Governing Body 25 July 2013

File No.: CP2013/16590

Purpose
1. To present the final report of the Consensus Building Group on Alternative Funding for Transport.

Executive Summary
2. On 19 July 2012, the Governing Body directed officers to carry out investigations, stakeholder collaboration and system design for selected alternative funding options for transport (GB/2012/104-107 refers). A Consensus Building Group (CBG) was established to support this work. The CBG has now completed that work. Its final report, Funding Aucklands Transport Future Alternative Funding for Transport, is available on the Auckland Council website at the following link: http://www.aucklandcouncil.govt.nz/EN/AboutCouncil/meetings_agendas/governing_body/P ages/home.aspx and hard copies will be available at the meeting.

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Recommendations
That the Governing Body: a) receive the final report of the Consensus Building Group on Alternative Funding for Transport, entitled Funding Aucklands Transport Future Alternative Funding for Transport. note that advice on the next steps is being prepared and will be presented to the incoming Governing Body from November 2013.

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Discussion
4. On 15 February 2012, the Strategy and Finance Committee approved the release of the discussion document Getting Auckland Moving for feedback. Responses indicated that Aucklanders wanted to see improvements in transport infrastructure that are able to cope with growth and that a mix of new and existing funding might be desirable. On 19 July 2012, the Governing Body considered a report on Alternative Funding for Transport that included the proposed collaborative process for policy development including the use of Consensus Building Group. The Governing Body resolved: a) That the report be received. b) That the Governing Body direct council officers to carry out investigations, stakeholder collaboration and system design for selected alternative funding options for transport. c) That the investigations, stakeholder engagement and system design primarily focus on more examination of: i. regional fuel taxes ii. congestion charging/network charging iii. additional car parking charges
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iv. airport departure and visitor accommodation charges as secondary sources and recommend involvement of the Tourism Industry in the Consensus Building Group v. tax increment funding d) That the Governing Body note that the recommendations above do not exclude the use of existing land transport funding sources, including general and targeted rates, development contributions, public transport fares and government financial assistance. 6. To implement these resolutions the Consensus Building Group (CBG) was established. Its purpose was to build a robust evidence based consensus on the preferred revenue tools for filling Aucklands transport funding gap, through active debate and public engagement. The CBG was chaired by Mr Stuart Milne and consisted of: Mr Andy Smith for Walk Auckland Mr Cameron Pitches for the Campaign for Better Transport Ms Donna Wynd for the Child Poverty Action Group Mr Gary Taylor for the Environmental Defence Society Mr James Brown for Tournament Parking Mr Kim Campbell (EMA) for the Auckland Business Forum Mr Paul Shortland for Cycle Action Auckland Mr Phil Eaton for the New Zealand Property Council Auckland branch Mr Robert Reid for the NZCTU Mr Shaun Awatere Mr Simon Lambourne (initially representing the Automobile Association) Auckland International Airport Ltd Mr Simon Wallace for Tourism Industry Association of New Zealand Mr Steven Grant/Mr Simon Douglas for the Automobile Association Mr Stephen Selwood for the NZCID Mr Tony Garnier for the Auckland Business Forum Mr Richard Llewellyn for Auckland International Airport Ltd (later replaced by Simon Lambourne) 8. The government was invited to participate in the CBG, either as a full member, or through the use of participant observers. The government elected not to participate in the CBG. Despite that decision, government officials were regularly briefed by the project team that supported the CBG. The CBGs final report, Funding Aucklands Transport Future Alternative Funding for Transport contains the consensus views of its members. The CBG reached its conclusions based on its own analysis and discussion. This included: a) b) c) d) testing the size and timing the funding gap, based on the costs of implementing the transport programme in Auckland Plan and the existing sources of revenues; exploring more than 20 different funding sources to close this funding gap; giving detailed consideration, including an indicative economic evaluation, to six funding scenarios reflecting different combinations of funding tools; and considering considerable public feedback.
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The CBG distributed the discussion document widely to organisations and individuals, through council databases of stakeholders and the networks of CBG members. CBG members engaged directly with the constituencies that they represented. The CBG also developed a web site and ran a public advertising campaign to encourage people to visit the web site and provide feedback. All those who provided feedback in the first stage of the public engagement process were linked to the discussion document and invited to contribute further. The discussion document sought feedback on two options for funding Aucklands transport improvements. More than 1,300 submissions were received. Of those 1,025 submissions supported the option that comprised the introduction of road pricing supplemented by smaller increases to rates and fuel taxes, further government contributions and small fare increases for public transport users. The CBG canvassed the views of local boards, advisory groups and the Independent Maori Statutory Board. The feedback received by the CBG in this process and from the public feedback is incorporated into its final report. The CBG concluded that significant improvements to the transport system are critical and urgent, but delivering the transport programme in the Auckland Plan would require at least $12 billion more than is currently projected to be available. The CBGs Principal Finding is that: Unless Aucklanders are prepared to accept significantly higher rates increases and heavier congestion, introducing some form of road pricing by 2021 will be required.

