four ways to fund transport and other infrastructure and with the end of petrol
tax increases it is now time we explored the other three,” says Stephen Selwood
Chief Executive of Infrastructure New Zealand.
“One, we tax people or
businesses and use the revenue to deliver or subsidise investment.
“Two, users pay. The
most familiar options are tolls and public transport fares.
beneficiaries pay. Development levies charged on new homes to pay for the
supporting infrastructure is an obvious example, but any tool which captures
land value increases or wider economic benefits is beneficiary pays.
“Fourth and finally,
infrastructure providers can sell one asset to invest in another.
“There are lots of ways
to finance investment, including through loans, bonds and PPPs, but there are
no other ways to fund infrastructure other than these four options. Regardless
of the form of finance, debt must be repaid from some combination of taxes,
charges, value capture or asset sales.
“The good news is that
we’ve only really explored the first. Petrol taxes, road user charges, rates
and other taxes which go into the transport fund to pay for investment have now
been exhausted and there is little public support to go further.
“While general taxes
which have driven the Government’s $5.5 billion surplus can and should be
directed into infrastructure, it is time we looked much more seriously at more
road tolling needs a clear path to implementation. The faster the uptake on
electric vehicles, the sooner road pricing will become necessary. The public
needs to know when and understand why road pricing is required.
“Those who benefit from
increased property values should also pay their share. The shift to compact,
public transport-oriented development has enriched many property owners and
pushed the less wealthy to the periphery of cities where they are more car
dependent and more exposed to road taxes.
“The Auckland Council
Chief Economist has recently estimated that rapid transit has increased
property prices near central Auckland stations by up to 20 per cent – that’s
$200,000 of value on a million dollar home transferred to a lucky property
owner, but paid for by all ratepayers and motorists.
“It seems fair that
these beneficiaries share the cost in some way.
“Asset sales are the
final option. All city councils across New Zealand own assets. Many of those
assets are providing little return when the funds could be better invested in
new infrastructure to support growth. Public opposition would reduce if the
benefits are obvious for all to see.
“A simple ballot can be
used to depoliticise this debate, offering residents the choice between
retaining ownership of an existing asset or investing in a better alternative.
"We need to stop
strangling growth by underinvesting in infrastructure. People will pay if they
experience the benefit, but we need to give them the choice," Selwood says.
For further information and comment contact
Stephen Selwood on 021 791 209