Land Transport Management Amendment Bill — Second Reading

The Greens support the second reading of the Land Transport Management Amendment Bill, subject to some minor tweaking to the Supplementary Order Paper at the Committee stage, which I am sure will be no problem for the Government. I want to talk about two main issues today in this second reading speech. The first one is about the question of hypothecation of all petrol excise and road-user charges to the National Land Transport Fund. The Green Party is the only party in Parliament that has consistently challenged the view that all tax on petrol ought to go into roads, any more than the view that all tax on tobacco ought to go into cigarette factories or that all tax on booze ought to go into liquor outlets. The reason is that road use causes substantial external costs to the rest of the economy that have to be funded out of general taxation. Until now the petrol excise has been contributing to those costs. It has not been paying all of them; it has been contributing to them.

Last night the Institution of Professional Engineers put out a very well-considered report, Transport: Engineering the Way Forward. Although we do not agree with everything the institution says, in many respects it has agreed with Green Party policy, particularly where it states in its report: “The mix of public and private providers, funding mechanisms, the interdependency of modes, and network availability may deter the selection of economically optimal modes. Government needs to ensure that the pricing of each of the three freight modes matches the real costs, including non-direct costs.”
There have been two major Government reports, the Land Transport Pricing Study of 1998—which Mr Williamson will remember—and the surface transport costs and charges report of the early 2000s. A lot of money has gone into both of those reports. Both of those reports showed markedly similar outcomes. Rail, for example, paid a very high proportion of its total costs to the economy, private motorcars paid very substantially less, and heavy trucks paid substantially less again—56 percent was the figure for heavy trucks.

So if we are to put all the petrol tax and the road-user charges into a land transport fund in order to pay for transport, then we need to have another way that makes real, in terms of the price of transport, the costs that it causes to the rest of the economy. Something that would do that transparently would be better than the current system, but we do not have anything to do that. There is no intention to do that. Both of those reports showed that the minimum band of confidence for the costs that are caused to the rest of the economy is about $1,200 million a year. That was at the bottom of the band. There is no proposal by anybody in this House that transport users should pay that; that is a subsidy from the taxpayer.

I will turn now to the regional fuel tax, which is the second-best way of funding public transport. It seems that even full hypothecation is not enough, and the Government wants even more money to go into more roads. This is a huge subsidy, again, to road transport users.

Our preference was for the regional fuel tax to go into public transport, which has been dramatically underfunded compared with roading over many years. We did manage to negotiate that only 5c could go into roading. If a second 5c is wanted, then it has to go into alternatives—not just public transport, but cycling facilities and so on. But it has been clear for many, many years that public transport is the poor relation and has been underfunded in terms of what is economically efficient for the economy, and the oil prices have just brought that home very clearly.

Last month’s figures show that vehicle kilometres travelled on the Auckland motorways are down by 3 percent. When have we seen that? Not only has the rate of increase stopped growing but also there is now no increase; there is now a reduction. That 3 percent is an average; it is 7 percent on the North Shore. Is that because the people who live on the North Shore cannot afford petrol and the people who live in South Auckland can? I do not think so. It is because the people on the North Shore now have an alternative. They have a very good busway, and they are using it. The people in South Auckland, who can afford transport the least, do not have a very good alternative. So they are still using their cars.
Let me spell it out really clearly for the House: better public transport reduces road traffic. It reduces maintenance costs, it reduces congestion, and it reduces the need for more roads.

The Green Party is not saying that we should have no roads, as the Government always suggests when we ask a question—”Oh, we need roads for buses.” We have a lot of roads; they are full at the moment. They do not need to be full if we use them better, and that is what we want to do.

But what happens if we need public transport? Auckland pays. What happens if we need a new road in Auckland? The country pays. If we need to electrify the rail system to increase the number of passengers it can carry, from 6 million trips a year to 38 million, then Auckland pays not just its own nominal half share but also the interest on the Government’s half share, as well. Auckland is effectively funding the whole thing and, with this legislation, we are very generously allowing it to do it. We want a new motorway, costing more than twice what that full electrification programme will cost, for just 4.5 kilometres of motorway tunnel in Waterview, and the approach is: “No problem; the Government will pay for that.” We keep hearing that Invercargill is not prepared to contribute to electrifying Auckland’s rail, but Invercargill is apparently quite happy to pay for a tunnel under Waterview, to complete, as they call it, State Highway 20. This is completely false economics.

But the Greens are pragmatists. In the absence of any other form of funding and given the essential nature of finishing the rail scheme in Auckland, we will support the regional fuel tax, and it is important that Auckland has asked for it. The Supplementary Order Paper will make clear, I gather, that that will be phased in at the rate needed. We support that, as well.

But there is a problem. On top of the regional projects chosen by democratic consultation in the region through the regional planning process, Ministers can add their pet projects on top and make Auckland pay the interest charges on those pet projects under new section 65N, which is to be inserted into the Land Transport Management Act by clause 31. This is what I call the Ministers’ pork-barrel clause. I thought initially that new section 65Q, which references new section 65J, meant that the Ministers’ choices for new roads in Auckland would also have to be consistent with regional priorities, as established by a democratic process in Auckland. But a closer reading of that clause has revealed to me that that is not the case. In fact, after the regional priorities have been established and applied to the first 5c that Auckland will fund through the regional fuel tax, Ministers can add a second 5c that does not go through that process and that they do not put through that process, and Ministers are not obliged any longer, after the select committee—as they were when the bill came in—to be satisfied that their projects are consistent with the region’s priorities.

This is the worst kind of roading pork-barrel politics, and I do not believe that the Government intended it. It took me so much time last night, when I had another look at this, to work circuitously around the clauses, and around the actual impact of what the select committee had done, that I think it is a mistake. I do not believe that Ministers would want to force Aucklanders to pay the interest costs, through a regional fuel tax, on roading projects that they had not chosen and that were not consistent with their priorities. I think that it is just one of those drafting things that creep in inadvertently. On that basis we will vote for the second reading, because I believe that can be very easily fixed in the Supplementary Order Paper next week. Thank you.