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Thursday, 28 February 2008

HOW ROADS ARE PAID FOR

A number of people have asked me about roads, and asked where the money would come from to maintain and repair island roads if we were under the Thames-Coromandel District Council. The short answer is that it depends on the road.

Roads can be funded partly by the government via Land Transport New Zealand and partly by ratepayers, or completely by ratepayers.

If Land Transport is satisfied that maintenance and road-renewal to an existing road meets its criteria it contributes 43% of the cost, or if it is a new road 53%. The system, as you might expect, is complicated and involves priorities set by regional and local councils, and has to be deemed to have community approval (which means being on the annual or the long-term plan). But if the criteria are met, your local council has to find only 67% or 47% of the cost.

If the criteria are not met, or if the council wants to do road-works on its own bat, it must pay 100%.

Under Thames-Coromandel's system of governance, referred to in the posting before this, if the people want a road fixed or built they work through their community board, which recommends to the council what they want. At that point, if the work was not on Land Transport's list, the ratepayers would have to foot the entire bill, which may be via a targeted rate based on improved value, or from the council's overall budget, or from a loan.

Who pays the bills in the end is the same under Auckland and Thames-Coromandel: partly or wholly it is the ratepayer. It is the detail and the level of democracy that differ. Under TCDC you get more say, so roading projects are more likely to be on the annual or long-term plans and thus are more likely to receive funding from Land Transport.

If a council's processes under the heading of roads are what they should be--democratic and consultative--and are done in such a way that roads are made to qualify by being put on the annual/long-term plan/s they will be subsidised with government money. So if a council ends up paying 100% it could be accused of not being on the ball.