'A change that simply has to happen': Road user charges for all cars a step closer
The government is inching closer to replacing petrol tax with electronic road user charges, or RUCs, on all light vehicles, in what the Transport Minister calls the biggest shake-up of road funding in half a century.
Cabinet has agreed to pass law changes next year to modernise the existing RUC system, but no date has yet been set for the full switch-over.
Speaking at a conference in Wellington, Transport Minister Chris Bishop said the process would be simple - like paying a power bill or Netflix subscription online.
It will put an end to the existing two-tier system where petrol users pay fuel excise duty (FED) of about 70 cents a litre at the pump, while diesel, electric and heavy vehicles pay paper-based road user charges (RUC) based on distance they travel.
While no date has been set for a full transition, it's expected a new digital system whereby all motorists pay a bill online will be "open for business" by 2027.
"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," Bishop said.
He said petrol vehicles with better fuel economy contributed less FED per kilometre towards road maintenance, operations, and improvements.
"We are also seeing a fast uptake of fuel-efficient petrol hybrid vehicles. In 2015, there were 12,000 on our roads, while today there are over 350,000," he said.
Bishop said as the vehicle fleet changed, the way it was funded had to follow.
"It isn't fair to have Kiwis who drive less and who can't afford a fuel-efficient car paying more than people who can afford one and drive more often," he said.
"This is a change that simply has to happen. The government has recognised reality and is getting on with the transition."
The coalition's transition will happen in stages, beginning with legislative and regulatory reform to modernise the current road user charges (RUC) system and faciliate private sector innovation.
"The current RUC system is outdated. It's largely paper based, means people have to constantly monitor their odometers, and requires people to buy RUC in 1000km chunks," Bishop said.
"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 said a handful of E-RUC companies already did this for about half of the country's heavy vehicle fleet and there were several companies, both domestic and international, with technology that could make complying with RUC cheaper and easier.
Law changes the government is progressing 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 NZTA's roles as both RUC regulator and retailer to foster fairer competition
- Allowing bundling of other road charges like tolls and time of used based pricing into a single, easy payment.
Bishop promised the changes would support "a more user-friendly, technology-enabled RUC system" with multiple retail options available to motorists.
"Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy," he said.
"I expect to pass legislation in 2026, 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."
The coalition expects the RUC system will be 'open for business', with third-party providers able to offer payment services and a consistent approval process in place by 2027.
"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," he 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."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Otago Daily Times
22 minutes ago
- Otago Daily Times
'We'll be the last manufacturer left': Chch business keeps craft wool processing in NZ
By Penny Miles of RNZ The country's last operational woollen dye house and spinning mill has been saved from the scrap heap. Christchurch-based Wild Earth Yarns is taking over manufacturing equipment belonging to Napier company Design Spun, which is closing. The family-owned company is the manufacturer of high-quality hand-knitting yarn from super-fine merino wool, possum fibre and strong wool. "What that means for us is massive expansion," Wild Earth Yarns factory manager Blair McLaughlin said. Yarn from its factory in the Christchurch suburb of Bromley is used in textiles, knitting and merino socks. The newly purchased machinery can also manufacture mohair and alpaca fibre. And a woollen bouclé yarn can now be made for the weaving market. McLaughlin said if they had not bought the heavy machinery, it would have been scrapped. "We'll be the last worsted yarn manufacturer left in New Zealand." Most of the country's wool clip is sent overseas as greasy and clean fibre to be processed, but Wild Earth Yarns was committed to local manufacturing. "Obviously there's a rising demand for local traceable yarn," McLaughlin said. "We can see a worldwide trend of moving away from synthetic materials and wanting to use natural biodegradable fibres." It will add up to 15 more staff as it scaled up its operation. He said the company was thrilled to carry on Design Spun's legacy. Moving the machinery to the South Island would be a significant logistical operation. McLaughlin, alongside his father Graham, had been in Hawke's Bay planning the big move. Graham had the engineering skills to keep the machinery operational. "We'll start dismantling and preparing to ship to Christchurch at the start of next month," McLaughlin said. "There will be a lot of moving parts over the operation to get it up and running again." Meanwhile, the owners of Design Spun's dye plant and spinning mill in Napier were disappointed they could not find a local buyer to take over the operation, based at Onekawa. Managing director Brendan Jackson said it was bittersweet that no one in the region was lining up to take over the firm. Around 25 workers would lose their jobs when the production moves south. Around 60 percent of the business was in the hand-knitting sector, with the balance going into weaving and hosiery contracts. "Design Spun as a textile company has a long commitment and support for the natural fibre industry and our preference was to sell the business and keep production here on site here in Napier," Jackson said. "It's been an 18 month process for us. We've got retiring and exiting executive directors." "The dye house and spinning mill are all moving to Christchurch, they have bought all the equipment." But a silver lining was Wild Earth Yarns swooping in to use the machinery in the south. "We've got the next best thing, which is maintaining the capability of processing but on another site."
The Spinoff
an hour ago
- The Spinoff
Cheaper petrol on its way under new system – but will drivers end up paying more?
