The straitjacket sits tight
Comments (17) 
An editorial
When central government in NZ disagrees with local government on transport projects (be it cycleways or rail links or something else) one of their typical comments tends to be: “Well, if you like it so much, why don’t you fund it yourself?”
Sounds logical, eh?
Yet when our system ensures that roughly 2/3rds of New Zealand’s transport funding is controlled by central government taxes, and only 1/3rd is raised by local rates, then that starts to become a lot more dubious advice. When you then realise that transport co-funding rules actually make it worse, it starts to sound like outright mockery.
Because co-funding is a “carrot & stick” game that central government plays with local government – and it can feel a lot like an authoritarian father who “knows” his children can’t be trusted to spend money wisely.
By setting co-funding rates, central government defines that when a project meets their criteria, local councils can apply from a funding pot for that activity for additional funding. Say we want to build a cycleway worth $100,000. The co-funding rate (the FAR) for that is 53%. That means that $47,000 has to be paid by local government, and the rest, $53,000, is topped up by central government. IF there’s any money left in the pot.
But the “walking and cycling” pot is so small (only ~ 0.7% of all transport money), it is often oversubscribed almost immediately, because Councils all over the country want that money for the many projects they have on the back-burner.
So often, the answer is – “Actually, the pot is already empty. Your project sounds GREAT, but we can’t put in that $53,000 for you. Why don’t you raise it from rates, if you like it so much?“
So lets say local government tries. They reshuffle their budgets, to find the money to cover the $53k. But the actual impact is potentially even larger than that. Because since they can’t just raise higher rates, that 53k has to come from some other transport project.
Lets say Council is enlightened, and decides to cut back on a road widening project instead. By getting 53k from the reduced road widening, it is now actually missing out on a further 59k of co-funding it would have gotten for that other project if it had spent the 53k there – because the “road widening pot” is NOT nearly as small as the over-subscribed “walking & cycling” pot.
So suddenly, the actual cost for building that cycleway on their own is 47k original share, 53k subsidy share and 59k lost subsidy elsewhere – for a whopping $159,000 effective cost to local government (more than triple their theoretical amount).
And its all coming out of your pockets (taxes, rates) either way – there’s no savings anywhere. Because central government will simply give the 59k to another Council which DOES decide to do a road widening project. The relative merits of spending on road widening vs. cycleways are never even considered. Carrot – and a lot of stick.
Neither can money saved in one pot be moved into another. Even if they wanted to, Auckland can’t move the 30-40 million recently saved by downgrading the Dominion Road project into, say, funding the SkyPath walk & cycleway over the AHB. Our funding system specifically prohibits moving funding from one activity class to another.
So that’s part of why your local Council is so often tempted to build more roads, when better walking and cycling regularly scores highly in the wishes of their residents. Because the Minister of Transport in Wellington decides how large the pots are, that the pots may never be shared, and that walking & cycling is just dandy at ~0.7% of NZ’s transport investment.
After all, “Aucklanders want to drive, so we should provide for that…” – or somesuch similar claims that we WANT more roads. As opposed to the reality that we USE more roads when they are the only thing given to us.
You want some more stick with that rigged game?
Fullers (CAA Sponsor)
Themocracy