Road Pricing Required To Bridge Transport Funding Gap

New Zealand needs to properly price the cost of its roads as soon as possible, and better charge the cost of those roads to users. That is the stark message from Infrastructure New Zealand who says it’s the only option if the country is to deliver on the transport infrastructure required to keep our economy and communities moving through the 21st century.

“The alternative is New Zealanders having to put up with more traffic jams, unreliable public transport, a slow and cumbersome freight network, along with inadequate cycling and walking options,” says Infrastructure New Zealand Chief Executive Nick Leggett.

“The new Government is commendably ambitious for land transport, with major commitments being made in roading maintenance, RONS and public transport. However, those commitments can only be realised through adequate and sustainable funding.”

“When you look at the National Land Transport Fund, it is increasingly being challenged with revenue as vehicle types and use change. Councils are also struggling to fund their local transport obligations.”

“The costs of servicing PPPs are visible now in the accounts, but those roads have not provided the revenue stream they should have because they were not tolled. This is eating into funds that could be used for road maintenance, public transport, and other new projects. “

Linda Meade, of specialist infrastructure advisory firm Kalimena Advisory, told Infrastructure New Zealand, “the growing number of electric vehicles and the complexity created with dual-fuel vehicles like plug-in hybrids, suggests that the days of levying charges on fuel to fairly and efficiently raise revenue to fund our roading system are surely numbered.”

“But the transformational benefits come when we consider moving all road users not just to Road User Charging – RUC - in its current form, but to electronic road user charging. This will improve revenue stability and predictability for the National Land Transport Fund, enable more equitable charging across the fleet, and provide for future adaptability and flexibility.”

Infrastructure New Zealand has praised the changes already made to increasing revenue in the land transport system. Recently announced raises in vehicle registration fees are the first increase for 30 years, and electric vehicles and plug-in hybrids now contribute through the RUC system. Moving all vehicles to electronic RUC, as the Government has signalled, is vital in the future.

“Tolling, time-of-use charging, equity finance and value capture present a range of funding tools that can be implemented to bridge the funding gap in the short term and provide a full suite of user pays funding streams to sustain the National Land Transport Programme in the longer term,” says Leggett.

“We are calling on work on draft legislation to be accelerated and to cover the ability to generate more revenue from the users of roads. There has been too much waiting around as officials and successive Governments dilly-dally.”

“Increasingly, New Zealanders understand that there is no free lunch anymore. Our population has outgrown our infrastructure, which no longer meets our aspirations for the future. If we want modern transport infrastructure provided and maintained to a world-class standard, then we need to find new ways to pay for it. Old systems just won’t cut it.”

“Tolling and some sort of time-of-use charging are common features of transport systems in most developed countries, and yet we still debate their merits here,” says Leggett. “The time has come to move on from the debate and get on with the execution. If we don’t, the slow decline in our transport infrastructure will continue to the detriment of our economy, our communities, and the environment.”

“Concern from road users around change is understandable. The current funding situation is unsustainable and it's going to take leadership to make positive change."

Infrastructure New Zealand has assessed as part of its Priorities 100 Days Report Card that legislation incorporating road pricing could be introduced this year. The full report card is available at http://infrastructure.org.nz/wp-content/uploads/2024/04/Infrastructure-NZ-100-Days-Priorities-Report-DIGITAL.pdf.

Kalimena Advisory has reviewed electronic Road User Charging as part of their ongoing Insights article series, available on their website at https://kalimena.nz/insights/are-electronic-road-user-charges-the-best-way-to-fund-our-transport-system

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