Auckland's regional nest egg has taken a $50 million hit on investments at a time of deep funding uncertainty for key public transport projects.
Instead of earning a budgeted $13 million profit on a $262 million "diversified financial asset" portfolio of global equities, bonds and cash, Auckland Regional Holdings has advised its regional council parent of a half-year loss of $37.6 million.
Positive returns from the organisation's wholly owned port company, other property holdings and short-term cash deposits softened the overall loss on its $1.15 billion of regional assets to $22.4 million in the six months to December.
But the result could not have come at a worse time for the council, given that a decision to draw $155 million from the holding company this year for public transport and stormwater improvements was made in expectation of raising a regional fuel tax in July to protect its long-term asset base.
That plan is in disarray with the Government's sudden decision to discard the tax, which was to have risen from 2c to 9.5c a litre by 2011, in favour of a national fuel excise increase of 3c in October and 3c next year.
Although the Government has promised to foot the full bill for Auckland's $1 billion-plus rail electrification project, instead of leaving the regional council to pay $508 million for new electric trains, it has yet to offer any funding guarantees for $202 million of other public transport infrastructure reliant on the tax.
These include partly built railway stations, refurbished diesel trains, ferry terminals and an integrated electronic ticket to allow travel on various public transport services on one fare for any given journey.
Council chief executive Peter Winder yesterday told the Auckland Regional Transport Committee that the most immediate problems "pushing right in our face" were two big contracts signed in expectation of the fuel tax.
These were for the $35 million Newmarket station, for which a payment of $15.4 million falls due on July 1, as does a $32.8 million instalment for refurbished diesel trains needed to cope with booming rail patronage before the arrival of electric units.
The Government has acknowledged that its intervention may even delay electrification by at least six months, putting in doubt a target of completing that project by 2013 and the regional council's hope of laying on some electric trains in time for the 2011 Rugby World Cup.
Regional chairman Mike Lee has told Transport Minister Steven Joyce, in a letter tabled at yesterday's committee meeting, that his organisation already intended to spend 48 per cent of a $154 million rates take next year on public transport operations and to supplement those with $30 million from Auckland Regional Holdings.
The loss of the fuel tax left the council in an invidious position, as it would take a 15 per cent additional rates rise to plug the $202 million capital funding cap without substantial Government assistance.
In a separate meeting yesterday, the Auckland Regional Transport Committee reported an 8.9 per cent rise in public patronage in the six months to December 31 over the same half of last year, to 28.8 million trips. That included a 15 per cent rise in rail patronage, a 94 per cent increase in the Northern Express service boosted by the new busway, and 7.8 per cent more trips taken on other buses.
That follows years of sluggish patronage on the region's buses, which has been boosted in recent months by the introduction of free travel after 9am each day by senior citizens and a doubling of discounts for tertiary students.
Regional councillor Joel Cayford said large numbers of seniors clustering around Devonport's ferry wharf each morning on their way to Waiheke Island and other destinations, enjoying their region by exploring it free, showed that support for public transport was not "flogging a dead horse."
"This is where the action is," he said. "If you really want to flog a dead horse, you could build a motorway to Wellsford for $2 billion."
His reference was to the Government's decision to boost state highway spending by $1 billion over three years to accelerate plans for projects such as an extension of a four-lane road from Puhoi to Wellsford.
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