& ge a Office of Hon Simon Bridges ee MP for Tauranga Minister for Economic Development Leader of the House % Minister of Transport Associate Minister of Finance Minister for Communications 23 JUN 2017 Dear | refer to your request dated 25 May 2017, pursuant to the Official Information Act 1982 (the Act) seeking: “if the Minister has been briefed, or central government has put together any papers which detail Auckland Council's spending on transport infrastructure over time, could we please be furnished with a copy under the OIA?” On Tuesday 6 June 2017, you agreed to limit the scope of this request to briefing papers received in the last three months, as the request relates to recent comments. ‘The documents that fall within the scope of your request are: No. Document Title Date Author 1 Briefing paper | Transport Funding in |12April2017 _| Ministry of Auckland Transport 2 Briefing paper | Historicand currently | 9 May 2017 | Ministry of planned Auckland Transport transport funding Certain information has been withheld under the following sections of the Act: ‘+ Section 9(2)(a) - which relates to the privacy of natural persons. ‘* Section 9(2)(fXiv) - which relates to maintaining the constitutional conventions which protect the confidentiality of advice tendered by Ministers of the Crown and officials, '* Section 9(2)(g)(i) - which relates to maintaining the effective conduct of public affairs through the free and frank expression of opinion by or between or to Ministers of the Crown or members of an organisation or officers and employees of any department or organization. Private Bag 18041, Parliament Buildings, Wellington 6160, New Zealand. Telephone 64 4 817 6835 Facsimile 64 4 817 6535* Sections 9(2\i) and 9(2)(j)- which relate to the ability of any organisation to carry cout without prejudice or disadvantage, commercial activities, or commercial negotiations, With respect to the information that has been withheld, | do not consider there are any other considerations which render it desirable, in the public interest, to make the information available. You have the right under section 28(3) of the Act to make a complaint about the withholding of information to the Ombudsman. You also asked that | make clear in this response letter whether these papers have previously been released under the Act (or otherwise to media). | can confirm that they have not been previously released. Please note that the figures forecast for 2017/18 and beyond have since changed due to recent Auckland Council and Government announcements. They are likely to change further as a result of decisions on the 2018 Government Policy Statement on land transport, expected to be released later this year. Yours sincerely . ty Hon Simon Bridges Minister of TransportDocument "Transport funding in Auckland" Ministry of Transport MEMO: HOUSING and Infrastructure Ministers - 18 APRIL 2017 meeting DATE 12 April 2017 SUBJECT TRANSPORT FUNDING IN AUCKLAND. ‘The case for additional transport expenditure ATAP set out an agreed strategic approach for the development of Auckland's transport system over the next 30 years including an indicative investment package for the 10 years. from 2018. Under current funding arrangements, there is a funding gap of around $4 billion over the next 10 years for the ATAP package, which largely lies with Auckland Council (Council). However, the draft Government Policy Statement (GPS) also notes that more Government funding will also be needed to deliver ATAP, and that ths is expected to be addressed in the final GPS. Initial indications are that the funding gap is relatively smilfor the ext three to four years but becomes significant after 2020/21. However, Auckland’s recent po, ulation growth and nw Stats NZ projections have outstripped ATAP’s population assumptions. ‘Similarly, Auckland 7; ansport’s early work on te ATAP priorities as part of its three-year transport bid indicates some additional funding may be needed earlier. Initial discussions with Auckland Counc In Septemberiast year, Cabinet noted the Minister of Finance and Minister of Transport (we) would engage with the Mayor of Auckland on options to address ATAP’s funding gap. ‘After meeting with the Mayor, we wrote to him in February 2017 stating that both the Goverpment and Council would need to increase our existing transport budgets, but ruling out régional foe taxdhe to its negative