Councillor questions city council's funding streams for $6.4 billion transport programme

Monday, 26 August 2019

Wellington City Council would need to cut about $300 million from its budget in order to fund its share of the capital's $6.4 billion transport plan, a councillor claims.

The council will need to find about $1.3b for the Let's Get Wellington Moving (LGWM) plan - a joint initiative alongside Greater Wellington Regional Council and the New Zealand Transport Agency.

In a submission to the Productivity Commission on proposed changes to local government funding, councillor Andy Foster warned the council was in danger of falling short of its share if the changes did not go further.

But Wellington Mayor Justin Lester said Foster - a fellow 2019 mayoral candidate - was playing politics, and that the council had long-term provisions in place to fund the programme.

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Foster's comments are in line with council chief executive Kevin Lavery's pre-election report released last month, which said the the council would need to consider new funding tools to provide its share of the cost.

Those tools included a planned 'value capture' targeted rate for property owners near a future mass transit system, as well as other mechanisms such as congestion and road-user charges.

The Government has ruled out a regional fuel tax for Wellington, and Transport Minister Phil Twyford has said he was no longer considering imposing a cordon charge - according to a Ministry of Transport briefing tabled in February.

The commission made 30 recommendations following its review into local government funding and financing, including allowing councils to impose road-user charges.

It did not recommend allowing a fuel tax, something Foster said would 'offer a significant funding stream which could be directed towards LGWM'.

Although a rates rise had been proposed to help fund the programme, that was not enough, and there was no room in the council's budget to borrow the shortfall, he said.

'The funding source of council's proportion of the investment is currently undefined and although council has not yet met its borrowing limits, there is not the capacity to fund this project on borrowings alone,' the submission said.

'As such, there is a need to approach the funding of this programme with tools outside of the scope of the Commission's recommendations.'

The council is yet to assign any funding to the LGWM programme in its 10-year Long-Term Plan.

Foster said on Monday the council would need to save around $300m by pulling the plug on other projects - such as a new indoor arena or airport runway extension - as well as cutting costs within the organisation.

Borrowing the shortfall would 'blow our funding limits to pieces'. 

Lester said there was no problem with the council's budget. 'I tend to rely on trained professionals and our financial team and public servants who don't have a vested interest and can provide accurate and impartial advice.'

The only thing that could hold the project up was 'political shenanigans', Lester said. 'I'm going to make sure the project's delivered, and that it's affordable. And we've got the budget to do it.'

Twyford steered clear of the issue on Monday. 'The Government has committed to its 60 per cent share of the LGWM package. It's up to councils as to how they fund their share,' he said.

LGWM programme director Andrew Body said the city and regional councils were still working through their funding arrangements.

'The agreed approach for the local share funding of LGWM will be presented by the councils to ratepayers for consultation as part of the 2021 Long-Term Plan process.'