Alternative Transport Funding Project
Stage 2
Evaluation of Three Funding Pathways
29 October 2014
Produced by:
Alternative Transport Funding Project Team
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This is a final report for the Alternative Transport Funding Project prepared by the Project Team. It
consolidates the analysis undertaken for the Alternative Transport Funding Independent Advisory
Body during the project, but is based on the most recent information consistent with that in the
Independent Advisory Body’s final report. It does not necessarily reflect the views of each member
of the Independent Advisory Body, or the views of Auckland Council or Auckland Transport.
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Contents!
1!
Introduction .......................................................................................................................... 4!
2! Issues: Evaluation highlights .............................................................................................. 4!
2.1!
Revenue potential ....................................................................................................... 4!
2.2!
Strategic Alignment ..................................................................................................... 4!
2.3!
Administrative simplicity .............................................................................................. 5!
2.4!
Efficiency ..................................................................................................................... 6!
2.5!
Fairness ....................................................................................................................... 6!
2.6!
Risk ............................................................................................................................. 7!
3! Detailed evaluation ............................................................................................................... 7!
Appendix 1 ................................................................................................................................... 8!
Detailed Evaluation of Three Funding Pathways ..................................................................... 8!
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1
Introduction
This paper sets out the detailed evaluation of three funding pathways: a rates and fuel tax pathway,
a fixed motorway charge of $2, and a variable motorway charge of $3 during the peak and $2
during the inter-peak.
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Issues: Evaluation highlights
2.1
Revenue potential
Overall conclusion: All three scenarios raise sufficient net-revenue to cover the funding gap.
Rates are a predictable source of revenue but there are some risks to revenue from
motorway charging and fuel tax that will need to be managed.
The motorway charging options have greater revenue raising potential than increases to rates and
fuel tax. Balanced against this, the rates and fuel tax revenue is more predictable. Provided that
growth in the rating base occurs at the speed we have predicted, there are few risks to rating
revenue. Fuel tax revenue is not as predictable, with less being received in recent years than
expected, despite the Government increasing the level of Petroleum Excise Duty. However, we
anticipate that the Government could diversify its revenue sources to contend with vehicle fuel
efficiency improvements, hybrids and alternative fuels. Under this option it would also be easier to
ensure revenue is spent in accordance with the purpose for which it is raised. Rates or a regional
fuel tax could be easily hypothecated for investment in the Auckland Plan Transport Network, but
increases to national fuel tax are not necessarily hypothecated to Auckland.
Motorway charging is new to New Zealand and would be on a much larger scale than charging
schemes elsewhere. There are greater risks to revenue associated with our ability to predict how
motorists will respond to the imposition of new charges. Revenue raised through a motorway
charges could be hypothecated and applied only to transport investments in Auckland but there is a
risk that the new revenue is used as a substitute for existing funding.
2.2
Strategic Alignment
Overall conclusion: The greatest strategic benefits stem from implementing the Auckland
Plan Transport Network. Beyond this the motorway charging pathways have greater
motorway decongestion benefits than the rates and fuel tax pathway and make a greater
contribution to various Auckland Plan and Government transport objectives. A variable
motorway charge of $3 on-peak has greater motorway decongestion benefits than a $2 fixed
charge.
The rates and fuel tax option is likely to make a small, but not significant, contribution to the
transport objectives in the Auckland Plan and Government Policy Statement. It makes a much
lower contribution than the motorway charging option. This pathway is unlikely to significantly decongest Auckland’s roads, increase average travel times for Aucklanders, or greatly increase future
public transport use. Nor would it reduce transport-related accidents and fatal injuries, or decrease
transport-related greenhouse gas emissions and air pollution. This is because increases to rates do
not affect people’s travel choices and small changes in the price of fuel have only a limited effect on
the level of car use. Both motorway options provide greater transport and congestion benefits and
slow the rate at which motorway congestion grows. However, they may also have some congestion
dis-benefits on local roads. The variable motorway scenario provides greater transport benefits than
fixed charges. Due to the travel demand impact of motorway charges, the projected growth in
transport-related greenhouse gas emissions and air pollution is marginally slower under the
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motorway scenarios than the rates and fuel tax scenario. The variable charging has a slightly
greater impact on air pollution and greenhouse gas emissions than a fixed motorway charge
because it has a greater travel demand impact during times of peak congestion.
The rates and fuel excise pathway has a higher cost/benefit ratio than motorway charging and
therefore provides better value for money. However, it generates new welfare benefits substantially
lower than the motorway charging scenarios. The motorway charging scenarios are economically
efficient, but not as efficient as increases to rates and fuel tax. This is because they are relatively
costly to implement. However, they increase economic wellbeing more than increases to rates and
fuel tax. Variable charges of $3 on-peak provide the largest transport benefits and increase
economic wellbeing the most.
There are many factors at play which determine whether a funding scenario would support the
realisation of a quality compact environment. However, changes in accessibility can increase the
desirability of certain locations. We measured this using ‘travel time to work’ as a proxy. Our
transport modelling suggests that none of the scenarios are inconsistent with the realisation of a
quality compact environment, but for different reasons. Increasing rates and fuel tax are unlikely to
encourage or undermine the achievement of a ‘quality compact environment’ because they make
such a small difference to average travel times to work and the desirability of different locations.
The introduction of motorway charges may make some locations slightly more or less accessible
because they make some difference to the average travel times to work (by car) during the morning
peak, and the changes in travel time vary across different locations. The areas that benefit most
tend to align with growth areas identified in the draft Unitary Plan.
2.3
Administrative simplicity
Overall conclusion: Increases to rates and fuel tax are simple, quick and cost-effective –
systems already exist to implement and administer this pathway. The introduction of
motorway charges is achievable but more complex and costly.
The implementation of rates and fuel tax increases are simple, quick and cost-effective to introduce
and to administer. Systems already exist for their administration, collection and distribution; few
additional implementation costs would be incurred. Given their long history in New Zealand, these
funding sources are also well understood by the public and relatively simple to operate. There is no
requirement to construct physical infrastructure or put in place new technology. The major time cost
would be in securing agreement from Cabinet and Auckland Council’s Governing Body, and
legislative/regulatory change for either a regional fuel tax or increases to Petroleum Excise Duty.
