Government investigating fuel tax hike

Transport Minister Simon Bridges requested information on whether fuel tax increases are needed to pay for infrastructure spending. Photo: Getty

Potential tax increases were one of the main weapons used by National in its election battle. But documents suggest the Government has been considering its own bump in revenue gathering to pay for transport spending. Shane Cowlishaw reports.

The Government has been investigating fuel tax increases to plug holes in its transport budget, despite ruling them out during the election campaign.

National announced plans in August to build ten new roads of national significance at a cost of $10.5 billion. It is also facing a significant cost in meeting its share of the Auckland Transport Alignment Project (ATAP), an agreement between the Government and Auckland Council to develop the city’s transport system during the next 30 years.

Before the election Labour announced it would introduce a 10 cent regional fuel tax in Auckland if elected to help meet transport costs, suggesting the Government was itself already modelling a nationwide fuel tax increase to pay for its new motorways.

National denied this, saying there were no plans for a fuel tax and pointing the finger at Labour as the party that wished to raise taxes.

But, according to documents released to the Greens under the Official Information Act, the Government appears to have at least been considering the possibility.

The documents reveal Transport Minister Simon Bridges requested information from the Ministry of Transport on options for funding the ATAP shortfall and state highways.

With the revised funding gap for ATAP now estimated at $5.9b following new population growth projections, the Government’s share will be between $1b and 2.1b.

In a May memo, the Ministry advised of several options available to plug the ATAP gap, including raising fuel taxes by 1 to 2 percent, delaying major projects or using more Crown funding.

A later briefing in July followed a request from Bridges for advice on the funding implications of delivering “nationally significant urban corridors in Auckland over the next decade”. One of the new roads of national significance is the $1b Mill Rd corridor in south Auckland.

A redacted graph is included in this briefing that appears to outline petrol excise duty alongside the consumer price index.

In a separate document of internal Ministry analysis, however, a similar graph is unredacted and models a five cent fuel tax increase in 2018, followed by increases between 10 to 20 cents over the next decade.

Throughout the documents mention is made about the release of the Government’s policy statement on land transport funding (GPS 2018), essentially the transport budget for the year.

In an August briefing the Ministry noted the GPS was ready for release and included measures to plug most of the ATAP gap, with a target release date set for the end of the month before Parliament rose before the election.

The document has yet to be released.

Newsroom wanted to talk to Bridges about the possibility of fuel tax increases and why the GPS had not been released to the public but his office declined, stating it was innappropriate considering the Government was in caretaker mode.

The Ministry’s senior communications advisor, Fran Lovell, suggested speaking to Bridges’ office regarding options to address the funding shortfall.

Regarding the publication of the GPS, Lovell said it would be published before it came into effect on 30 June and previous versions had been released between two and 12 months prior.

Julie Anne Genter, the Greens’ transport spokesperson, said funding to build the Government’s 10 new roads of significance would have to come from somewhere.

“National was being pretty disingenuous in attacking Labour about taxes when they haven’t explained how their own project will be costed.”

All of the Greens’ planned expenditure on public transport would be paid for by scrapping some of the projects, but it was possible small incremental increases in fuel taxes would be needed to pay for existing Government projects such as Transmission Gully, she said.

Michael Wood, the Labour Party’s transport spokesperson, said a reliable source had told him the Ministry had been modelling fuel tax increases.

Regardless, the Government had denied that the option was being considered so to have that confirmed was “riddled with irony and hypocrisy”.

“We raised this in the lead-up to the election and Steven Joyce basically denied it.”

Wood said Labour's policy of a regional fuel tax and scrapping of the East-West link project would be sufficient to address the city’s shortfall and was a fairer option.

“We need this stuff for Auckland and Aucklanders are ready to pay for that and we don’t think it’s particularly fair or reasonable to charge someone in Invercargill to build Auckland’s transport network.”

Regarding the roads of national significance, Wood said there would be an “evidence based review” to see which were viable financially.