What cutting the fuel tax means for Auckland

Saturday, 10 February 2024

PM Christopher Luxon announces plans to scrap Auckland regional fuel tax, saying it'll help ease cost of living pressures. (Video first published February 8, 2024.)

The Government announced on Thursday that it was axing the Auckland regional fuel tax. So what does it mean for Auckland?

It’s too soon to say which of the region’s transport projects will be cut due to the funding loss, Auckland Transport chief executive Dean Kimpton said.

“We need a few weeks to work through with Auckland Council and the AT board, to see where our priorities lie.”

People filling up at fuel pumps in the Auckland Council region (except Aotea Great Barrier Island) currently pay an extra 10 cents for the fuel tax and 1.5 cents in GST on every litre of petrol or diesel. That ends on June 30.

Initially put in place for 10 years in 2018, the tax was intended to support transport projects that would otherwise be delayed or not funded.

Minister of Transport Simeon Brown said on Thursday the tax was supposed to help fund road projects but Auckland Transport has used the funds on many “non-roading” projects including cycle lanes, redlight cameras, speed bumps and lowering speed limits.

Auckland mayor Wayne Brown disagrees with the notion that the money has been misspent.

“The safety things have been on the things that the last government was funding 51% of. If the Government doesn't want to do these things, just stop funding the other half,” Brown told Stuff.

Axing the regional fuel tax means a $600m loss of funding for Auckland Transport, its CEO Dean Kimpton said.

Projects that have come out of the fund are the Matakana link road, Puhinui interchange and the downtown ferry basin redevelopment, Brown said.

“We had to do things that were new. We weren’t allowed to spend it on things that we were already doing. So, the idea that we just wasted it on things that we were doing is not true.”

Kimpton said removing the tax will cut about $600m of funding that would have enabled AT to borrow and build around $1.8b of capital projects.

Auckland Mayor Wayne Brown is ruling out filling the funding gap with a rates rise.

“We can fundamentally build less, unless we can top it up with rates or other funding.”

But Mayor Brown is ruling out a rates rise to fill the gap.

“I'm not going to put my rates up just to cover the cost of the fact that your petrol’s gone a bit cheaper. That just makes no sense at all.”

Auckland Transport CEO Dean Kimpton said it’s too soon to say which projects will be cut due to the funding loss.

At September 2023, the tax had raised around $780m, Minister Brown said, with $341m remaining unspent.

But Kimpton and Mayor Brown both said what’s left in the pot is already committed, with contracts in place for the Eastern busway (although not enough to complete the project), and new trains and rail infrastructure for the City Rail Link.

“We’ve got no choice but to pause all the projects funded by the regional fuel tax and wait around and see,” the mayor said.

“The Government will ultimately have to face up to the fact that if they've taken away one [funding source], they have to put something back.”

Brown said he and the minister have to agree on what Auckland wants.

“We have some short term disagreements about what's best for Auckland and he’s got the excitement of a new job. I had that a year ago, it does wear off.”