Higher taxes, fewer potholes: How the Government’s transport plan impacts you

Monday, 4 March 2024

• Prime Minister Christopher Luxon and Transport Minister Simeon Brown released their draft transport plan on Monday.

• The Government’s transport plan sets the budgets for NZTA, while given an indication on what to prioritise.

• Brown proposed taking $550m from the combined rail, walking, cycling and public transport budgets, to pay for roading.

The Government has outlined its new transport master plan, which proposes $50 hike to car rego fees, and major cuts for public transport and cycling.

As well as increasing registration fees, the Government also planned to increase the petrol tax and road user charges from 2027 - starting with a 12 cent per litre increase.

But Transport Minister Simeon Brown has warned those tax hikes alone would not be enough to fund his transport plan, and asked NZTA (Waka Kotahi) to investigate 'different ways of funding'.

In the future, more toll roads, congestion charging schemes, value capture taxes and public private partnerships could be used to fund infrastructure, he said.

Why it matters

The Government’s transport plan sets NZTA’s budgets for its entire operation, and tells it what to prioritise.

NZTA funds roads, railways, shipping, cycle and walkways.

The plan also outlines how the agency will fund its work, setting pricing for petrol taxes, road user charges, and vehicle registration fees.

Brown and Prime Minister Christopher Luxon released this Government’s draft transport plan on Monday afternoon.

What it costs

Brown proposed first increasing the rego fees by $25 in January, and a further $25 the year after. That represents a significant jump in the price of registering a car, currently just $106 for a normal petrol car.

He said rego fees hadn’t increased since 1994, and clearly had not kept up with inflation.

Extra money would also come from debt, general taxes, and increases to the fuel tax.

The fuel tax would rise 12 cents per litre in 2027, then six cents in 2028, and four cents per year thereafter, Brown proposed.

He said road user charges - which are paid for diesel vehicles - would also rise at the same rate as the petrol tax.

Changing plans

Brown proposed taking $550 million from the combined rail, walking, cycling and public transport budgets, to pay for roading.

The proposed 2024/25 transport budged included an extra $780 million for state highways and local roads, while the active and public transport budget would fall from what former transport minister David Parker budgeted last year.

Brown said he was prioritising a new “pothole prevention fund” and 15 new 'roads of national significance'.

“All new roads of national significance will be four-lane, grade-separated highways,” he said.

A $550 million decrease for public and active transport represented 20% of the annual budget for those forms of transport.

By the numbers

$6 - That’s the extra tax every Toyota Corolla owner will pay when they fill a tank in 2027.

$550 million - has been taken from the 2024/25 budgets of public transport, cycling and railway projects.

$500 million - of the roading budget had been ring-fenced for ‘pothole prevention’.

60,000 - is the total number of potholes Simeon Brown says were discovered in 2023, a “ten year high”.

$156 - will be the new annual cost to register an average car, come 2026.

The arguments

Labour leader Chris Hipkins says the Government is breaking a campaign promise as it outlines hikes to car rego fees and the price of petrol.

'Luxon said that they weren't going to be introducing new taxes, that they weren't going to be increasing fuel taxes. In fact, they're doing both of those things today,' Hipkins said.

National campaigned on not raising petrol taxes in its first year in government. Brown's policy statement meant the petrol tax and road user charges would remain the same until 2027.

Hipkins said gradual changes would be easier to budget for.

'It's going to be a massive blow to low income households. We proposed to step out the increase over time. They are proposing to introduce an all in one hit and then continue to increase fuel taxes thereafter,' he said.

Green Party transport spokesperson Julie Anne Genter said the Government's transport plan would be worse for commuters and the environment.

“All we’re going to get from the same failed approach is more congestion, carbon emissions and high transport costs,' she said.

Brown said the state of roading, with 60,000 potholes discovered last year, had become a national economic and safety issue.