Car rego hike to fund $20 billion transport plan

Monday, 4 March 2024

The Government has unexpectedly announced a $50 hike for car registration fees to pay for a $20 billion transport plan that includes 15 four-lane highways, a $500m pothole fund, and $2b for rail and Auckland bus corridors.

The National Party campaigned on redirecting transport spending into road building, promising at the same time to reduce cost-of-living costs by pausing increases to petrol taxes and road user charges.

Now, faced with the prospect of paying for its transport plan, the National-coalition Government has decided a hike to car registration fees and a delayed but heftier increase to petrol taxes and road user charges will pay for it.

'We need to ensure that we have got revenue to be able to invest in the road network,“ Prime Minister Christopher Luxon said.

“I think the way we're trying to digest it, in two $25 increments, is actually a smart way to go about it.”

The abrupt announcement of the provisional transport plan came after a Cabinet meeting on Monday, at a press conference at which Luxon was expected to face questions about his quick reversal over claiming a $52,000 accommodation “entitlement” and the Government’s response to the closure of one of the country’s major news producers, Newshub.

The Government Policy Statement on land transport outlined at a high level the coalition Government’s transport projects for the coming decade, and $20b of spending in the coming three years.

Broadly, the Government is focusing on major road building at the expense of hundreds of millions of dollars the prior Labour Government intended to spend on public transport and walking and cycling improvements.

Labour leader Chris Hipkins said the proposed increase in fuel taxes would be a “massive blow to low income households”.

“Christopher Luxon made cost of living his number one election commitment. He said that they weren't going to be introducing new taxes, he said that they weren't going to be increasing fuel taxes. In fact, they're doing both of those things.

“The Government has got their priorities wrong when they're doing things like hiking fares for public transport users, cutting public transport, increasing vehicle registration fees, and increasing fuel taxes, when they said during the election that they were going to make cost of living the number one priority.“

Green Party transport spokesperson Julie-Anne Genter said the transport plan was “extreme” and doubled-down on the “failed approach of the last century”.

“It looks like they're completely gutting walking and cycling and, buried in the detail, it says that big roading projects cannot use their funding for walking and cycling improvements, which is a huge departure from even the last National Government.

'This is totally unbalanced. I think Steven Joyce as transport minister was more balanced than Simeon Brown. It's like he has a vendetta against anyone not using a car.“

Motor Trade Association spokesperson Simon Bradwell was sympathetic to the increased costs motorists would face while already grappling with the cost of living crunch. “No one needs another hit on the wallet.”

However, he noted the work was “essential” as the state of New Zealand’s roads were “not great”. He said potholes plaguing parts of the country would only get worse because of climate change. “The pothole problem is nationwide.”

Bradwell said New Zealand's registration fees were “very low by world standards” and had not been substantially changed for some time ‒ the last was in October 2023, when administrative fees for vehicle licensing renewals increased between $4.56-$5.16.

Cycling advocates expressed deep concerns about the Government's draft transport plans.

Cycling Action Network spokesman Patrick Morgan said cutting investment in cycling, walking and public transport was “unacceptable”.

“That would cost lives, damage health, deepen the climate crisis, and harm our communities.

“Wasting billions on highways means that urgently needed transport projects which deliver safety, emission cuts, and better transport choices, are delayed or cancelled.”

Central to the Government’s plan is the return of four-lane highways called “Roads of National Significance” that are promised to be built.

This list includes parts of the Whangarei to Auckland road, Tauranga to Auckland route, Mill Road and East West Link and North West Alternative highway in Auckland, Hamilton Southern Links, Petone to Grenada Link road in Wellington, the Hawke’s Bay expressway, and a second Mt Victoria tunnel.

Public transport projects to be prioritised include completion of rail projects in the lower North Island. The battle to pave over potholes will receive a dedicated $500m “pothole prevention” fund.

Beyond the list of “Roads of National Significance” promised by National, much political focus will be on how the Government will afford the billions in projects, amid reports National may have under-priced its transport promises.

While National during the election campaign ruled out increases to petrol taxes and road user charges in their first term of Government, on Monday Brown said the motor vehicle licensing fee would increase by $50 in the next two years. That would add $660m to transport coffers in the coming three years.

'The reality is we committed to not increasing [fuel excise duty] and [road user charges], we're not doing that. But the reality is we are raising some revenue through the motor vehicle registration fee to support building and maintaining our roading network,“ said Transport Minister Simeon Brown.

“It’s a one-off fee people pay when they register the vehicle … and under this we're going to make sure that funding goes back into the roading network.”

That would be followed by increases of 12 cents, 6c, and then 4c to petrol taxes and road user charges from 2027. The Labour Government had proposed a total 12c increase by July 2026 - only six months before National plans the same increase.

The Crown would also provide both a $3.1b grant and $3.1b loan to the National Land Transport Fund, which pays for transport infrastructure.

The Government also expected that different funding models ‒ such as public-private partnerships and taxing developers who gain from infrastructure being built ‒ will be used pay for projects. It was also expected that local government will hike public transport fares.

The transport plan will be consulted on until April 2, and the final plan will be produced later in the year.

– Additional reporting Gianina Schwanecke