effects. ‘Current funding assumptions Contbined Government and Council Auckland transport expenditure has remained relatively Constant sitice 2008 - both on a per capita basis (around $1,200 per person, and as a proportion of regional GDP (around 2.5 percent of regional GDP). (0° See graphs 1 and 2 The Government's share of Auckland's transport expenditure has steadily increased from just over 50 percent in 2001/02 to 60 percent at the end of the lat financial year (noting some significant exceptions). © See graph 3 Under current assumptions, for the next three-year funding period (2018/19-2020/21), our share is tipped to exceed 70 percent. This is because the Counci’s transport expenditure is projected to drop by 30 percent (or $812 million) compared with the previous three years (2015/16-2017/18) before increasing somewhat in subsequent funding periods. © See graph 3 - whole red area for Council funding*R Ministry of Transport Withheld under section 9(2)(Aiv) ‘The main reason for the drop in Council funding over the next three years is its plans toend its Interim Transport Levy next year. ‘The Council introduced the Levy as a three-year special rate on all household anid business ratepayers in 2015 on the assumption that the Government would provide it with new funding tools (it proposed a motorway user charge) in place by 2018. The Levy ($114 (inc GST) on residential and $183 (inc GST) for business ratepayers) currently generates st ver 60 ila yar ln revenue The Coun es leveraged. bh matching debt and assumed NZTA subsidies to support a three: Year $520 million transport Investment programme between 2015/16 and 2017/38. A secondary reason for the drop in Council transport funding/sthat itsdebt situation is projected to continue to get worse over the next three years before improving after 2022/23. | ‘withheld under Section 9(2(9)(i) Bridging the gap While we expect the Council incréase its transport budget for the next three years, We inalises tts draft 2018-2028 Long Term Plan for publicskrun suce _rimie evel zu Weer _olene seme slur _saomor_sastor_ saves Yon GRit eee tame ecm wetes ite Sey wu nnn ppelansit rte Date: Attention: >. im ‘ finister Security level: In-Confidence & Transpo | | ice al vo \ Oi seen 1D pproved < oe OD teferesto ee. Not seen by Minister overtaken by eventsPurpose 1. This is a briefing on historic and current planned transport funding in Auckland, updated from information provided to BGA Housing and Infrastructure Ministers on 18 April 2017, as appropriate. effect of proposes rates rises for the Auckland Council's 2017/18 oes ‘expenditure in that period, and updates City Rail Link costs. It tables as an Appendix. 3. We expect Auckland Council's budgeted transport expen: late May 2017, Council staff should be in a position to provided to elected members about revised transport ‘members will make substantive decisions on 1 Jur j Couneil 2017/18 Annual Plan (budget) on 29 June 4. We plan to provide you with updated infor a aver few months, jointly with Auckland Couneil officers where appi 1e Yobus of the updated information will be on better understai ind Transport Alignment Project (ATAP) funding gap ee “with @ particular focus over the first three years (2018-21). Ho 8, in early June 2017, will focus primarily on oe 8 ee ‘expenditure for the 2017/18 financial year. 5. Ifyou wish to meet ifically to discuss transport funding in Auckland, we sug: June, would contain the best jointly agreed mle Response to wmsthica Who has agreed "*S 6. ; 2 propardaly Ministry of Transport with input from the Treasury and the ra ‘Agency (NZTA), with Auckland Council (the Council) and Auckland ;ncial information from published sources. oe and analysis has been undertaken by the Ministry of with the methodology used in ATAP. As noted above, the Council will make ns} Q). 