Other FIT Wellington pages:
One of the issues that light rail supporters will get pressed hardest on is how light rail will be funded. One of the current regional councillors has said:
“I have no problem with planning for light rail now for the future and as far as I am aware decisions or any options taken in the near future with the Let’s Get Wellington Moving including Basin Reserve are allowing for the move to light rail some point in the future.
“My key concern is the costs of light rail even at your estimate at $450M; I doubt if GWRC has the capacity to raise a loan for even half of this even if NZTA pays the other half. I am very concerned for the impact for regional ratepayers. People on fixed incomes ie super can’t take much more re rate increases.”
This page documents funding options that were discussed among a range of people, including several candidates for Greater Wellington Regional Council who support light rail.
We concluded that our position is that the citizens of Wellington are asking for no special favours in regards to the funding of this project. It is absolutely our intention that this essential light rail development for Wellington will be funded in the same way as the City, Regional and Central Government intended to fund the second Mt Victoria Tunnel and the proposed 4 lane motorway to the airport.
Government has a policy of fully funding State Highway projects — the extra tunnels and highway to the airport will be part of SH1 — but not other transport projects. Auckland had a three year battle before Prime Minister Key finally agreed that Government would share funding of the City Rail Link, which is likely to be 50%. Under current policy, Government could not transfer funding from the RoNS account into light rail.
Wellingtonians nevertheless expect the project will be funded in the same way as the light rail, and city rail projects are being funded in Auckland. The first tranche of Matangi trains for the Wellington region were funded 90% by Government. However, public transport funding for capital projects reduced from 60% to 50% in 2013 (we understand funding is being reduced in 1% steps each year).
Our position in detail:
A source of substantial government revenue for infrastructure projects of this nature could be a universal tax on land. There is much historical precedent for this. William the Conqueror funded his Kingdom out of land rent and set the basis for taxation during the feudal era. In 1776, Adam Smith argued that in the enterprise economy public revenues and services would best be served by a tax on land. He identified the concept of Economic Rent (the difference between the cost of production and the revenue derived from a value-adding enterprise) as a source of revenue that would not distort people’s incentive to work, save and invest. Forty years later, David Ricardo another prominent economic thinker of his day, pointed out that landowners, with little or no effort on their own part, happily enjoyed all the economic benefit of capital gain resulting from public investment in infrastructure. A strong argument could be made to tax some of this gain to fund light rail along the key corridor.