Auckland's reserves and be given away along with the rest of Auckland's nest egg.

As the capital is given away, these annual surpluses will naturally reduce and in 10 years that huge amount of money, which was going to solve the congestion problem, will be gone.

Surely it would be better not to give the money away but to use most of the annual surplus to provide ongoing financial support for a public transport system.

A regional passenger transport authority could be quickly established, independent of day-to-day political interference, and charged with developing and managing a fully integrated public transport system as envisaged in the regional passenger transport action plan.

The authority would have powers to borrow for capital development, with its borrowing underwritten by the infrastructure bank. It would operate as a business, but with fare subsidies where needed.

Meanwhile the infrastructure bank would function as an investment company, obtaining the best return through sound commercial management of its assets - without any politically inspired restrictions.

When Infrastructure Auckland was established, it seems there was some ideological objection to allowing Auckland to set up a permanent bank of this nature.

The chief executives of local councils even had a name for such a bank - the Auckland Region Infrastructure Bank. But Auckland's mayors and central Government decided behind closed doors to set up Infrastructure Auckland and make it dispose of that huge asset base.

It is not too late to reverse the situation. There is still $800 million left in the kitty. Use that as the base for an infrastructure bank which will provide a sound basis for Auckland's long-term transport needs.

Why kill the goose that is capable of laying golden eggs? A change in the legislation to allow this could be made almost overnight.

The way is open. All that is needed is the political will - both national and local - to do it.

* David Thornton is a former member of the North Shore City Council.

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