Govt must pay for trains regardless – ARC Adding fuel to the fire
The government will be asked to cough up for Auckland’s electric trains whether a regional fuel tax is approved or not.
The region’s bid for a 5 cents a litre tax has been downsized to 1c in the face of skyrocketing petrol prices.
But Auckland Regional Council chairman Mike Lee says if the legislation is still turned down, central government will be asked for the cash.
“If the bill does not succeed we’ll send out a clear message to both political parties that Auckland will not be dumped on again.
“Auckland has had a shocking deal in the past.”
A proposed 5c a litre tax earmarked to pay for electric trains has been ruled out for next year by Prime Minister Helen Clark.
The legislation change to approve the tax must be passed by Parliament.
Mr Lee says the new proposal for 1c a litre from next year, rising gradually to 5c, is still being considered.
“We’re just waiting on the passing of the bill.”
He says as fuel prices rise so does the need for fast, modern transport.
“The public will no longer tolerate the idea of Wellington, a much smaller city, having a government-funded, brand new electric system and Auckland having to make do with refurbished diesels.”
The regional council aims to have some of the network converted before the 2011 Rugby World Cup.
A fleet of electric trains to replace the diesel engines is estimated to cost $500 million.
But this week the council was forced to vote on an annual budget without provision for buying the new trains.
The budget had to be signed off by June 23, but the fuel tax legislation is still waiting for its second reading in Parliament.
The council says work on electrification continues and the fuel tax was only intended to fast-track the project.
The budget can be revisited if the tax is approved during the financial year.
A shortfall in transport funding should be made up with GST from petrol, says Chamber of Commerce head and Auckland Regional Council deputy chairman Michael Barnett.
Mr Barnett says the government has received a windfall of extra tax revenue from increasing petrol prices.
“A strong case exists for the government diverting this or equivalent revenue back to Auckland to mitigate for the delayed regional fuel tax,” he says.
But Campaign for Better Transport spokesman Cameron Pitches disputes whether the government benefits from higher fuel prices.
“I don’t believe tax would be increas- ing by that much because people would be using less petrol,” he says.
“People are under a misconception the government is getting more money.”
A treasury report released in 2005 by Finance Minister Michael Cullen says petrol price hikes lead to little change in tax revenue.
In the long term, revenue can drop because people use less petrol and spend less on other goods.
Mr Barnett says his calculations allowed for a drop in fuel consumption.
“There’s been some fluctuations in volume but there’s still been a significant gain by government.”