The introduction of motorway charges is achievable but is more complex and costly. The
requirement for new legislation, modelling, designing, consenting and constructing a motorway
charging scheme, as well as working through implementation and operational risks would present
complexities to work through. The estimated cost of implementation is approximately $108 million,
including roadside equipment, back-office and other setup costs. The estimated operating costs are
estimated to be around 10-12% of revenue. Transaction costs are likely to be approximately 24
cents per trip for both a fixed and variable charging scheme. Some compliance costs for users
might arise through the establishment and maintenance of motorway charging accounts. These are
reasonable, given that: account holders would qualify the user for a discount; and the use of
accounts would also reduce the overall costs of operating the scheme. It may be more onerous for
low income households to make the ‘lump sum’ payments required to establish and ‘top up’ a
motorway charging account.
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2.4
Efficiency
Overall conclusion: All pathways are economically efficient. Increases to rates and fuel tax
have a high benefit-cost ratio because they are inexpensive to implement and administer,
but provide relatively low benefits. Motorway charging makes a greater difference to
economic welfare.
With a Benefit Cost Ratio (BCR) of 15, the rates and fuel tax scenario has the highest economic
efficiency. However, this is because there are low implementation and operating costs associated
with this scenario. The rates and fuel tax pathway offers only limited transport benefits and does not
greatly increase economic welfare. Motorway charging is more costly to implement and therefore
has a lower BCR (1.7 for both charging scenarios). However, these options offer significant
congestion benefits and therefore increase economic welfare more than the rates and fuel tax
scenario. Evasion of new charges is unlikely under all three scenarios, although the implementation
of exemptions could increase the potential for this.
2.5
Fairness
Overall conclusions: All options target the funding burden at those who benefit. Increases
in rate cannot be avoided by changing travel behaviour, but motorway charges can be.
Under all pathways, the majority of households would experience a low financial impact but
a minority would be highly affected. Under the rates/fuel tax scenario, most of those
severely affected are low income households, but the overall number of vulnerable
households in this category is lower than the motorway scenarios. Motorway charging has
a greater cost impact on frequent motorway users, but these drivers will also benefit from
higher motorway speeds. On average, businesses receive a net-benefit under all pathways,
but the impacts are not felt evenly across sectors. The business sector contributes a lower
proportion of the additional revenue under the rates and fuel tax pathway than under either
motorway charging pathway.
Under all scenarios, those who pay are likely receive (to differing degrees) benefits in return.
However there is far poorer alignment between those who pay and those who benefits with the
Rates and Fuel Tax pathway than with motorway charges. Motorway charges match new costs with
transport use – those who pay will benefit from transport improvements. Under the Rates and Fuel
Tax pathway ratepayers indirectly benefit from higher property values as a result of transport
improvements, but ratepayers who are low transport users would pay a disproportionate share of
additional costs in relation their direct benefits.
The rates and fuel tax scenario spreads the funding burden broadly - few households suffer a
severe financial impact. There is only limited opportunity for these households to change their
behaviour in order to reduce the amount of rates and fuel tax that they pay. Of the households that
suffer a severe financial impact, almost all are low income households. On average, businesses will
receive a slight net benefit from the implementation of the Auckland Plan Transport Network and
increases to rates and fuel tax, but these benefits are not spread evenly.
The motorway charging scenarios target the funding burden at motorway users, particularly
frequent motorway users, who will pay significantly higher amounts than most households.
However, because many households can alter their travel behaviour to avoid paying motorway
charges, the vast majority of households will experience only a low budgetary impact. More low
income households will suffer a high or very high cost impact under the motorway charging
scenarios, but the overall number remains relatively small. Vulnerable households contribute a
lower proportion of additional funding under the motorway charging scenarios than they do under
the rates and fuel tax pathway. Some areas adjacent to motorways, or which are dependent of
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motorways for access to other parts of the region, may have greater exposure to the effects of
motorway charges.
2.6
Risk
Overall conclusion: Motorway charging is new to New Zealand and would be on a large scale
– these pathways carry greater risk than the rates and fuel tax pathway.
Motorway charging is new for New Zealand and will be on a large scale, even by international
standards. It therefore carries a higher degree of risk (including IT risk) than increases to rates and
fuel tax.
None of the funding scenarios include design features which are likely to present particular barriers
from a public acceptability point of view. However, rates and fuel tax schemes are more familiar to
the public. Under the motorway charging scenarios, the nature of variable charges may be more
difficult for the public to understand than a fixed charge.
Under all scenarios, the public acceptability of increasing household and introducing a new type of
funding mechanism would need to be navigated. The most significant public acceptability issue for
motorway charging is likely to be privacy concerns in relation to the information that is collected and
what it may be used for.
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Detailed evaluation
A detailed assessment of the scenarios against the IAB’s evaluation criteria is set out in appendix 1
of this report.
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Appendix 1
Detailed Evaluation of Three Funding Pathways
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
Revenue sufficiency
This option has the potential to raise sufficient revenue
through a series of small progressive increases to rates and
fuel tax. However, it does not raise as much revenue as
motorway charges could.
Both motorway charging scenarios have the potential to raise
sufficient revenue, and have greater potential to raise more
revenue than the rates and fuel excise option.
Both motorway charging scenarios have the potential to raise
sufficient revenue, and have greater potential to raise more
revenue than the rates and fuel excise option.
This pathway would provide a steady funding stream,
however only some funding sources within this pathway could
easily be hypothecated to the Auckland Plan Transport
Programme. A transport rate could be assigned and used
only for transport in Auckland, as could a regional fuel tax.
However, under the current funding arrangements, an
increase in fuel taxes is tagged for transport, but not for the
Auckland region. As is currently the case, Auckland
Transport, along with all other regional transport agencies,
would need to submit funding proposals that met governmentset criteria.
Revenue raised through a Congestion Reduction Charge can
be tagged and applied only to Auckland transport, giving
Aucklanders some assurance that the funding is used for its
intended purpose. However, even here, there is a risk that
the new revenue is used as a substitute for existing funding.
