Chris Bishop acknowledges tolling for roads ‘may cause some angst’

Tuesday, 18 June 2024

Infrastructure Minister Chris Bishop has clarified that the Government will consider charging tolls for all new “roads of national significance”, but says they may not make sense in every case.

Bishop said in speech notes released late last week that Transport Minister Simeon Brown had “signalled that each of our new roads of national significance will be tolled”.

Those roads include the Warkworth to Wellsford expressway that is expected to cost $2.3 billion, the “second” Wellington tunnel, and two projects in the South Island, including the Belfast to Pegasus Motorway and Woodend Bypass.

But appearing in front of Parliament’s Transport and Infrastructure select committee on Tuesday, Bishop made clear that tolling roads of national significance was not necessarily a blanket policy.

“We have got an expectation they will be considered for tolling. We are not going to toll them if it doesn’t make sense to toll them,” he said.

The Government has been talking up the potential for alternative sources of finance to help fund a wide array of infrastructure as it seeks to beef-up investment while bringing its spending back into line with tax revenues.

Bishop said there would be people who would not be enthusiastic about tolling and it “might cause angst in some quarters”.

But he characterised the user-pays model as fair, saying “the great advantage of tolls is the people who use the road pay”.

Research published in 2005 by Land Transport NZ, now the Transport Agency (NZTA), stated that tolls typically reduced the benefits of roads “and hence the underlying economic merits” of projects.

That was because some people who might otherwise use a road would be put off doing so by a toll, meaning fewer drivers would benefit from a new road.

NZTA said the business-cost-ratios for state highway and local-road improvements made between July 2021 and May of this year averaged 1.2, weighted by the money spent on each project.

That suggests the expected benefits of those projects only exceeded the expected costs by a margin of 20%.

The 2005 research, which is still available on NZTA’s website, noted that the amount that could be charged in tolls would be reduced if there were “more-or-less parallel free routes”.

It said a review of international literature indicated the economic case for having urban toll roads among a network of “free” roads was “generally rather weak”, but also concluded some urban roads were much more suitable for tolling than others.

A common objection to the “user-pays” model is that more of the cost of services may be met by lower income groups than if they were paid for through general taxation.

However, the downsides of tolls are not referenced in a more recent statement on tolling on the NZTA’s website, which instead sets out only the benefits of tolling.

That statement emphasises revenue from tolls “can be used to construct infrastructure projects earlier than would otherwise be possible using traditional funding sources alone”.

“Paying a toll is seen as a user charge that buys a specific right to use a road, bridge or tunnel. Tolls are therefore generally understood and accepted by road users worldwide,” it states.

Bishop said he was unable to comment on what proportion of the cost of roads of national significance the Government envisaged might be paid for by tolls, but indicated they would not pay for the roads’ full cost.

“Tolling is one of the suite of options that the Government is interested in using,” he said.