Fuel tax hike to pay for road costs

Map showing the route of the Tauranga Eastern Link roading project, one of the government's 'roads of national significance'. Photo / supplied

Fuel tax is likely to rise by about 3.5c per litre over the next two years to help fund hundreds of millions in additional government spending on "roads of national significance" such as the Puhoi to Wellsford highway.

Transport Minister Steven Joyce this morning released the Government Policy Statement on Land Transport Funding 2012 (GPS) which details plans to invest about $36 billion over the next ten years in State highways, local roads, public transport road policing and road safety promotion.

The plan makes about $2.95 billion available in 2012/13 for investment in the land transport sector, rising to $3.25 billion in 2014/15 and a total of about $36 billion over ten years which is a similar level of spending to that in current policy.

However, this morning's statement makes some significant changes from the existing plan.

It lifts the funding available for new and improved State highways by $125 million for the first three years to further support the State highway improvement programme including progressing the seven Roads of National Significance.

It also increases the funding available for public transport services by $140 million for the first three years to help support the upgrade and expansion of the metro rail systems in Auckland and Wellington.

The Ministry of Transport this morning said that in order to deliver the programme of investment envisaged by GPS 2012, "it is likely that the government will need to increase FED (fuel excise duty) and RUC (road user charges) in future years".

"These increases could be in the order of 2 cents a litre in 2012 and 1.5 cents a litre in 2013."

Earlier this year Mr Joyce cancelled a planned fuel tax increase of 1.5 cents per litre which was due to come into effect at the start of this month, saying it had been deferred "while economic conditions remain tight".

Also, the increased funding for roads of national significance and commuter rail would be partly met by "reducing the funding available for some activities classes" elsewhere in the Land Transport Fund.

That included money spent on transport planning and on management of the funding allocation system.

"These reductions are important to encouraging greater value-for-money," the Ministry of Transport said on its website.

Meanwhile, Mr Joyce said the the new statement built on the government's progress in supporting economic growth through investment in much needed infrstructure.

"Continued funding for State highways and the Roads of National Significance will help encourage business, tourism and jobs and will improve road-user safety."

"Providing the support necessary to repair the land transport network in Christchurch is also a top priority."

The NZ Transport Agency estimates it will cost about $360 million to $470 million with about $300 million to $400 million of that required for work on Christchurch City Council roads.

The NZ Transport Agency is to meet 75 per cent of the council's roading bill under an emergency funding mechanism compared with the 43 per cent it contributes for usual maintenance spending.