The revenue sustainability of this funding scenario is the
same as the revenue sustainability for a fixed motorway
charge.
Rates and fuel tax increases are secure, provided there is
sufficient political will to implement them.
Revenue from motorway charging would be less certain. The
risks for the fixed and variable charging schemes are the
same.
The risks to revenue under a variable motorway charging
scenario are similar to the risks under a fixed scenario.
However, calculating the estimated travel demand response
to charges is slightly more complex, as demand elasticity may
differ between the peak/offpeak and between price points.
•
•
Net revenue is equal to
the estimated funding
gap.
Revenue is available
when required.
Revenue sustainability
•
Revenue source is
secure and there are
few risks to revenue.
Rates provide a predictable form of revenue, although
estimated rates revenue is subject to our estimates of
population growth and an increase in the rating base.
Fuel tax revenue is also reasonably predictable, although less
than expected has been received in recent years despite
increases in the level of PED. In the longer term, the
government may need to diversify its revenue sources to
contend with vehicle fuel efficiency improvements, hybrids
and alternative fuels.
Realising a quality
compact environment
(Auckland Plan)
•
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Travel times to work
are shorter in areas
zoned for
intensification
compared to areas that
are not zoned for
The existing tools scenario does not make any locations
significantly more or less desirable to live in from an
accessibility perspective because it makes little difference to
average travel times to work (by car) during the AM peak.
Although average travel times to work improve slightly more
in some suburbs than others, the amount of time savings that
are attributable to the funding tools (as opposed to the
implementation of the Auckland Plan Transport Network) are
small.
A motorway scheme would be new and untested on Auckland
roads, and accurately setting the level of charge carries risks.
A charge that is too high could suppress demand, overload
the local roads network and decrease revenue, and if too low,
decongestion benefits may not be achieved. Making
predictions about how people’s travel behaviour will change in
response to a charge is difficult. The risk relating to traffic
volumes are highest during the initial stages of the scheme,
when the demand response is not yet established.
This scenario is consistent with ‘a quality compact city’.
Although it may make some locations slightly more or less
desirable from an accessibility perspective, the suburbs that
benefit the most tend to be consistent with growth areas
identified in the draft Unitary Plan.
In 2026, the decrease in average travel time to work is
greatest for commuters from Matakana, Warkworth, Kumeu,
Muriwai, Wellsford, Omaha, Muriwai and
Devonport/Takapuna, who experience a saving of 4.1 – 7.0
This scenario is consistent with a ‘quality compact city’.
In 2026, the decrease in average travel time to work is
greatest for commuters from Warkworth, Kumeu, Muriwai,
Wellsford, Omaha, Hobsonville, Whenuapai and
Devonport/Takapuna, all of which experience savings in the
region of 5.2 – 6.9 minutes. In 2046 Warkworth, Wellsford,
Pukekohe, Hobsonville, Whenuapai, Te Atatu, Rosebank and
Devonport/Takapuna experience the greatest savings.
Key performance
indicators and measures
•
growth.
If the accessibility of
key destinations by
private vehicle
decreases under a
funded scenario, they
remain accessible by
PT.
Creating enduring
neighbourhoods, centres
and business areas
(Auckland Plan)
•
•
•
More Aucklanders
have access to key
destinations.
Improved accessibility
to employment.
Charging infrastructure
does not undermine
the urban amenity of
neighbourhoods,
centres and business
areas.
Existing tools 1
The Auckland Plan Transport Network includes significant
investment in public transport under all funding scenarios.
This will increase the proportion of Aucklanders living within
10 minutes walk of a high frequency public transport stops
and provide transport alternatives for those who wish to
reduce the amount of time that the spend in congestion.
There is no difference between the funding scenarios for this
measure.
There is no difference between the funding scenarios for this
measure.
None of the funding scenarios makes a significant impact on
access to key destinations, although the Auckland Plan does
improve public transport access to Auckland’s metrocentres.
In 2026, under this scenario:
Fixed motorway charges do not significantly improve access
to key destinations compared to the other scenarios. In 2026,
under this scenario:
Variable motorway charges do not significantly improve
access to key destinations compared to the other scenarios.
In 2026, under this scenario:
97% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by car (no change from 2013);
97% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by car (no change from 2013);
69% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by public transport
69% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by public transport
58% of Aucklanders will be able to reach the CBD within 45
minutes by public transport (no change from 2013).
58% of Aucklanders will be able to reach the CBD within 45
minutes by public transport (no change from 2013).
This scenario makes a greater improvement to accessibility to
employment than the existing tools scenario, but a lower
improvement than the variable motorway charging scenario.
In 2026 under this scenario:
This scenario makes a slight improvement to accessibility to
employment. In 2026 under this scenario:
97% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by car during the AM peak;
69% of Aucklanders will be able to reach their nearest
metrocentre within 30 minutes by public transport
57% of Aucklanders will be able to reach the CBD within 45
minutes by public transport (no change from 2013)
All funded scenarios make slight improvements to
employment accessibility. This scenario has the lowest
impact of all three scenarios. In 2026 under this scenario:
25.55% of jobs will be accessible to the average Aucklander
within 45 minutes by public transport.
•
Motorway variable charge ($3/$2)
minutes. In 2046 Warkworth, Wellsford,
Devonport/Takapuna, Hobsonville, Whenuapai, Te Atatu and
Rosebank receive the greatest savings.
50% of jobs will be accessible to the average Aucklander
within 30 minutes by car.
Double passenger
transport from 70 million
boardings (2012) to 140
million by 2022 (Auckland
Plan)
Motorway fixed charge ($2)
56% of jobs will be accessible to the average Aucklander
within 30 minutes by car.
58% of jobs will be accessible to the average Aucklander
within 30 minutes by car.
25.91% of jobs will be accessible to the average Aucklander
within 45 minutes by public transport.
25.86% of jobs will be accessible to the average Aucklander
within 45 minutes by public transport.
Increases to rates and fuel excise will not result in any visual
imposition of charging infrastructure on the urban amenity of
neighbourhoods, centres and businesses.