48 budget decisions on some of the key issues over the next few weeks and they will 6 bhare more information at that point. uncil staff advise that based on the information published in the 2017/48 Annual Plan consultation document, there is not likely to be a reduction in transport expenditure for 2017/18 as a consequence of 2.5 percent rates increases versus the previously forecasted 3.5 percent. We understand that upcoming decisions to finalise the Council's 2017/18 Annual Plan in June 2017 may include an increase in forecast transport expenditure. Page 2 of 7What is the source of City Rail Link costs 9, The Crown City Rail Link (CRL) estimates assume funding flows from 2017/18. Forecast figures from 2017/18 onwards are based on figures provided to Cabinet in September 2016, which assume costs will be split 50/50 with the Crown from 2017/18," ‘Withheld under section A 10. These CRL numbers are sourced from the Auckland Transport project team | ‘These may vary slightly as part of Budget 2017| fous eat How has this information been updated following the Business Grow!! Infrastructure Ministers meeting on 18 April 11. Auckland Council figures for years 2012/13 to 2017/18 differ from t erall Housing and Infrastructure Ministers on 18 April, rower same. a three year 0/21) Paravrapiis 25 to 27 thi A 12. The main difference is a smaller drop in Council e funding period (2015/16-2017/18) and the next explain this trend. (Figures 1 and 2 in the Ap, 12.1. The Council's transport expenditu torap by.¥7 percent (or $373 million) compared with the previo (29 1017/18) before increasing ‘somewhat in subsequent fur dr§p than advised previously). 12.2. For the next three-year fun 's share of combined Government and ¢ land is tipped to exceed 70 percent 13. We have updated 13.1. We iB 1" 16/47 are 2017/18 figures have been updated using the most recent \ council 2016/17 Annual Plan and the 2017/18 Annual Budget ) Consultation, Document (rather than the 2015 Long Term Plan used in ATAP).. 13.2 heap difference 6? INP the course of formalising these numbers, government oficials and Ws _ kdand Council officers identified a difference between how ATAP . calculated the Councils historical funding compared to forecast funding. YS (Cy) such as public transport fares and parking revenues (as well as excluding the National Land Transport Fund contribution and finance and depreciation costs). This allows best comparison to central government funding for transport, on the ground, in any given year. However, ATAP omitted to net off ‘Council operating revenue for historical expenditure. N } S52.2.ATAP caloulated Auckland Councils forecast funding net of operating revenue " Figures provided to Cabinet in September 2016 aggregated out-years from 2021/22 due tothe focus for Budget 2017 on the next four years. This briefing sets out the break down aver the remaining years. ‘Withheld under section 9(2)(fyiv) Page 3 of 713.2.3. Consistent with the approach for forecast funding, Council staff have updated figures for years 2012/13 to 2018/16 to net off Council operating revenue to enable best comparison to forecast figures. 1.2.4. Within the time available, we were not able to confirm revised Council figures for 2000/01 to 2011/12, Revising these means combining information from the eight legacy councils and compares pre-amalgamation budgety/Itwould require substantial time and effort. We do not expect tly change the trend. ASS GY Explanation of general assumptions behind these numbers Treatment of Council funding 14, Asnoted above, and consistent with the approach ATA; ed, Aucklant jgures from 2012/13 onwards: 14.1, remove the National Land Transport Fund transport subsidy) 14.2. net off operating revenue sources te revenues) saan een the Auckland Council figures reported gures. 14.3. exclude depreciation 45. 16. S 2016/17 Annual Plan, and the forecast for ‘Annual Plan consultation document. Forecasts from Counci's 2015 Long Term Plan. < 2018-2028 Long Term Plan by June 2018, and the 2018 ‘on land transport will likely change forecast expenditure. ort Fund figures include Crown SuperGold Card and Urban Cycleways . Forecasts for 2016/17 and 2017/18 are based on subsidy estimates from ‘nnual Plan and Consultation Document, and high-level National Land gramme forecasted state highway expenditure. Forecasts for 2018/19 onwards from ATAP which were derived from the 2015 Government Policy Statement on port and the 2015 National Land Transport Programme. x of rail expenditure (~~ ‘Crown rail expenditure excludes loans for the purchase of electric trains, The expenditure Oo} associated with paying back these loans is captured under the NZTA and Auckland Council WV lines respectively. Forecasts for 2018/19 onwards assume the Auckland Rail Development Plan will be funded by the Crown (subject to Budget bids), consistent with current funding arrangements. Page 4 of 7Forecast Auckland transport expenditure by funding source 20. This section confirms information provided to the Housing and Infrastructure Ministers meeting on 18 April (subject to updates explained in paragraph 13). 