16 November. Rodney Councillor Greg Sayers says Auckland Council is exploiting a legal loophole allowing it to use millions of dollars collected in regional fuel taxes to prop up “excessive operational spending” and “ballooning debt levels”.
This, despite the fact that legislation requires that regional fuel tax (RFT) funds be exclusively spent on transport projects.
Cr Sayers discovered the issue while investigating how $121 million earmarked over 10 years for road sealing was cut to $1 million for the current financial year in Council’s Emergency Budget.
The trivial amount for road sealing became yet more perplexing when reviewing Council annual reports, which reveal more than $100 million is being collected each year in regional fuel taxes.
But it turns out that only a fraction of the regional fuel tax money is being spent on transport projects.
Auckland Council’s annual report for 2019/20, for example, shows that Council received $148 million in regional fuel taxes, but spent only $79 million on transport projects.
Cr Sayers says the remaining money ($69 million) is being spent on Council’s operational costs and debt repayments.
He says the money should instead be spent on what it was originally collected for, such as fixing Auckland’s traffic congestion, repairing its deteriorating roads, upgrading the Hill Street intersection and funding “shovel ready” projects such as road sealing.
Cr Sayers says Council is exploiting a loophole in the fuel tax legislation, which requires it to separately account for the monies in a regional fuel tax reserve fund.
However, the law does not require Council to hold those funds in trust for spending only on transport-related projects. Although any money from the reserve fund used for other purposes must ultimately be returned to the reserve fund in a future period – either from borrowings or from other Council revenue sources.
Cr Sayers says this is not good enough. Even if Council’s current accounting practices are legal, he believes they are morally wrong and should be corrected.
“Regional fuel tax monies should be placed in a separate interest-bearing trust and spent only on transport-related projects,” he says.
“Parliament also needs to update the law so any regional fuel taxes cannot be used to fund Council’s general spending or borrowing.”
Council group treasurer John Bishop did not respond to queries from Mahurangi Matters about the use of RFT funding for non-transport related expenses, but he did say RFT funds are publicly reported on and open for scrutiny. He says the RFT supports a 10-year programme covering 14 separate transport project groups. Each year Council will spend a different amount of money on transport projects, depending on the status of the projects. He says over the 10-year period, the entire $1.5 billion expected to be raised through the RFT will be spent on the 14 projects.