The introduction of motorway charges will involve the
construction of gantries across the motorway or poles at
motorway entries/exits, but will not result in any visual
imposition of charging infrastructure on the urban amenity of
neighbourhoods, centres and businesses.
The impact on urban amenity for this scenario is the same as
it is for the ‘fixed charging’ scenario.
This scenario makes the least contribution to increases in
public transport patronage, although some growth is expected
due to the higher levels of public transport service provided by
the Auckland Plan Transport network. In 2026, under this
scenario, annual public transport boardings will be 141.381
million (compared to 66.282 million in 2013).
This scenario makes a greater contribution to increases in
public transport patronage than the existing tools scenario,
but a lower contribution than the variable charging scenario.
In 2026, under this scenario, annual public transport
boardings will be 144.530 million.
Of the three scenarios, this scenario makes the highest
contribution to increases in public transport patronage, due to
its high travel demand impact on motorway travel. In 2026,
under this scenario annual public transport boardings will be
145.336 million.
Increased PT use."""
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Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
Increase the proportion of
trips made by passenger
transport into the city
centre during the morning
peak from 47% of all
vehicular trips (2011) to
70% by 2040 (Auckland
Plan).
This scenario would have a mildly positive impact on the
proportion of people who would access the city centre by
public transport in the future, but it has the least impact of the
three funding scenarios. In 2026 under this scenario, 59% of
trips to the CBD would be by public transport.
This scenario would has a slightly more positive impact on
future access to the city centre by public transport than the
existing tools scenario, but a lower impact the variable
motorway charge. In 2026 under this scenario, 60% of trips
to the CBD would be by public transport.
This scenario has the greatest impact on future access to the
city centre by public transport, but it is not substantially
greater than the fixed motorway charge. In 2026 under this
scenario, 61% of trips to the CBD would be by public
transport.
This scenario has a small impact on average speeds on the
strategic freight network during the AM peak, but this is not as
significant as the impact of the motorway charging scenarios.
In 2026, under this scenario, average speeds on the strategic
freight network during the AM peak (at peak congestion but
measured in both directions) would be 51 kilometres per hour.
This is an improvement on the daily average speed in 200609.
This scenario has a positive impact on average speeds on the
strategic freight network and slows the rate at which these
speeds decline in the face of population growth. It has a less
dramatic impact than variable motorway charges, but a higher
impact than increases to rates and fuel tax. In 2026, under
this scenario, average speeds on the strategic freight network
during the AM peak would be 57 kilometres per hour.
Of all three funding scenarios, this option has the most
positive impact on average speeds on the strategic freight
network. It dramatically slows the rate at which these speeds
decline. In 2026, under this scenario, average speeds on the
strategic freight network during the AM peak (would be 60
kilometres per hour.
Implementing the Auckland Plan Transport Network the rate
at which severe congestion grows on the strategic freight
network (which is essentially the motorway network).
However, funding these improvements through rates and fuel
tax increases does not improve upon this achievement. In
2026, if this scenario was implemented:
This funding scenario would reduce congestion levels on the
strategic freight network during the AM peak, but have little
more effect on interpeak congestion than rates and fuel tax
increases. In 2026, if this scenario was implemented:
Of all three scenarios, this scenario would have the biggest
impact on congestion levels on the strategic freight network
during the AM peak, but have little more effect on interpeak
congestion than the other two funding scenarios. In 2026, if
this scenario was implemented:
•
Increase proportion of
people accessing CBD
by PT.
Reduce congestion levels
for vehicles on the
strategic freight network to
at, or below, the average of
2006-09 levels (average
daily speed of 45kph and
average delay of 32
seconds per kilometre) by
2021 (Auckland Plan).
•
•
Average vehicle
speeds on the
Strategic Freight
Network are
maintained at
acceptable levels in a
growing Auckland.
Severe congestion on
the strategic freight
network does not
increase significantly.
“An effective, efficient,
safe, secure, accessible
and resilient transport
system that supports the
growth of NZ’s economy,
in order to deliver greater
prosperity, security and
opportunities for all New
Zealanders” (Government
Policy Statement).
•
10
Auckland experiences
less congestion
The percentage of travel time spent in severe congestion on
the strategic freight network during both the AM peak and the
interpeak would be 18%.
The percentage of travel time spent in severe congestion on
the strategic freight network during the AM peak would both
be 12%.
The percentage of travel time spent in severe congestion on
the strategic freight network during the interpeak would both
be 17%.
The percentage of travel time spent in severe congestion on
the strategic freight network during the AM peak would both
be 9%.
The percentage of travel time spent in severe congestion on
the strategic freight network during the interpeak would both
be 17%.
This option is unlikely to significantly reduce congestion in
Auckland and would have a far lower impact than either of the
motorway charging scenarios. In 2026, under this scenario:
This option will slow the rate at which region-wide congestion
grows, but not as much as the variable motorway charge. In
2026, if this scenario was implemented:
A variable motorway charge slows the rate at which regionwide congestion grows more than the other funding
scenarios. In 2026, if this scenario was implemented:
The amount of traffic on Auckland’s roads would be 0.3%
lower than if the Auckland Plan Transport Network had not
been implemented.
The amount of traffic on Auckland’s roads would be 1.5%
lower than if the Auckland Plan Transport Network had not
been implemented.
The amount of traffic on Auckland’s roads would be 12.4%
lower than if the Auckland Plan Transport Network had not
been implemented.
Peak hour travel times from the north, south and west of the
region to the city centre are estimated to be 1 per cent lower
than they would under a ‘basic’ network.
Peak hour travel times from the north, south and west of the
region to the city centre are estimated to be 10 - 12 per cent
lower than they would under a ‘basic’ network.
Peak hour travel times from the north, south and west of the
region to the city centre are estimated to be 12 - 15 per cent
lower than they would under a ‘basic’ network.
The proportion of time spent in severe congestion on the
motorway network would decrease by 5% by 2046, with no
The proportion of time spent in severe congestion on the
motorway network peak is estimated to decrease by
The proportion of time spent in severe congestion on the
motorway network peak is estimated to decrease by
Key performance
indicators and measures
•
Use of passenger
transport increases.
