Auckland's chances of gaining electric trains in time for the 2011 Rugby World Cup have been dealt a blow by the Government's decision to ditch the regional fuel tax that was to have paid for them and other public transport needs.

Although the Government has promised to pay for the whole $1 billion-plus electrification project - and will replace a regional fuel levy of up to 9.5c a litre with a national fuel tax rise of 6c over two years - it has in a Cabinet paper acknowledged that new trains may be delayed by at least six months.

The Auckland Regional Council hoped to introduce a limited number of electric trains in time for the rugby tournament, although the previous Labour-led Administration was committed only to completing the electrification project by 2013.

Its regional transport authority had hoped to invite formal tenders in May from a short-list of four suppliers of 35 four-carriage trains.

A Cabinet paper obtained by the Herald reveals that the Government decided last week to repeal regional fuel tax legislation "at the earliest possible opportunity" but that Finance Minister Bill English and Transport Minister Steven Joyce would "further consider funding for the Auckland electrification project".

It noted that other projects to have been financed by fuel tax - including ferry wharf upgrades, integrated ticketing and the Penlink road project to Whangaparaoa Peninsula - would not be guaranteed.

Mr Joyce is to report back to a Cabinet committee by July 1 on funding and ownership of Auckland metro rail, after taking account of the report expected at the end of this month from the royal commission on the region's governance.

The uncertainty puts a cloud over Auckland transport projects worth more than $200 million.

Although the Government has promised to pay for Auckland's new electric rail fleet, its axing of the fuel levy has left the regional council with only $55 million to invest in new railway stations, ferry terminals, and a long-awaited integrated public transport ticket.

Council chairman Mike Lee says his organisation will have to shred a five-year budget for $257 million of public transport infrastructure and start working out new priorities at a round of meetings to start on Friday.

The fuel levy was to have covered $202 million of that sum, as well as a loan of $496 million for the region's half-share of the railway electrification project.

Mr Joyce says it makes better sense for the Government to pay the whole tab and to add electric trains to KiwiRail's fleet.

But he has stopped short of giving guarantees on other projects, except for an assurance that the Transport Agency will give urgent consideration to applications for extra money.

Mr Lee acknowledged yesterday that the Government was probably unlikely to let projects such as the half-built Newmarket station lie unfinished, despite a $35 million funding shortfall left by the aborted fuel tax.

But he had serious concerns about the integrated ticketing project, for which his council had budgeted $32 million as its 40 per cent share of a capital cost of up to $80 million.

The Transport Agency, which agreed in principle last year to pay 60 per cent for a scheme it said should be able to be extended throughout New Zealand, is to consider whether to accept a preferred tender by the end of this month.

Mr Lee is worried that the Government may instead opt for an inferior scheme based on Infratil's Snapper Card, which operates mainly for the NZ Bus fleet in Wellington rather than on trains and ferries.

He said even the rail electrification project risked delays, despite the completion of a short-list of preferred tenderers.

"I don't know what that will do for New Zealand's image," he said. "We worked in good faith with the Government of the day for several years, patiently negotiating a way of meeting a $700 million funding shortfall.

"We had an ironclad assurance guaranteed by Parliament," Mr Lee said.

Auckland City Mayor John Banks said he was confident the Government would do its best for the region "in these times of unprecedented global recession" and urged the regional council to play its part.

"I am entirely satisfied that the Government's putting its shoulder to the wheel as far as Auckland's infrastructure build is concerned in these extraordinarily difficult times."

Asked about the regional council's efforts to gain widespread consent for a fuel tax to provide for such infrastructure, he said: "I'm not sure people have noticed, but there was an election and a change of Government."

North Shore City Mayor Andrew Williams said there was no good reason to ditch the fuel tax, given the example of the benefits to motorists of reducing congestion through successful public transport projects such as the $300 million Northern Busway.


From a total capital budget of $257m spread over five years, $202m is threatened.

This Includes:
* Newmarket railway station (half-built by KiwiRail on behalf of the Auckland Regional Transport Authority) - $35m.
* New Lynn railway station (yet to be built in a $160m trench being dug by KiwiRail) - $13.6m.
* Manukau central railway station (yet to be built at the end of a $50m branch line being laid by KiwiRail) - $14m.
* Several smaller stations, including Avondale, Park Rd and Parnell (yet to be approved), Onehunga (new branch line completed but station yet to be approved despite $8m site purchase by regional council).
* Ferry terminals (including new facilities at Bayswater, Beach Haven, Hobsonville and upgrades at Birkenhead and Half Moon Bay) - $37m.
* Integrated ticketing - $32m.