How New Zealanders will help pay for the country’s new roads

Key points

The coalition Government has big plans for building new roads – but building new roads does not come cheap.

Transport Minister Simeon Brown has revealed a Revenue Action Plan he says will help deliver critical transport infrastructure sooner.

The plan includes making better use of existing funding tools for the National Land Transport Fund, which is what the Government uses to pay for the development and maintenance of our roads.

But that plan also includes some new revenue streams. Here’s what you need to know.

Road user charges for all vehicles as early as 2027

New Zealanders already help pay for the roads via their vehicle licence (or “rego”) fee, road user charges (RUC) and the petrol excise duty (PED).

The rego fee is already set to increase by $25 in January next year and another $25 in 2026.

Some vehicles are also already paying RUC – namely, heavy vehicles over 3500kg and lighter vehicles that are powered by diesel, electricity or another fuel that isn’t taxed at its source.

READ MORE: Road user charges for all drivers? What Govt’s policy will mean for you

But all drivers will transition to paying RUC instead of a fuel tax by as early as 2027, Brown told the Building Nations Conference today.

“Transitioning to RUC will ensure that all road users are contributing fairly to the upkeep of our roads, regardless of the vehicle they drive,” he said.

Changes to tolling policy

The user-pays system will also extend to new roads the Government has planned.

Brown said Cabinet will look at reforming tolling legislation and make decisions about it this year.

“We expect that NZTA will consider tolling to construct and maintain all new roads, including the Roads of National Significance, and that the Government will support all recommendations,” he said.

Brown said NZTA would soon begin consultation on new tolling proposals for:

NZTA Waka Kotahi said public consultation on the potential tolling of those three roads would open on September 9. It said the final decision on whether or not to toll each road would rest with Cabinet.

“The National Land Transport Fund is under increasing pressure to fund transport improvements and increasing road maintenance costs across the country,” said NZTA Group General Manager Transport Services Brett Gliddon.

“Tolling provides an opportunity for an additional source of revenue to supports major infrastructure projects, bringing efficiency, safety and resiliency benefits to the transport network.”

Brown said it made sense for people who benefit from the new roads to contribute towards those projects.

Finding other new funding tools

The Government is also looking at using tools like Public Private Partnerships (PPPs) and value capture to help pay for transport infrastructure, Brown said.

PPPs are an arrangement between government agencies and private sector companies to finance, build and operate major infrastructure projects.

Value capture is where governments look to recover some of the increased property values private landowners might get from being near new infrastructure. There are several value capture mechanisms, such as special taxes on properties near the new roads.

“The use of Public Private Partnerships (PPPs), ‘Build, Own, Operate, Transfer’ equity finance schemes, and value capture will also enable the delivery of infrastructure in a more efficient manner,” Brown said.

“We have inherited a transport system in need of investment, without the appropriate funding tools to pay for it. Our Revenue Action Plan will result in infrastructure being delivered for New Zealanders sooner and funded by those who benefit most.”