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
change in the inter-peak period.
approximately 24 per cent in the AM peak and 12.5% in the
inter-peak by 2046.
approximately 33 per cent in the AM peak and 12.5% in the
inter-peak by 2046.
Under this option, some traffic will divert off the motorway and
onto the arterial road network in order to avoid motorway
charges. It is likely that additional capacity will be needed on
Triangle Road in Massey, particularly between Waimumu
Road and Lincoln Road; on Great South Road in Otahuhu,
particularly between Mangere Road and Bairds Road; on
Bairds Road Otara between Great South Road and Hellabys
Road; and on Great South Road between Takanini and
Papakura.
This option would have similar local road impacts to the fixed
charge option, although they may be slightly more
pronounced during the peak period, when motorway users
would face a $3 charge as opposed to a $2 charge under the
fixed charging scenario.
Further investigation is needed in some other locations to
determine whether traffic can be managed or improvements
are needed. In addition, some planned improvement works
are likely to need to be brought forward, particularly widening
State Highway 20B (the Airport Eastern Access) and
upgrading Mill Road (linking Papakura and Otara). The
reduction in motorway flows might also mean some planned
motorway improvements are no longer required
Value for money
(Government objective).
•
The benefit-cost ratio
for the funded scenario
is positive.
Safety and environment
(Government objective).
•
•
Reduced fatal and
serious injuries from
transport-related
accidents.
Reduced greenhouse
gas emissions and air
pollution from transport
sources.
This scenario does not increase public transport use as much
as the other two funding scenarios. In 2026, under this public
transport boardings would increase by 0.3%.
This scenario makes a bigger difference to public transport
use than the rates and fuel tax scenario, but less of an impact
than variable charges. In 2026, under this scenario, public
transport boardings would increase by 1.6%.
This scenario makes the biggest difference to public transport
use during the AM peak. In 2026, under this scenario, public
transport boardings would increase by 2.0%.
The Benefit Cost ratio for this option is 15. It is therefore
likely to provide higher value for money than the other two
scenarios. However, the high benefit/cost ratio is driven by
the minimal implementation and operational costs associated
with increasing rates and fuel tax. This scenario delivers a
much lower level of economic welfare gains than the other
two scenarios. This scenario increases economic welfare by
$247 million.
The Benefit Cost ratio for this option is 1.7. It is economically
efficient, but does not provide as much value for money as
the rates and fuel tax scenario. However, this scenario does
deliver higher net gains to economic welfare than the existing
tools scenario. This scenario increases economic welfare by
$585 million.
The Benefit Cost ratio for this option is 1.7 It is economically
efficient, but does not provide as much value for money as
the rates and fuel tax scenario. However, this scenario
delivers higher net gains to economic welfare than the other
two funding scenarios because it has a bigger impact on
congestion and travel times. This scenario increases
economic welfare by $594 million.
The number of fatal and serious injuries from transport-related
accidents on Auckland’s roads reduces the same amount
under all funding scenarios and is minimal. The reduction is
attributable to improvements in the quality of Auckland’s
transport network under the Auckland Plan, rather than the
funding mechanism which pays for it. In 2013, there were
0.0109 transport-related fatalities and serious injuries per
capita. In 2026, if Auckland Plan Transport Network is
implemented, there would be 0.0067 transport related
fatalities and serious injuries per capita.
There is no difference between the funding scenarios in
relation to this indicator.
There is no difference between the funding scenarios in
relation to this indicator.
Population growth results in an overall growth in transportrelated greenhouse gas emissions between 2013 and 2026.
They would grow marginally more if this funding scenario was
Transport-related greenhouse emissions and air pollution
grow less under the motorway charging scenarios than the
existing tools scenario. This is because fewer car trips will be
This scenario would do the most to decrease the rate at which
transport-related greenhouse gas emissions and air pollution
11
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
implemented, than they would under the other funding
scenarios. This is because private vehicle use does not
decline as much under this scenario. In 2026 under this
scenario:
made overall. The impact is marginally less under this
scenario than under the variable charging scenario. In 2026
under this scenario:
grow in Auckland. In 2026 under this scenario:
the amount of transport-related greenhouse gas emissions in
2026 would be 9,025,000 kilograms; and
5,600 kilograms of VOC emissions per day would be
attributable to transport;
19,100 kilograms of NOx emissions per day would be
attributable to transport;
810 kilograms of PM emissions per day would be attributable
to transport.
Implementation costs
•
•
Implementation costs
are reasonable.
Implementation of the
scheme is achievable.
The implementation costs of this option are reasonable.
Systems already exist for the collection of rates and fuel
excise, so few additional implementation costs would be
incurred if increases to these taxes were implemented. New
legislation would not be required unless fuel tax increases
were achieved through a regional fuel tax scheme.
the amount of transport-related greenhouse gas emissions in
2026 would be 9,025,000 kilograms
5,440 kilograms of VOC emissions per day would be
attributable to transport;
18,910 kilograms of NOx emissions per day would be
attributable to transport;
the amount of emissions in 2026 would be 8,996,000
kilograms.
5,420 kilograms of VOC emissions per day would be
attributable to transport;
18,880 kilograms of NOx emissions per day would be
attributable to transport;
790 kilograms of PM emissions per day would be attributable
to transport.
800 kilograms of PM emissions per day would be attributable
to transport.
The estimated cost of implementing a motorway charging
scheme are likely to be approximately $108.7 million,
including roadside equipment, back-office and other setup
costs. This assumes that Automatic Number Plate
Recognition is used to identify vehicles using the motorway).
The implementation costs for this scenario are essentially the
same as the costs for a fixed charge motorway scheme.
New legislation is likely to be required and could lead to
delays in implementation. The Land Transport Management
Act 2003 provides for tolling on new roads, but only allows
tolling on existing roads where they are physically or
operationally integral to the new road. However, there is also
a provision within the Local Government Act 1974 under
which the Minister may “authorise a council to establish, by
using the special consultative procedure, toll gates and collect
tolls at any bridge, tunnel, or ferry within the district or under
control of the council.”
Compliance costs (to
users/payers).
•
Compliance costs are
reasonable.