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The CBG recommends: (a) That Auckland Council makes a decision by 2015 to pursue one of the funding pathways identified in recommendation (b). (b) That Auckland Council further investigates and introduces one of two alternative pathways for funding the transport gap: (i) Primary reliance on rates, fuel taxes, tolls to fund major new roads and significant government contributions, and increased fare revenue from public transport with agreed annual increases to rates and fuel taxes commencing in 2015, or; (ii) Initial increases in rates and fuel taxes and increased fare revenue from public transport commencing in 2015, followed by the introduction of some form of road pricing and additional government contributions. (c) That this investigation includes: (i) Detailed work on the design and impacts of possible road pricing schemes, focussing on the single cordon and motorway network schemes (ii) Further analysis of the affordability and social impacts of the funding alternatives and ways to mitigate adverse effects (iii) Analysis of possible governance and revenue administration arrangements. (d) That the following should not be pursued further as funding tools: regional lottery regional payroll tax regional GST/sales tax visitor bed tax departure tax a levy on vehicles registered in Auckland

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The CBG also conducted a two stage process of public engagement between January and June of 2013, that first informed Aucklanders of the inevitability of Aucklands population growth and its implications for transport, and then sought feedback on its Public Discussion Document Funding Aucklands Transport Future Alternative Funding for Transport.

Governing Body 25 July 2013 new forms of parking levies managed toll lanes tax increment financing/betterment double cordon area charging full-distance charging

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(e) That before imposing greater transport costs on businesses and households, there should be affordable and reliable transport alternatives in place. These should include improved public transport and a connected network of safe and attractive walking and cycling options. (f) That central government increases its funding for transport in Auckland, beyond what can be expected from the National Land Transport Fund, to reflect Aucklands growing population and its contribution to the national economy. (g) That mechanisms are established to achieve on-going agreement between Auckland Council and government to align the strategy and funding of transport in Auckland. (h) That Auckland Council works with Auckland Transport and the New Zealand Transport Agency to optimise the sequence and timing of the investment programme, and to ensure consistency with the Auckland Plan, Unitary Plan and the available funding. 18. In addition to the recommendations noted above the CBG also considered and dismissed the potential for asset sales to reduce the size of the funding gap. They noted: We considered the potential application of funds from dividends and interest from, or sale of, council assets. The councils revenue forecasts anticipate the expected future dividends from council assets. Selling the assets would broadly realise the same value of contribution as the forecast future earnings. Accordingly asset sales would not reduce the funding gap beyond our current estimates.

Consideration
Local Board Views
19. A briefing was provided on 20 May 2013 to a meeting of Local Board Chairs and transport portfolio holders. All twenty-one Local Boards considered the Discussion Document at a business meeting in May and June 2013. Members of the CBG were available to provide information to local boards, where requested. Individual resolutions and submissions are attached to this report (Attachment A). The views of the Local Boards on the questions posed in the Discussion Document are summarised below. When common themes emerge, they are noted. Question 1a: Do you agree that securing additional funding for transport improvements in Auckland is a priority? Local Boards agreed that the transport system must support Aucklands economic development and growth, and that congestion on motorways and arterial roads needs to be addressed. However, the focus of the Discussion Document on gathering public revenue for capacity and infrastructure building is in question. A number of Local Boards suggested alternative or additional ways to ease current road congestion land use planning, travel demand management, and improvements in alternative transport modes (i.e. public transport, walking and cycling). Such policies have the potential to affect the selection and sequencing of the transport projects and associated quantum of transport funding required over the next 30 years. Question 1b: Do you agree that a package of funding sources (rather than a single source) should be used to raise the additional $400 million per year required to meet the transport

