The Ministry of Transport released a discussion document titled Driving Change: Reviewing the Road User Charges System in January 2022.
The consultation looks at possible changes intended to improve the road user charges (RUC) system and support the uptake of low carbon vehicles. The key topics in the discussion document include:
- how RUC might be used to charge for greenhouse gas emissions and other factors beyond damage to the roads (like noise pollution and congestion)
- how light electric vehicles (EVs) owners can transition into paying RUC when the exemption for EVs ends in March 2024
- how RUC’s compliance regime can be improved.
Other possible changes being considered include removing paper label requirements, transitioning CNG/LPG vehicles into the RUC system, and mandating electronic RUC for heavy vehicles.
Infrastructure New Zealand’s key position is that RUC should continue to be collected and used for the building, maintenance and operation of our land transport system only. We support changes that will make the RUC system more efficient, easier to administer and easier for motorists in terms of compliance.
We are not convinced the RUC system is the appropriate mechanism to account for negative externalities such as air or water pollution or accidents, especially when both are already being managed through pricing via the Emissions Trading Scheme and the ACC scheme. In our submission which concentrates on the discussion document’s strategic and technical policy aspects, we express disappointment that the discussion document falls short of discussing the potential ‘double-dipping’ and ‘over-recovery’ that could occur.
We have further argued that extending externality charges would not necessarily change behaviour, especially where that charge is “priced” into the RUC. The Emissions Trading Scheme component/levy, for instance, has been “priced” into fuel prices and has not necessarily changed behaviour.
The Auckland Regional Fuel Tax is another example of where the extra fuel tax has been absorbed by motorists as part of the fuel price, and has not necessarily changed behaviour. While this regional fuel tax was not geared to change behaviour, the fact remains that managing externalities through pricing that is lumped onto the RUC is highly unlikely to change behaviour. Any further added cost would thus simply become a revenue generating scheme.
The discussion document also makes reference to the RUC system currently not recognising costs such as congestion, and that the Ministry of Transport is interested in looking at whether “we should be able to consider some of these other costs when setting RUC”. We have taken issue with this approach since the discussion document appears to have little to no regard for the extensive work that has already been undertaken regarding the case for introducing congestion charging/road pricing in Auckland through The Congestion Question project, which the Ministry of Transport and Waka Kotahi NZ Transport Agency have both been involved in.
The document also falls short of taking into consideration the Transport and Infrastructure Select Committee inquiry on congestion pricing in Auckland which, in its range of recommendations, suggested that the Government progress legislation to enable New Zealand cities to use congestion pricing as a tool in transport planning.
An e-copy of our submission can be accessed on our website.