21. That information assumed the Council's share of these updated CRL costs will be borne out of their general transport expenditure, funded through rates and borrowings. This has been the case for previous years. 22. Officials are working with Council officers to test the likelihood of this as Withheld under _ of writing this briefing, Council staff advise that the low level of rest Seton SC) 0) fu a is highly unikely to eventuate ‘elected members have yet to decide how to address the new Cis. confident at this point that the changes to the CRL cost profile will ns. other current planned transport expenditure. ro ‘Table 1: Current planned Auckland transport expenditure ‘$Smillions Government total ‘Auckland Coun [Government propectio eS = ‘Auckland “atin Coun prporon af Bod Gy CO Withheld under sections 9(2)(A(iv), 9(2)(i), Explanati Sha action it ed diture 2018-2021 ae sl vente me Withheld under section 9(2)(A(iv) \daly reason for the drop in Council funding is the ending of the Interim Transport 2018/2019. As outlined for BGA Housing and Infrastructure Ministers, the Levy ‘generates just over $60 million a year in revenue. The Council has leveraged it with iatching debt and assumed NZTA subsidies to support a three-year $520 million transport /estment programme between 2015/16 and 2017/18. Withheld under section 9(2)(9)() jure si revenue raise: ieKland Council has remai y constant as a proportion of regional GDP since 2011/12, both in total (around 4 percent) and from rates (around 1.7 percent). Auckland Council's application of this revenue to transport has also remained relatively constant at around 1 percent of regional GDP. Page 5 of 726. Looking ahead, the Councils current forecast shows a decrease in transport expenditure for the next 3-year funding period (to a low point of 0.4 percent of regional GDP in 2018/19, see Figure 3), despite revenue remaining largely constant, both from rates and in total. Figure 3: Auckland Council rates revenue and total revenue, and Auckland Council transport expenditure as a proportion of regional GDP? 27. ‘there is a funding gap of around $4 billion, in 2016 ATAP package, which largely lies with the Council. 28. rategic approach for the development of years including an indicative investment 30. infid re that the funding gap would be relatively small for the next thre’ ryedi=Yut would become significant after 2020/21. However, recent population ns Fc9 ulation ATAP assumed Auckland would reach in 2026 will now around?’ is is likely to increase Auckland's short-term transport funding & semande\ \ PRR rien 2 Income excludes income from vested assets and revalustons. Vested assets are physical assets- roads, reserves, water ££ 0 assets tobe recorded as income. We have excluded thom since they provide no financial resource to the Council for future jenditure. Therefor the ttatneame shown s eighty lower than inthe Counc published accounts. Note 3 - Total revenve includes water and wastewater charges, bulding consent and regulatory fees and charges, parking revenue ate. Note 4 - Rates, revenue and population figures are from Auckland Council Annual reports (2011/2012 - 2016/16) and 2018/16 - 2024/26 {Long Team Plan and StatsNZ. Transport figures are as reported elsewhere inthis report Page 6 of 7Next steps 31. We expect to report to you next in early June 2017. We expect this briefing will be from ‘government officials and Council officers jointly. Council officers will provide the memo to the Mayor of Auckland also. 32. This joint memo will provide: of Counci’s investment going into transport over time. 32.1. Further detail on the Council's funding plans, including debt limi «> 32.2. Further analysis of the funding gap, which is expected to i growth, project cost escalation and project sequencing. (a) Note the information provided in this briefing. Recommendations 33. Werecommend you: g (b) Note that we expect to report to you, the ‘Auckland with a joint briefing with Auck! the Council's substantive decisions 0} (o) Yes/No Martin @lynn Direptor Auckland Page 7 of 7PuepENY ul erypuede yodsues jee28I} PUE POIRH 4 OnBL apueddyepozatea : + g | (2 pur | sab. spodéns) 922202 01 jo/0002 Puepery w eunypuEd® vodsuEa jo KewunS °z em eras rep Bupioddng‘eye eamonnseyu pus BujsnoH yo 10} peprnoud Asnoineud suds youonipPY