While Chris Bishop calls it the biggest change to road funding in 50 years, details on how the new system will work remain scarce for now, writes Catherine McGregor in today's extract from The Bulletin. Major shift from fuel tax to pay-per-km The government has announced it will scrap fuel excise duty and move all vehicles to a system of road user charges (RUCs), in what transport minister Chris Bishop called 'the biggest change to how we fund our roading network in 50 years'. He said the surge in fuel-efficient, hybrid and full electric vehicles had eroded the longstanding connection between petrol consumption and kilometres driven. Under the new system, charges would be based on distance travelled, vehicle type, time and location. The timeline is still vague: Bishop expects legislation to pass in 2026, with the system 'open for business' by 2027. But a full transition date for light vehicles remains deliberately unannounced, with Bishop explaining the government is 'focused on getting the system right rather than rushing its rollout', reports the Herald's Jamie Ensor. Privatised and digitised Alongside the policy shift comes a sweeping modernisation of the road charging system. Gone will be the paper labels stuck to windscreens, replaced by a fully digital e-RUC system. The NZTA's dual role as both regulator and RUC retailer will be split, with private firms taking over the collection and administration of charges. The idea is that this will drive innovation and reduce compliance costs by allowing the market to offer high-tech solutions, such as integrations with in-car computers. '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 said. Flexible payment options like monthly billing and post-pay models are being considered, and RUCs could be bundled with tolls and congestion charges in a single bill. As Luke Malpass writes this morning in The Post (paywalled), the new system is being designed with one eye firmly on a future where our most expensive roads are funded with tolls, and ease of payment will be key to getting people to use them. 'Roads have to be paid for somehow,' he notes. A pattern of reform The transport minister's announcement came as a surprise to many, but the move had been clearly signalled for years. National ran on eliminating fuel taxes and the policy was part of the National-Act coalition agreement. Last year the government scrapped the Auckland regional fuel tax and oversaw the imposition of RUCs on electric vehicles, ending a long-standing exemption. These earlier moves laid the groundwork for yesterday's grand shift. As the number of petrol hybrids on the roads climbs – from 12,000 in 2015 to 350,000 today – there's a growing mismatch between fuel tax contributions and actual road usage, Bishop said, adding that lower-income drivers of older cars are effectively subsidising wealthier owners of hybrids and EVs. The missing details While the move has been widely framed as a step toward fairness and future-proofing, many of the key details remain unresolved, writes Stuff's Michael Daly. One key question: how much drivers will pay. Bishop gave no indication as to how much the government is planning to charge different vehicle types under the new system. Currently, light diesel vehicles pay $76 per 1000km, but that figure may not translate directly to petrol vehicles. Owners of small, fuel-efficient cars could be forgiven for worrying they'll end up paying more under a RUC system, regardless of the weight class tiers. There are also concerns about the cost of privatising tax collection. 'The only people who will see any benefit from this scheme are the corporates who take their cut to gather the tax,' said Fleur Fitzsimons of the Public Service Association, whose members include NZTA employees. As the legislation progresses and the 2027 rollout approaches, the government will need to spell out what motorists are actually signing up for – and how much they'll be paying.
RNZ News
an hour ago
- RNZ News
Road user charges: AA backs shake-up but wants low admin costs
Photo: RNZ Private companies will need to keep the costs of running the government's new road user charges scheme as low as possible, the AA says. The government is inching closer to replacing petrol tax with electronic road user charges on all light vehicles, in what Transport Minister Chris Bishop calls [ the biggest shake-up of road funding in half a century]. He says it'll be fairer and will be like paying a power bill or Netflix each month and will be in place by 2027. The changes will put an end to the existing two-tier system, where petrol users pay a fuel excise duty of about 70 cents a litre at the pump, while diesel, electric and heavy vehicles pay paper-based road user charges based on distance travelled. However, Labour says the timing of the coalition's transition to a universal road user charges system risks "clobbering" motorists with more costs. AA's policy director Martin Glynn said his organisation is also worried about how much motorists would have to pay under the new scheme. He told Morning Report he was unsure if it would be more expensive. At present the minimum road user charge kicked in once a light vehicle had travelled 1000km. That was $76 and $12-$13 for an administration fee. With private providers being brought in to run the revised scheme they would need to be making money, Glynn said. "We really want to see the administration costs be as low as possible." He agreed with the Minister that with more vehicles becoming more fuel efficient, the current petrol tax penalised those with older vehicles. "It's become more unfair over time and it's going to become more unfair if we don't change." The current system of buying RUCs was "a bit clunky", he said. Those using diesel or a heavy vehicle purchased RUCs online from the NZ Transport Agency or they could go to an agent. Motorists needed to keep an eye on their odometer to ensure they stayed up to date. The other problem was the the RUC came in the mail and needed to be displayed on the dashboard. AA supported Bishop's plan to make the system fully electronic. Annual warrant of fitness checks were the main way to ensure compliance at present. "But it's fair to say it's difficult to enforce being an annual system so there's a fair degree of evasion and avoidance and that's something that will have to be addressed in the transition." Heavy vehicles already have an ERUC, a device in the trucks that monitors kilometres and location.
