Dialogue: Toll roading can release much-needed capital

Private roads will be tightly controlled and could provide the short-term answer to Auckland's traffic jams, writes JOHN WALTON*.

The Government's land transport strategy opens the way for the introduction of tolls to pay for the development of new roads.

Some will see this as opening the floodgates a chink further on private ownership of what should be public assets.

Opponents will declare that this creeping privatisation is unacceptable and that we need to take urgent action to save the roads.

That would be unkind. The scale of Auckland's congestion problems means the Government's policy direction merits analysis, not rhetoric.

Nine months ago representatives of Auckland local bodies identified heavy rail, light rail and buses for their integrated transport model for the region.

Contracts were also awarded for the Britomart development, the centrepiece of Auckland's new transport strategy.

Transport Minister Mark Gosche now plans to spend $94 million more on roading (on top of $973 million budgeted for the 2001/2002 year).

This compares with $36 million for public transport and $30 million and $3 million respectively for alternatives to roading such as walking and cycling.

The Government also acknowledges that road tolls might be used to pay for the building of even more roads.

For many Auckland commuters, cars still have the edge and there is at present no more convenient alternative. Some see charging for road use as another tax, and if private owners make the charges, it is an affront.

The spectre of over-charging arises and, as investors are likely to be foreign-owned, profits could disappear overseas.

But this is hardly a balanced interpretation of the Government's policy announcement.

The minister's transport plan proposes that charging will apply only to new roads. The 4c a litre petrol tax rise will go into a fund dedicated to transport, rather than into the Government's general coffers.

Initial tolls, and any increases, will be tightly controlled and will be used together with private investment to pay for roading projects that are identified as being desirable, based on a much wider range of criteria than applied now.

But that still doesn't answer the question of why the Government is focussing on an alternative financing mechanism that will enable the construction of new roads. If we take a wider view of Auckland's infrastructural needs, however, the logic begins to emerge.

In the past few years, we've seen our water supplies under pressure, the electricity network fail and we are told that our stormwater network is in serious need of further investment.

Some regional financing is available, but no one is enthusiastic about continued increases in taxes and rates to cover the cost of these infrastructure requirements.

Overseas, tolls are often used as a way of wholly or partly financing the cost of new roads.

Together with private capital and public/private partnerships for the development and operation of infrastructure such as roading, many countries have been able to develop roading projects that would simply not have occurred had the public purse been the only source of finance.

These initiatives have the dual purpose of imposing discipline on the investment decisions and ensuring that the costs of the roads are met, at least in part, by those who most take advantage of them.

By allowing for wider investment in new roads in New Zealand, and opening the way to recovering some of the real costs of building and maintaining those roads, the proposed measures should not only help to alleviate the short-term problems created by Auckland's roading gridlock, they should also free up capital for other pressing infrastructure investment.

That capital could also be used to explore and promote alternative transport projects.

Given the choice of higher tolls during peak hours using electronic assessment and billing, those alternatives to getting into your car may become very attractive indeed. Promoting road construction for Auckland may have the very effect the opponents of new roads desire.

That will depend on how willing we are to accept that our roads are not free, and they never have been.

* John Walton is a partner with law firm Buddle Findlay.