Funding questions over Labour's $5b trams for Auckland

Labour is unclear how it will fund a $5 billion plan for modern trams in Auckland, but says Auckland Council will shoulder a "significant" share of the cost.

Labour's Auckland Issues spokesman Phil Twyford today said he did not know how the costs will be shared between the Government and Auckland Council, except to say council will not pay the majority.

Twyford also did not know whether modern trams, also known as light rail, will sit on the Government or Auckland Council's balance sheet.

In her first public appearance as Labour leader, Jacinda Ardern promised fast modern trams along two routes from the CBD to the airport and West Auckland within 10 years at a cost of up to $5b. This would be followed by trams to the North Shore.

Labour has promised to fund its Auckland Transport package by a combination of increased expenditure, cancelling or scaling back existing transport projects like the $1.8b east-west road through the city's industrial belt and giving Auckland Council the ability to set a regional petrol tax.

Twyford said Labour would change the mix and priorities of projects in the city's 10-year transport plan and spend an extra $2.1b. The overall plan would cost $15b, including the light rail projects to the airport and West Auckland, and had a $6b funding gap, he said.

Twyford said Labour was committed to funding the full $15b programme, but could not say how much Auckland Council would pay towards trams.

"Auckland Council is going to end up contributing a significant amount of that, but probably the smaller amount, not the majority," said Twyford.

The Government and Auckland Council are sharing the cost of the $3.4b City Rail Link.

Asked whose balance sheet the trams would sit on, Twyford said: "We haven't worked that out yet. That is something we will work out when we sit down with Auckland Transport to renegotiate ATAP (the joint government-council transport plan)".

With Auckland Council starting work on a new 10-year budget, Twyford said Labour could have a positive impact on council's ambitions for public transport.

"We are going to front up with some serious resources to fund it and make it happen," said Twyford, saying the New Zealand Transport Agency would fund rail projects under Labour.

It is unclear how the council, which carries the $3.4b City Rail Link on its balance sheet, could absorb another $5b for trams when the council is right up against its debt ceiling, which, if breached could lead to a credit rating downgrade and drive up borrowing costs.

Labour has said a regional fuel tax of 10 cents a litre would raise $160m a year for Auckland Council. The Herald estimates a 10c-a-litre tax would raise $100m a year.

Auckland Mayor Phil Goff said Auckland recognises that we need to have skin in the game.

"We're prepared to share in the costs of investing in transport infrastructure in our city, but we need government to help us expand the base from which we generate revenue to pay for it," he said.

Goff, the former Labour MP who campaigned during the mayoralty for light rail, said trams to the airport is a priority and the latest ATAP update increases by $700m to $1.2b the money set aside for trams or rapid buses on the isthmus and to the airport.

"I welcome announcements from both parties that central government will contribute a significant share towards Auckland's transport investment needs.

"I favour road pricing mechanisms rather than general rates increases. That would include options of congestion charging, tolling or a fuel tax to help generate the levels of funding required for transport infrastructure investment in Auckland. We're also exploring the use of targeted rates and value uplift (higher rates for businesses that benefit from projects).

"I look forward to discussions with whoever forms our Government post-election to progress plans for light rail in Auckland," Goff said.

Transport Minister Simon Bridges could not be reached for comment.