Hamilton City Council has put up its hand for a regional fuel tax of 11.5 cents a litre, saying it needs the extra money to deliver better public transport and roads.

The Waikato city has joined Christchurch City Council in asking the Government to introduce a regional fuel tax, which is limited at this stage to Auckland Council.

Hamilton City councillor Dave Macpherson says the council has a $500 million transport growth programme, but financial restraints meant it has been cut in half that will lead to fewer public transport options and greater traffic congestion.

"We are growing just as fast as Auckland. Parts of Hamilton and parts of the North Waikato are actually growing faster at the moment as the spillover from Auckland happens," said McPherson.


He was speaking at a parliamentary select committee hearing in Auckland today on the Land Transport Management (Regional Fuel Tax) Amendment Act.

Hamilton City councillor Dave Macpherson.
Hamilton City councillor Dave Macpherson.

The bill allows Auckland Council to introduce a regional petrol tax of 10c a litre plus GST from July 1, but other councils are locked out of the tax until 2021.

Hamilton City Council, which has proposed rates increases of 9.5 per cent for both the first and second year of a new 10-year budget, is unable to pay for $250m of transport projects, including investment in public transport, cycleways, a northern river crossing and roads to complete the Peakcocke area for 20,000 new residents.

Macpherson said the regional fuel tax should have been available to Hamilton this year and wanted the bill amended for other councils to have the ability to introduce the tax next year.

A regional fuel tax would raise about $12m to $13m a year and complete a $500m programme over 10 years, he said.

The Automobile Association told the select committee the regional petrol tax for Auckland is sound in principle, but is not convinced it is practical for other parts of New Zealand.

AA principal regulations adviser Mark Stockdale said smaller councils in smaller areas were prone to leakage from people buying fuel across the boundary, and motorists paying more for fuel than already was the case because of less competition.

Hamilton City Council wants to build a new bridge over the Waikato River.
Hamilton City Council wants to build a new bridge over the Waikato River.

Stockdale said the AA was also concerned about price spreading - fuel companies applying the regional petrol tax outside Auckland, which, he said, could fatally undermine the tax.


He said the Government only wanted the tax to be collected in Auckland, but there was no mechanism to ensure that happens, saying fuel companies have a range of options about price setting.

Price spreading was the reason two previous attempts at regional fuel taxes were abolished, Stockdale said.

The AA wants the legislation changed to require the New Zealand Transport Agency to carry out price monitoring, and there is a fuel price app, Gaspy, with a wealth of data that could help, he said.

Talking to the Herald outside the meeting, Stockdale was encouraged by an earlier suggestion by Road Transport Forum chief executive Ken Shirley to apply the regional fuel tax at its source at Marsden Point.

He called it "quite a clever solution" worth exploring to avoid price spreading, saying most of Auckland's fuel was supplied by Marsden Point through a pipeline to the city.

Auckland Mayor Phil Goff made a strong plea today for the tax, saying without the controversial move the council will be unable to stop worsening congestion.

"Please don't stand in the way of us introducing it," Goff said.

Without the tax, Goff said, Auckland would have a $4.3 billion transport funding hole and virtually unable to build any new projects to address a rapidly worsening congestion problem.

The Penlink highway between Whangaparaoa and the northern motorway will be part funded by the Auckland regional petrol tax.
The Penlink highway between Whangaparaoa and the northern motorway will be part funded by the Auckland regional petrol tax.

The Government plans to pass the bill in time for the council to introduce the tax on July 1 when the council's new 10-year budget kicks in.

On Monday, the council voted 15-2 in support of the tax and consultation on a range of public transport, roading, cycling and walking and safety projects that proceeds from the tax will go to fund.

Goff said the tax would raise $1.5b over 10 years but with Government subsidies and development contributions it would generate $4.3b of new transport spending for the city.

"This is a serious amount of money," said Goff, saying without the petrol tax the council's transport package will be limited to renewals and committed projects.

"We have to decongest Auckland and having a fund to put in place a transport system that works for New Zealand's only international system," he said.

With a regional petrol tax congestion will get worse in Auckland, says Mayor Phil Goff.
With a regional petrol tax congestion will get worse in Auckland, says Mayor Phil Goff.

Goff said figures from the AA showed the cost would be $2.33 a week for people and a Colmar Brunton poll of just under 4000 people showed 52 per cent support for it and 43 per cent were opposed.

Speaking to media after his presentation to the select committee, Goff said he had no intention of taking advantage of a clause in the bill allowing the tax to be increased at a later date.

"It's certainly not in the minds of me or council members to further increase that in the foreseeable future," said Goff.

Ken Shirley, chief executive of the Road Transport Forum, told the select committee the act was more about political posturing than prudent public policy.

He believed the council would be better off selling part of its 100 per cent shareholding in Ports of Auckland as an alternative to the tax, saying it would free up much-needed capital and probably lead to a better dividend.

He said that globally fuel taxes are being phased out with the move to electric vehicles and decarbonisation.

If the tax is introduced, Shirley said, it would be more efficient to introduce it at Marsden Pt, where excise fuel taxes of $2 billion a year are already raised, and ring fence Auckland's share.

Shirley also questioned why the tax was only being levied in Auckland at this stage.

Christchurch has expressed an interest, he said, and areas like the East Cape and Gisborne had a strong case.

"Why wouldn't they?" he said.

Auckland Chamber of Commerce chief executive Michael Barnett told the select committee the term of the bill should be reduced from 10 years to five years to focus on a road pricing solution aimed at managing congestion and raising revenue long-term.