Implementation of this scheme would be relatively quick and
achievable. There is no requirement to construct physical
infrastructure or put in place new technology. The major time
cost would be in securing agreement from Cabinet and
Auckland Council’s Governing Body, and
legislative/regulatory change for either a regional fuel tax or
increases to Petroleum Excise Duty.
Implementation of the scheme would be achievable, but
would take longer than increases to rates and fuel tax. New
legislation would be required which could lead to delays
implementation. Modelling, designing, consenting and
constructing a motorway charging scheme, as well as working
through implementation and operational risks would also
present complexities to work through.
Implementation of this scheme is achievable.
Systems already exist for the collection of rates and fuel
excise. No additional compliance costs would be associated
with increases to these taxes unless an exemptions or
rebates system was introduced. (Under an exemptions or
rebates scheme individuals who met certain criteria would
need to apply for an exemption or rebate and would need to
If Automatic Number Plate Recognition (ANPR) technology
was used, this scheme would involve very few compliance
costs compared to many international road charging schemes
because vehicles would not need to be fitted with
transponders or GPS.
The compliance costs for this scenario are essentially the
same as they are for a fixed motorway charge, although care
will need to be taken to ensure that motorists are aware of
changes in price for motorway use during the peak/offpeak.
Reasonable compliance costs would be associated with the
12
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
support their application with proof that they meet the criteria).
establishment and maintenance of accounts (for regular
users). Although account holders will need to pay a small
lump sum to establish and ‘top-up’ their account, they will
receive a 15% discount for doing so. In addition, the
establishment of accounts significantly reduces the costs of
scheme collection and therefore reduce the gross revenue
requirement, meaning that motorway users can be charged at
a lower rate than would otherwise be required.
Motorway variable charge ($3/$2)
The compliance costs of establishing and maintaining
accounts for low income households may be more onerous,
as they are less likely to have the ability to fund ‘lump sum’
top-ups.
Operating costs (to
scheme operators).
•
Operating costs are
reasonable.
Scheme complexity and
transparency.
•
Scheme is simple and
understandable.
Economic efficiency.
•
Scheme has a BCR of
1 or higher.
Systems already exist for the administration of rates and fuel
excise. Additional administration costs would be low and are
reasonable. An increase in rates or national fuel tax would
not materially affect collection costs. The introduction of a
new regional fuel tax would not create significantly additional
operating costs.
The estimated annual operating costs of a motorway charging
scheme are estimated to be around 10-12% of revenue.
Transaction costs are likely to be 24 cents per transaction.
The operating and transaction costs for this scenario are the
same the costs for the fixed charge scenario.
This is the simplest and most understandable funding
pathway to implement. Given their long history in New
Zealand, rates and fuel excise are funding sources that are
well understood by the public and relatively simple to operate.
Increases to these funding sources can be introduced
relatively easily and at a low cost.
If motorway charging is introduced, a fixed charge would be
simpler for motorway users to understand than a variable
charging scheme. The introduction of either motorway
charging scheme would, be more complex than increases to
rates and fuel tax.
From the perspective of the user, a variable charging scheme
would be more complex than a fixed charging scheme.
Motorway users would need to anticipate the price that they
would pay before they entered the motorway. This could be
difficult to calculate if traffic leading onto the motorway is
congested. The introduction of either motorway charging
scheme would, be more complex than increases to rates and
fuel tax.
Compared to motorway charging, this option has a high
benefit cost ratio of 15 and from that perspective, it is highly
economically efficient. The reason for such a high
benefit/cost ratio is that the costs of this option are relatively
low.
This option is economically efficient, although not quite as
efficient as the rates and fuel excise option. It has a benefit
cost ratio of 1.7.
This option is equally economically efficient as the fixed
motorway scenario, but as efficient as the rates and fuel
excise option. It has a benefit cost ratio of 1.7. It increases
economic welfare more than the fixed motorway scenario
because results in greater transport benefits for users. There
is an economic welfare gain of $594million under this
scenario.
The drawback of this option from an economic perspective is
that although it is relatively low cost, it also fails to generate
significant benefits and therefore it does not greatly increase
economic wellbeing. Unlike motorway charging, it does not
provide significant congestion or travel time benefits and
therefore only increases economic wellbeing by $247 million.
Evasion/non-compliance.
•
Opportunities and
incentives to evade
payment are limited.
There are few (if any) means of evading rates and fuel tax
increase.
If fuel excise increases were implemented by way of a
Regional Fuel Tax, it is possible that two compliance issues
could arise:
Unlike the rates and fuel excise option, the economic costs of
implementing and operating motorway charges are high.
However, these costs are offset by the decongestion, travel
time and environmental benefits that are generated as a
result of pricing use of the motorway network. Under this
option, the implementation of a new funding tool increases
economic wellbeing by $585 million.
The motorway charging options that we have presented
leaves little room for avoidance or non-compliance. The
numbers of all vehicles using the motorway will be
automatically recorded and the registered owner will be
automatically charged for the associated motorway trip.
The performance of this scenario against this criterion is the
same as the fixed charge.
It is possible that a small proportion of motorway users could
13
Key performance
indicators and measures
Equal treatment of ‘like’
payers. (Horizontal equity).
•
Those receiving similar
benefits or creating
similar costs pay the
same level of
charge/tax.
Fair distribution of burden
between different groups.
•
•
•
14
Benefits to households
and businesses
outweigh the costs
incurred.
Even distribution of
impact across different
business and
household types and
sizes.
Even distribution of
impact across different
parts of the region.
Existing tools 1
Motorway fixed charge ($2)
Motorists might avoid paying a higher price for fuel by
refuelling outside of Auckland; or
Fuel companies could increase the retail price of fuel in other
regions in order to minimise the increase within Auckland.
refuse to comply with their payment obligations, but the
experience with the Northern Gateway suggests that this is
rare. In cases where a motorway user refused to pay, or was
late in making their payment, enforcement action could be
taken.
These possibilities would not occur if fuel excise increases
were implemented by way of a national fuel excise increase.
They are also unlikely under a regional fuel tax scenario
because the price differential between Auckland and other
regions would not be high enough to induce this type of
behaviour.