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Question 2: We have set out two packages of funding sources from 2021. Which of these do you prefer? Views were varied but neither Option 1 (increased revenue primarily from rates and fuel taxes) nor Option 2 (road pricing supplemented by rates and fuel taxes) were completely satisfactory. Overall, Local Boards tended to sway towards Option 2, albeit with some reservations. There appears to be a strong opposition to rates increases to fund transport projects. Local Boards suggested a number of funding options that were additional to the preferred sources of funding in the Discussion Document. The most popular of these were infrastructure bonds, Public Private Partnerships and increased central government funding. Increased central government contributions are justified based on projected population and economic growth, the national economic benefits generated by Auckland, and the current and historical low share of Land Transport Funding, or of the national tax revenue spent in Auckland. A number of Local Boards noted that the assessment of preferred funding sources should reflect the values of equity and fairness. Further modelling would help to inform the discussion and allow a better understanding of the impacts of the funding options on groups such low or fixed income households or those with limited transport options (such as those living in rural areas), as well as cross-subsidies between transport modes. Question 3: What other issues or consideration do you think we need to take into account? Some Local Boards questioned the selection and sequencing of the transport projects. In that respect, Local Boards feedback on transport funding options must be read in conjunction with their feedback on the Getting Auckland Moving discussion document provided in 2012. As noted above, many Local Boards commented on the need to consider alternative and additional ways to alleviate transport network congestion at peak times. 21. Finally, all Local Boards request to be actively engaged in the future development of transport funding options for Auckland.

Maori Impact Statement

22. With the assistance of the Councils Maori Strategy and Relations Team three Maori with strong backgrounds relevant to the matters under consideration were appointed to the CBG. These appointments were designed to ensure that Maori views and perspectives were reflected in the considerations of the CBG and in any consensus that it reached. As part of the public engagement process Iwi were invited to contribute their views to the CBG. In addition, the Independent Maori Statutory Board was briefed on 24 June 2013 and advised that it would provide its feedback directly to the Governing Body. The impacts on Maori of the funding sources considered by the CBG are included in the overall impact on Aucklanders that the CBG assessed. The most significant impacts and concerns that the CBG have identified are the potential negative impacts of additional charges on low-income households. Maori comprise a disproportionately large component of low-income households across Auckland. The CBG has recommended that further work be undertaken on the affordability and social impacts of the funding alternatives and ways to mitigate any adverse effects.

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General
25. The CBG comprises people that represent very different constituencies and very different points of view. They have worked together with the common objective of addressing one of the biggest challenges facing Auckland. In their discussion document, they presented an unprecedented consensus to the people of Auckland. Their final report presents to the Council a robust, evidence based consensus including some very challenging recommendations.

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funding gap? The consensus amongst Local Boards was that a package of funding sources will be required.

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The CBG comprises representatives of key Auckland groups. Their views should not be taken lightly. They hope that, having invested so much time and energy working together on this issue both the council and the government will take their work seriously. In their view, both the Council and the government would fail Auckland if they do not jointly address and resolve the critical transport funding gap faced by Auckland.

Implementation Issues
27. The work commissioned by the Governing Body to carry out investigations, stakeholder collaboration and system design for selected alternative funding options only takes the analysis to the point where credible options are presented for consideration. If the Council is determined to address the funding issues that the CBG has identified then it will need to undertake further work to develop the options into workable solutions. To be in a position by 2015 to make final decisions on the funding pathway to be implemented, work will need to be undertaken through the balance of 2013 and 2014. This work will also need to be integrated with the Councils work on the 2015-25 Long-Term Plan. A final decision in 2015 on the funding pathway to be implemented will need to involve the government and the people of Auckland. It is therefore important that any work to progress the CBGs recommendations involves the government to the fullest extent possible, and incorporates appropriate consultation with the people of Auckland. The CBGs work predated the governments significant transport announcements of 26 June 2013 which supported a number of the key transport elements of the Auckland Plan. Additional work will be required to refine the estimated size and timing of the funding gap to reflect those announcements. The CBGs work has been completed for less than the $1.136 million budgeted for that purpose. The savings to date could support additional work to progress consideration of the issues identified by the CBG.

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Attachments
No. A Title Local Board Comments Page 13

Signatories
Authors Authoriser Peter Winder Project Director Michael Quinn - Executive Officer Doug McKay - Chief Executive

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Attachment A

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Attachment A
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Attachment A

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