Jul 4, 2008

National And Fuel Taxes

The Herald today notes that National has attacked the new regional fuel tax regime without stating whether it will remove the tax. As we noted yesterday, the taxes are better than nothing as they will allow an acceleration of investment in essential infrastructure. However, they are less efficient than the types of investment National is talking about - bulk funding of big projects through infrastructure bonds, PPPs etc. Once the law is changed to allow this approach we can't see the regional fuel taxes being needed. That doesn't mean that their shouldn't be different charging per region. The Hive is very open to congestion and cordon charging options being considered for Auckland and Wellington. Indeed it would make sense for some form of GPS based system to be introduced nationwide to ensure that users are charged according to the roads they are using. This would be both the fairest approach, and the approach most likely to reduce current congestion levels.

Of course, if we are to go the PPP route we will need to change our overseas investment regulations as well. At Tuesday's select committee hearing of the challenge (breach of standing orders) to the change of regulation introduced at the time that the Government was trying to kill the Canadian pension plan's bid to buy Auckland Airport, the Treasury lawyer (Kwok) reportedly said that "strategic infrastructure" meant all airports, ports, roads and transmission lines. To date Government had not been prepared to say which infrastructure was captured by this definition.