Officials say Northland highway relies on fuel tax hike Government looking to axe
Thursday, 9 April 2026
Official advice says a Northland motorway set to be a flagship project for the Government needs fuel taxes to rise to pay for it.
It comes as ministers have warned it’s unlikely they’ll increase taxes at the pump in the middle of a fuel crisis.
The Warkworth to Te Hana highway will be 26 kilometres long and include two 850 metre tunnels in the Dome Valley.
It is part of the Government’s roads of national significance programme and is part of the wider 100km Northland corridor which aims to link Whangarei to northern Auckland via three four-lane motorways.
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The road was expected to be delivered via public private partnership (PPP) - the same type of arrangement which built the Transmission Gully motorway north of Wellington.
It means that the private sector designs, builds and operates a project then the Government pays for that work in payments, usually over decades.
Due to commercial sensitivities regarding the agreement it is not known how much the construction cost for the road will be, but it is expected to cost billions.
An indicative cost estimate from the end of 2023 put its price tag between $2.9 and $3.75 billion.
A cabinet paper from July seen by The Post shows that the kitty which pays for all of New Zealand’s roading projects - the national land transport fund (NLTF) - has enough money to pay for the road’s PPP payments however, that relied on fuel taxes to increase to levels required under current legislation.
That would see a 12 cents per litre hike in January next year, a further 6 cents per litre increase in January 2028 and an extra 4 cents a litre in 2029 -- with equivalent Road User Charges hikes for diesel, hybrid and electric cars.
In recent weeks, there had been talks that taxes might not rise as New Zealanders grappled with soaring fuel costs.
In a statement provided to The Post, Bishop said no decision had been made on the fuel excise tax and road user charges but noted it was unlikely they would go up during a fuel crisis.
“I’m very conscious that any change to those settings would have a direct impact on the funding available for transport projects.”
He was confident that the project would go ahead on time, with diggers in the ground at the end of the year.
“It is worth noting that unitary payments on the PPP are not scheduled to begin until 2034.”
In 2022 the Labour-led Government cut the fuel tax by 25 cents a litre after the Ukraine War broke out.
Writer for the transport advocacy group Greater Auckland, Connor Sharp told The Post the document showed that the project was “really, really expensive”, despite the fact its actual cost was redacted.
“The cost of this project is so big that if you tried to fund it just through the private market, through a public private partnership, you would have to get a crown loan to subsidise some of that.”
Sharp believed it would cost billions when not even factoring in the PPP finance payments for the projects.
“After a 25-year period of repayments you’d probably be looking back two to three times that initial sticker price.”