Monday, 24th April, 2017

We keep coming up with lists of projects to address Auckland’s rapidly worsening traffic congestion but then blame a funding shortage for not delivering them quickly. That’s no solution to what is Auckland’s number one problem.

So how real is Auckland’s funding shortage?

Auckland Council cites a tight debt-to-revenue ratio constraint for its limited capital investment programme. It is quietly supporting central Government providing the capital to get a package of (non-State Highway) ‘ready to go projects’ underway. 

Government on the other hand rightly points out that it already provides Auckland with around $1.2 billion a year for transport compared to Auckland Council’s $650 million; a share that government argues is declining in proportion to its increased revenue from ratepayers.

These arguments get us nowhere. Someone needs to step in and lead a fresh look at identifying practical funding solutions that a seriously aligned Auckland-Wellington leadership could immediately apply to deliver the transport solutions Council and Government took two years to agree were needed.

Most obvious, has anyone seriously looked at how Auckland Council could circumvent its debt-to-revenue ratio constraint?  It doesn’t seem credible that a city with $60 billion-plus of assets could use this constraint as an excuse for lack of investment action?

Otherwise the Crown is an obvious party to ‘take over’ Auckland Council’s inability to fund the critical transport infrastructure Auckland (New Zealand Inc) needs, and do so on its terms?

Second, what about debt funding? Government and Council annually allocate around $2 billion to Auckland transport. They could use this lump sum to debt-fund, say, a 10 year programme to implement all the projects they agree are required immediately. And then use subsequent annual allocations to pay the interest cost. The benefits to Auckland would be immediate – for commuters looking for action on congestion, contractors wanting construction programme certainty, investors and workers wanting assurance that Auckland is taking steps to remain an attractive city.

Another option is an Auckland transport infrastructure bond issue. Talked about for years, it would be a long overdue innovative step in the right direction. I don’t profess to have all the answers to how it would work, but other cities use this approach. I am aware that there is significant private sector interest, including among Aucklanders. A look at the numbers suggests it has merit to address the immediate funding gap.

Auckland has an agreed $24 billion list of transport projects that Government and Council want to do over the next 10 years, of which $4 billion is unfunded. So why not raise a $4 billion infrastructure bond issue to close this gap immediately? Another bond option is to tie it to a specific ‘ready to go’ project where there is a revenue source.

Other options include Council extending the transport targeted rate until the proposed permanent ‘user pay’ or demand funding scheme being jointly developed by Council and central government is ready.

Then there are numerous ‘value capture’ options that many cities use. These range from substantial revenue from multi-story tower blocks over ‘park and ride’ and train stations, apartments along rail and road corridors where Council or Government have surplus land, and other productivity benefit options.

An Auckland lottery is another idea - Brisbane in Queensland has funded a motorway corridor by a dedicated lottery.

Public-private partnership options with big potential include Kiwi Saver, ACC (already investing in motorway projects), and numerous international firms keen to invest here.

I am advised there is also room for improved efficiency among providers - NZTA, Auckland Transport and KiwiRail – and under-used funding schemes.  

So my point: The money exists to pay for the transport infrastructure that Auckland critically needs. It’s about how we organize ourselves better to tap all practical conventional and innovative sources available.

Finally, it is clear to me that if Council and especially Government continue to be unwilling to lift the pace and investment needed to solve congestion and other transport issues Auckland has – it won’t just be our transport crisis that will continue to get worse, but the city’s employment and other social problems exacerbated by the cost and frustration of moving around the city.

The funding options I have put up don’t need a prolonged debate. Most are proven. What’s needed is action – NOW.


For more information contact Michael Barnett, mobile: 0275 631 150 or
Michael Barnett, Chief Executive, Auckland Chamber of Commerce.

* The Auckland Business Forum: Established in 2000 with a purpose to reverse years of inaction and underinvestment that occurred in the second half of last century to build the city’s long-planned transport infrastructure network, Auckland Business Forum members include Auckland Chambers of Commerce, Employers & Manufacturers Association (Northern), Ports of Auckland, Auckland Airport, Civil Contractors NZ, Infrastructure NZ, National Road Carriers. These organizations represent a cross-section of Auckland industry and commerce whose role includes guardianship of businesses responsible for more than 450,000 Auckland jobs and generating 42% of New Zealand’s gross domestic product (GDP).