Transport Minister Chris Bishop has announced that all vehicles - whether they’re petrol, diesel, electric or hybrid - will eventually be paying for roads based on distance and weight through electronic road user charges.
The transition will happen in stages - starting with legislative and regulatory reform to "modernise" the current Road User Charges (RUC) system, Bishop says, "and to enable private sector innovation".
Cabinet has agreed to a series of legislative changes that will shift how New Zealand drivers pay for the country's roading network - through electronic road user charges, rather than petrol tax, Bishop says.
These include:
- Removing the requirement to carry or display RUC licences, allowing for digital records instead
- Enabling the use of a broader range of electronic RUC devices, including those already built into many modern vehicles
- Supporting flexible payment models such as post-pay and monthly billing
- Separating the New Zealand Transport Agency Waka Kotahi roles as both RUC regulator and retailer to foster fairer competition
- Allowing the bundling of other road charges like tolls and time-of-use based pricing into a single payment
“Right now, New Zealanders pay Fuel Excise Duty (FED, or petrol tax) of about 70c per litre of petrol every time they fill up at the pump with a petrol car," Bishop says. “Diesel, electric, and heavy vehicles pay Road User Charges based on distance travelled.”
And this revenue goes towards the National Land Transport Fund which funds the building of new roads and maintains the country’s current ones, he says.
“For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down. For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements.”
Bishop says they’re also seeing a quick uptake of fuel-efficient petrol hybrid vehicles, going from 12,000 in 2015 to over 350,000 in 2025. “As our vehicle fleet changes, so too must the way we fund our roads.”
He says it’s not fair to have New Zealanders who drive less and who can’t afford a fuel-efficient car to pay more than people who can afford one and drive more often.
“This is a change that simply has to happen. The government has recognised reality and is getting on with the transition.”
Bishop says the current RUC system is outdated - it’s mostly paper based which means people have to check their odometers and buy RUC in 1000 kilometre chunks.
“We’re not going to shift millions of drivers from a simple system at the pump to queues at retailers. So instead of expanding a clunky government system, we will reform the rules to allow the market to deliver innovative, user-friendly services for drivers.”
Bishop says RUC will eventually be like paying for a power bill online and he expects to pass legislation in 2026. This will be followed by an updated Code of Practice for RUC providers.
“We will also engage with the market in 2026 to assess technological solutions and delivery timelines. In parallel, NZTA and Police will upgrade their systems to support enforcement in a digital environment.”
Bishop says: “By 2027, the RUC system will be ‘open for business’, with third-party providers able to offer innovative payment services and a consistent approval process in place.
“At this stage, no date has been set for the full transition of the light vehicle fleet. That’s a deliberate choice, as we’re focused on getting the system right rather than rushing its rollout.”
Making use of latest technology
The Motor Industry Association, which represents manufacturers and suppliers of new vehicles, has welcomed the announcement.
The Motor Industry Association's chief executive Aimee Wiley says "converting the whole fleet to road user charges will be a major undertaking, and we will gain nothing if we do not make use of the latest technology to manage the system digitally and in real time".
"It'll make compliance much easier and administration less expensive."
13 Comments
Probably makes sense.
There will be winners and losers, likely collectively we'll end up paying more.
Good day to own a V8, I guess.
Maybe it will also shift some more of the roading burden away from general tax take onto the road users (although I'm sure the trucking industry will keep their protected status!)
Pretty much everyone is a road user, either directly or indirectly, so it'll probably be about even.
The day that tax stops being collected at the pump is the day that fuel companies will start screaming: international supply shock, prices gotta go up!
Heavy regulation will be needed to make sure we don't still pay a ghost tax at pump as well as the new RUCs
It won't solve their dilemma.
Their problem is a reduction in surplus energy going into the total system. That is neither accounted by economists, nor solvable by changing how proxy is distributed/cashed-in.
Reliance on fuel is bad for our emissions, trade balance and resilience. I get that we need to increase charges on fuel-efficient vehicles, but this shouldn't extend to identical treatment - it's surely better to retain incentives to move away from fuel consumption.
While it's a nice sounding idea, the reality of our efforts has been a bit of motoring welfare for the upper middle class, mostly at the expense of less affluent motor users.
If everything was taxed based on vehicle weight the trucking industry would collapse, surely
Based purely on weight and they'd probably be paying more than now.
But impact on roads is roughly a log scale.
10 times heavier equals 700 times the damage.
A well built road with no trucks and buses tends to last a long time. After a flurry of construction it often needs repaired. If they priced in the full cost it would be uneconomic for many operators.
Will be interesting to see if bigger and heavier utes pay more and if so how much.
But they're also pricing for congestion, so as long as cars are a similar length they all tend to contribute equally
If they priced in the full cost it would be uneconomic for many operators.
They'd just pass it onto the end user of the freight system, and we'd pay either higher shipping charges or more for goods.
People don't seem to understand that the consumer will wear every additional cost the government passes on to industry.
I'm keen to see how they intend to track, catch and penalise all the folks who are chronic non-payers of things like registration, WOF, insurance and road / parking fines, otherwise these parasites will just be ducking yet another payment that they see as optional.
I suspect the networked speed cameras with number plate recognition tech are going to be used to track / estimate everyones mileage (kilometerage??), which might also go a long way towards tracking and stopping those who are dodging their 'optional' vehicle expenses.
A rash of number plate thefts might eventuate.
COVID has shown us the bulk of the population are obedient and compliant, so they'll also pay their mileage as well as for the shirkers.
There was a certain percentage who would not get vax... in Auckland we waited, and waited, and waited at 89%... while these so called most vulnerable seemed.... less interested and less vulnerable then assumed, we waited and waited and waited and eventually they unlocked, then we kicked there sorry ASS into opposition...
hard to reach I believe, I suggest they will be hard to reach to collect tax as well
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