If an exemptions scheme were implemented, or a limit was
set on the number of times that a vehicle could incur a charge
each day, significant evasion and compliance issues could
arise. The Independent Advisory Body has therefore not
included exemptions or capping proposals in the scheme
presented in its report.
This option treats all ‘like’ payers equally. All property owners
with similarly valued properties located within a defined
geographic area will be subject to the same level of rates
increase and are likely to benefit from similar increases in
their property value as a result of Auckland Plan Transport
improvements.
Motorway charging has high horizontal equity. All motorway
users would be charged the same amount for using the
network, notwithstanding their personal, household or
business characteristics. In return for their payment, they will
all benefit from quicker travel times and less congestion on
the motorway.
All motorists will be subject to the same level of fuel increase,
notwithstanding their personal, household or business
characteristics. The amount that they pay is proportional to
the amount of fuel that they use (or travel that they undertake
in a private vehicle) and is therefore proportional to their
contribution to congestion.
Motorists who travel on the motorway at peak time will receive
similar levels of benefit to each other. Motorists who travel on
the motorway during the inter-peak will receive similar levels
of benefit to each other.
This option spreads the funding burden between those who
benefit most from the Auckland Plan Transport Network and
those who contribute most to the requirement for investment:
property owners and motorists. Land owners would indirectly
benefit from improved property values and motorists benefit
from improved travel options and slower increases in
congestion. However, property owners who have low
transport use will benefit more than ratepayers with low
transport use.
Both charging options concentrate the funding burden on
motorway users. This group contributes significantly to
congestion and the need for the Auckland Plan Transport
Network, and will receive travel time savings on the motorway
in return for their payment. However, it could equally be
argued that motorway users will subsidise other transport
users who benefit from Auckland Plan transport investments
that are not motorway related.
Overall, the business sector would be $256 million or 5.3%
better off in 2026 under this scenario than if the Auckland
Plan Transport Network had not been implemented and paid
for by rates and fuel tax increases. However, the net benefit
is lower than if motorway charges were introduced. The net
savings arise because although the business sector will incur
additional direct transport costs, these would be outweighed
by the savings that result from travel time improvements
resulting from the implementation of the Auckland Plan
Transport Network.
Overall, the business sector benefits more under this
scenario, than if rates and fuel taxes were increased. In
2026, the business sector will realise net savings of $303
million or 6.2%. The savings are greater than under the rates
and fuel tax pathway because of the positive effects that
motorway charges have on motorway speeds (in additional to
the travel time benefits provided by transport improvements).
Motorway variable charge ($3/$2)
This scenario has relatively high horizontal equity. All
motorway users are charged the same amount for using the
network, according to the time that they travel. Those who
pay the same amount will receive a similar level of transport
benefits in return.
The groups that pay, and who benefit are similar under this
scenario to those under the fixed charging scenario.
Of the three options, this provides the greatest benefit to
businesses because it has the largest impact on travel times.
In 2026, the business sector would be $314 million better off
under this scenario than under a ‘basic transport network’
scenario.
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
Distribution between household/business sector
Distribution between household/business sector
Distribution between household/business sector
Households would contribute 66% of gross revenue and
businesses would contribute 34%.
Households would contribute 59% of gross revenue and
businesses would contribute 41%.
Households would contribute 54% of gross revenue and
businesses would contribute 46%.
Distribution between households
Distribution between households
Distribution between households
This pathway spreads the funding burden evenly and broadly
but there are few opportunities to reduce the amount paid –
rates cannot be avoided. A small proportion of households
suffer a severe financial impact - most of these are low
income households. Super-annuitants with a low annual
income and living in high value properties could be
disproportionately affected.
This pathway focuses of the funding burden on frequent
motorway users, who would pay (and benefit) significantly
more than the average. The majority of households would
experience a low financial impact because they can minimise
the amount of charges they pay be altering their travel
behaviour (albeit at a social/convenience cost). A slightly
greater number of vulnerable households would suffer a high
financial impact than if rates and fuel tax were increased.
The household and business impacts of this pathway are very
similar to the impacts of the fixed charge scenario.
In 2026, if this pathway was implemented:
The average household would pay $345 per year, but after
taking into account changes in their fuel use, parking and
vehicle operating costs related to changes in travel behaviour,
the net average cost that households would need to
accommodate within the non-transport areas of their budget is
$217 per year.
In 2026, if this pathway was implemented:
96.7% of Auckland households would experience a low
financial impact. 2.4% of households would face costs that
equate to more than 2.5% of their after-tax income.
In 2026, if this pathway was implemented:
97.9% of Auckland households would experience a low
financial impact. 0.3% of households would face costs that
equate to more than 2.5% of their after-tax income
The average household would pay $348 per year, but after
taking into account changes in their fuel use, parking and
vehicle operating costs related to changes in travel behaviour,
the net average cost that households would need to
accommodate within their budget is $297 per year.
Vulnerable households account for approximately 18% of
Auckland’s population and would contribute 14.7% of the
revenue raised. The average vulnerable household would
pay $251 per year.
1.5% of Auckland’s vulnerable households would suffer a high
or very high financial impact.
Distribution between business sectors
The impact of rates and fuel tax increases are not felt evenly
across all business sectors. In 2026, if this scenario was
implemented:
96.7% of Auckland households would experience a low
financial impact. 2.5% of households would face costs that
equate to more than 2.5% of their after-tax income
The average household would pay $371 per year, but after
taking into account changes in their fuel use, parking and
vehicle operating costs as a result of changes in travel
behaviour, the net average cost they would have to
accommodate within their budget is $256 per year.
Frequent motorway users would account for 7.5% of
households, but would pay 26% of the total revenue from a
Motorway User Charge.
Frequent motorway users would account for 6.7% of
households, but would pay 30% of the total revenue from a
Motorway User Charge.
Vulnerable households would contribute 11% of the revenue
raised. After adjusting their travel behaviour to reduce the
costs they pay, the average vulnerable household would pay
$140 per year.
Vulnerable households would contribute 11% of revenue.
After adjusting their travel behaviour to reduce the costs they
pay, the average vulnerable household would pay $160 per
year.
3.4% of Auckland’s vulnerable households would suffer a high
or very high financial impact.
