The Government is proposing to increase transport funding to a record $20.8 billion over 2024-27 but the road transport industry is hitting out at the plan and the tax hikes announced with it.
Prime minister Chris Hipkins and transport minister David Parker announced the much-delayed draft Government Policy Statement (GPS) on land transport on Thursday at the site of a new railway station being developed for Drury.
It sees an increase of $5.3b, up 34%, on 2021-24 which they say will enable a “major boost” to road maintenance, along with key critical new roading and public transport projects.
The draft GPS 2024, which guides how funding will be allocated to different transport activities, increases the investment range available to essential maintenance of state highways and local roads, including pothole repairs, by 41% to between $5.4b and $8.1b over 2024-27.
Over the next three years it proposes a minimum level of investment of:
- $5.4b in road maintenance ($2.4b for local roads and $3b for state highways)
- $3.8b in road improvements ($460m for local roads and $3.4b for state highways)
- $3.6b in public transport ($1.9b for running services, $1.7b for public transport infrastructure)
- $1.5b on safety programmes like road policing and road safety advertising
- $1.2b on upgrading and maintaining the rail network
- $500m on walking and cycling improvements.
“Some of the additional funding needed will be raised by small increases in petrol taxes and road user charges,” Parker says
“These sources fund the core of our transport networks. Past governments have regularly increased these charges, and this will commence again.”
The increase in the first year is proposed to be split into an initial two cent increase, with another two cents six months later.
This is to be followed by a four-cent annual increase in 2025 and again in 2026 – a total increase of 12 cents over three years.
A two cent per litre increase in petrol taxes, equates to a 44 cent per week increase in cost to the average motorist, or a 0.9% in the cost of petrol (including GST) at a petrol price of $2.50 per litre, Parker says.
The increases in petrol taxes and road user charges will raise the total revenue from petrol taxes and road user charges from $13.1b to $14.5b over three years.
Other proposed funding sources for the draft GPS 2024, in addition to petrol taxes and road user charges, are:
- Crown grant to the National Land Transport Fund ($2.9b – inclusive of CERF below)
- Crown loan to the National Land Transport Fund, to be repaid over 10 years from petrol taxes and road user charges ($3.1b)
- Climate Emergency Response Fund contribution, dedicated to walking and cycling activities ($500m)
- Safety camera and fine revenue, dedicated to safety initiatives ($300m)
‘GPS won’t deliver’
Road freight body Transporting New Zealand is criticising the draft GPS which it says fails to adequately prioritise road network resilience.
Interim chief executive Dom Kalasih says the proposal will result in major tax hikes for road users, while failing to prepare the roading network for the future.
The proposed increases in road user charges alone would add thousands of dollars to the cost of operating a truck and trailer each year, that trucking companies would be forced to pass on to consumers, he says.
“At a time when New Zealanders are grappling with a cost of living crisis and a series of devastating weather events, the draft GPS completely misses the mark.
“The Government needs to be prioritising the fundamentals: a well maintained state highway network with strong regional connections that can transport people and freight safely and reliably.”
Kalasih says the road transport industry already pays its fair share of tax compared to other road users.
“It’s time other road users starting paying more of their share of the costs and the same goes for rail freight. It’s also time that investing the money that is collected needs to be focussed on benefiting those that are paying for it.”
Transporting NZ has consistently called for a road network resilience to be the overarching GPS priority, including substantial network improvements and maintenance.
This year’s severe weather has highlighted the vulnerability of the country’s regional connections, and the important of maintaining alternative routes, Kalasih says.
“Another disappointing aspect is that this draft GPS is months late and it talks about a project being underway to look the future of revenue in the transport system. Funding is the absolute key and we really hoped we’d see much more advanced thinking in this regard.”
Kalasih is calling for the Government to reconsider its current approach.
“GPS sets out transport priorities for the next ten years. This current draft isn’t going to prepare our transport system for the major challenges it will face over that time, particularly severe weather and an increasing freight task. We’ll be hammering that point home in our feedback to Government.”
