The Government has confirmed it is now open to the introduction of electronic road tolling in Auckland.
Finance Minister Steven Joyce has told a business audience the Government could support road tolling but will not support a regional fuel tax.
"There is no getting away from the fact that central Auckland is built on a narrow isthmus which makes it hard to get around - and the available land transport corridors are rapidly being used," Joyce said in a speech.
"So beyond the current building programme we are going to have to look at demand management to reduce the reliance on the road corridors, in favour of better use of buses, trains and ferries."
Joyce said the Government is developing a work programme to look at demand management tools including electronic road tolling in the medium to long term.
"But to be clear, we see this as a way to make the roading system work better - not as a revenue raising exercise."
The Government's had an expectation that any road pricing initiative on existing motorways and highways would be as a replacement for petrol taxes and road user charges, not in addition to them.
"And second, I stress that we are not interested in introducing a regional fuel tax," Joyce said.
"Simon Bridges and I have reiterated to Auckland Council this morning that we do not see regional fuel taxes as part of the Government's mix for transport in Auckland because they are administratively difficult, prone to leakage and cost-spreading, and blur the accountabilities between central and local government."
Joyce said they were keen to have a more detailed discussion about ways to tackle the problem, and explore further options for longer term funding for new infrastructure.
One option was looking at using private finance for certain projects, using the proposed Penlink alternative route between the Whangaparaoa Peninsula and SH1 at Redvale in Auckland as an example.
Auckland Mayor Phil Goff has expressed his disappointment at the decision to rule out a regional fuel tax.
"While the Government has the power to rule out a fuel tax, it has a duty to the people of Auckland to come back to council with alternative solutions," he said in a statement.
"Aucklanders are fed up with sitting in their cars on the motorway for hours at a time. It's lost time for them and lost productivity for the city.
"In my view a regional fuel tax is a fair, effective and efficient way of helping close the current $400m a year gap in transport funding."
Goff said putting the burden of resolving the transport funding deficit onto ratepayers would result in a rates increase of about 16 per cent next year.
"I don't intend to do that. Ratepayers have been shouldering the burden for too long. We must find new revenue streams to fund our much-needed housing and transport infrastructure rather than continuing to load the cost of growth on ratepayers."
Goff said if the Government remained adamantly opposed to regional fuel tax, they must urgently come up with another workable and sustainable solution.