3.9% of Auckland’s vulnerable households would suffer a high
or very high financial impact.
The impact on businesses, business sectors and retail are
similar to the fixed motorway charging scenario. In 2026, if
this scenario was implemented:
Distribution between business sectors
Distribution between business sectors
Core transport businesses would receive a net-benefit of
$8.7million.
Businesses highly reliant on the transport sector to move
goods essential to their business would bear increased costs
of $13.6 million.
Businesses that use the transport network to provide mobile
goods and services (such as construction trades, painters,
Most businesses benefit from a Motorway User Charge, but
some sectors will benefit more than others, because they
have greater ability to alter their travel patterns in order to
reduce the amount of motorway charges they pay. In 2026, if
this scenario was implemented:
Core transport businesses would receive a net-benefit of
Core transport businesses would receive a net-benefit of
$10.7million.
Businesses highly reliant on the transport sector to move
goods essential to their business would receive net benefits of
$4.7 million.
Businesses that use the transport network to provide mobile
goods and services (such as construction trades, painters,
15
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
cleaners and waste collection businesses) will receive net
benefits worth $96.6 million.
$11.0million.
cleaners and waste collection businesses) will receive net
benefits worth $105.9 million.
Under all funding scenarios, retail spending would be 0.60.9% lower than under a scenario that does not require
additional funding because households would have less
discretionary income to spend. Changes in where and how
households choose to shop may also alter the distribution of
retail sales across the region.
Businesses highly reliant on the transport sector to move
goods essential to their business would receive net benefits of
$6.1 million.
The impacts on retail are the same as those under the rates
and fuel tax pathway.
Businesses that use the transport network to provide mobile
goods and services (such as construction trades, painters,
cleaners and waste collection businesses) will receive net
benefits worth $108.4 million.
The impacts on retail are the same as those under the rates
and fuel tax pathway.
From a household perspective, the impacts of this scenario
are spread relatively evenly across Auckland. Very low
impacts are evident in most areas, apart from a handful of
locations where relatively high property values coincide with
relatively low household incomes.
From a business perspective, trucking firms on the outskirts of
Auckland, and areas where there are high concentrations of
heavy commercial vehicle operators are likely to feel a greater
impact than other areas under this scenario.
Affordability
•
•
Impact on household
budgets and business
overheads.
Low-income
households not
disproportionately
affected compared to
high income
households.
This funding pathway is more affordable for the average
household than the motorway charging scenario, but there is
less scope to reduce the costs that they incur by changing
their travel behaviour. 97.8% of households would feel a low
impact on their budget.
Under this option would be increased charges would equate
to more than 2.5 of households income for (0.29%) of
households. For these households that would be a severe
financial impact.
This option spreads the funding burden evenly, so there are
few households that are severely impacted. However, low
income households are disproportionately represented in this
category because they account for 92.6% of those
households that are severely financially impacted.
16
From a household perspective, the impacts of motorway
charging are likely to be more concentrated in areas that are
close to the motorway or where the motorway is the dominant
option for accessing other parts of Auckland. These areas
are likely to be more exposed to Motorway User Charges, but
will also receive significant travel time benefits when travelling
on the motorway.
This scenario has the same geographic impacts as the fixed
charge.
Firms located in Auckland’s industrial areas may experience a
larger effect. This is because they tend to have good
transport and motorway accessibility (a key consideration
affecting business location decisions). However, many of
these firms will be better off from a Motorway User Charge,
with benefits exceeding their additional direct costs.
By a small margin, this funding pathway is slightly less
affordable for the average household than the other funding
scenarios, but remains affordable for the majority. 95.8% of
households would feel a low impact on their budget.
Charges under this option would equate to more than 2.5% of
household income for (2.2%) of households. For these
households that would be a severe financial impact.
This scenario is likely to be less affordable for frequent
motorway users. They would pay between $1,140 and
$1,260 per year. However, they will receive travel time
savings on the motorway in return.
Low income households make up 30.8% of those households
that suffer a severe financial impact under this scenario. A
disproportionate financial impact will be felt by a small group
of low income households that are also frequent motorway
users.
This funding pathway is slightly less affordable than rates and
fuel tax increases, but remains affordable for the majority.
96% of households would feel a low impact on their budget.
Charges under this option would equate to more than 2.5% of
household income for (2.5%) of households. For these
households that would be a severe financial impact.
This scenario is likely to be the least affordable for frequent
motorway users. They would pay between $1,430 and
$1,580 per year. However, they will receive travel time
savings on the motorway in return.
Low income households make up 24.8% of those households
that suffer a severe financial impact under this scenario. A
disproportionate financial impact will be felt by a small group
of low income households that are also frequent motorway
users.
Key performance
indicators and measures
Existing tools 1
Motorway fixed charge ($2)
Motorway variable charge ($3/$2)
Risks
The revenue, implementation and operational risks for the
rates and fuel tax pathway are relatively low. The
mechanisms for setting, collecting and administering them are
well established
Given the unknown nature of this funding source and the
scale of the proposed scheme, there are greater risks (for
example, IT risks and traffic volume risks) than for the rates
and fuel tax pathway.
Given the unknown nature of this funding source and the
scale of the proposed scheme, there are greater risks than for
the rates and fuel tax pathway.
The scheme design features of the proposed rates and fuel
tax schemes do not appear to present specific barriers to
public acceptability. However the public acceptability of
increasing household and business costs would need to be
navigated. The potential public responses to increases in
these funding sources are well understood.
The scheme design features of the fixed motorway scheme
do not appear to present specific barriers to public
acceptability. This scheme has been kept as simple as
possible to ensure that it is understandable to the public and
as affordable as possible. However the public acceptability of
increasing household and introducing a new type of funding
mechanism would need to be navigated.
Most of the scheme design features of the fixed motorway
scheme do not appear to present specific barriers to public
acceptability. However, the variable nature of charges may
be harder for the public to understand. The public
acceptability of increasing household and introducing a new
type of funding mechanism would also need to be navigated.
•
•
Few risks, with low
likelihood of occurring
Scheme design
features of funding
pathway likely to be
acceptable to the
public.
17