Scrapping petrol tax could be transformative. But will it?
Some people travel a lot, creating disproportionate harms on people and the planet, such as pollution, injury risk and physical inactivity.
Others cannot afford to travel enough, missing out on things that are important, such as catching up with loved ones or healthcare appointments, or end up having to forego expenditure on other important things, such as food.
Replacing fuel excise duty (or petrol tax) with electronic road user charges for all vehicles – as announced by Transport Minister Chris Bishop last week, offers an opportunity to transform the way we fund and pay for our transport system in a way that works for people and the planet – by reflecting the true costs imposed when we use the roads.
Bishop said 'it isn't fair to have Kiwis who drive less and can't afford a fuel-efficient car paying more than people who can afford one and drive more often'. And on the whole, we agree.
We know that those households with the lowest income drive far less (about 100km a week less) but also have to spend a much greater proportion of their income on getting around (16 percent of income compared with 9 percent or higher-income households). Those on lower incomes are also far less likely to be able to afford an electric vehicle with cheaper running costs, instead paying the relatively more expensive petrol tax.
However, Bishop's proposal represents a narrow view of the harms, or wider costs, of driving to society. It is largely based on the assumption all vehicles should contribute 'fairly' (based on weight and distance travelled) towards road maintenance, operations and improvements.
But a pricing structure that also accounts for the costs to our health system of injuries, pollution and physical inactivity caused by the transport system, might also include differential charging for different types of vehicles.
For example, we know that SUVs cause more severe injuries to those outside of the vehicle, and while EVs reduce tailpipe emissions, they still contribute to congestion and injury risk. The proposal does suggest that weight, as well as distance travelled, will be factored into pricing; however, it should also consider the damage that heavier and larger vehicles do to people and the environment.
A change in the way we are charged for using the roads offers a real opportunity to design a progressive charge that alleviates costs pressures for those already struggling to pay for the driving they need to do, while reducing levels of driving overall. One way to achieve this would be through increasing the rate per km, above a certain amount of kilometres driven.
Given the costs involved in running and operating the scheme, and that this needs to be revenue generating for Government, it seems unlikely there will be a reduction in the cost of travel in real terms for everyone. However, if the Government is committed to fairness, it needs to ensure costs don't escalate for those who can least afford it and who have few alternatives.
The proposed changes to road user charges are most likely to be successful and acceptable if they are accompanied by investment in public transport, walking and cycling and alongside strategic urban planning that supports local access to the things we all need such as shops, schools and sports grounds.
The most straightforward way to ensure that charging for using the roads doesn't force people into situations where they have to forego other essentials, is to ensure that it's easy and safe to get around in other ways, or that we don't need to travel as much.
For both fairness and health and wellbeing we need to continue to improve travel options other than driving. Bishop presented this as a new way to fund our roads, but we should be taking a more holistic view – this is an opportunity to think about how we fund our transport system. Using revenue raised to reduce the need to drive can make charging for driving more acceptable.
Bishop said, 'This is a once-in-a-generation change. It's the right thing to do, it's the fair thing to do, and it will future proof how we fund our roads for decades to come'.
This policy has the potential to be truly transformative and be part of creating a transport system (not just roads) that is fairer, and healthier for everyone. It can be done. The question is, will it?
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