Petrol powered vehicles pay around 70 cents per litre at the pump as fuel excise duty (FED), while diesel powered, electric and heavy vehicles pay road user charges (RUC), based on distance travelled. Plug in petrol hybrids pay a mix of FED and RUC.
The Government’s proposed changes to switch all vehicles to RUC will mean they no longer have to run two different schemes and vehicles will be taxed at more equal rates.
It will also update RUC’s paper-based recording and payment system, to a digital one that is easy to use. “As simple as playing a Netflix subscription”, Transport Minister Chris Bishop says.
So, the ultimate goals seem good but how this is going to work in practice is going to be an important thing to get right. Not least because the money people and businesses pay as fuel tax or RUC goes into maintaining existing roads and building new ones via the National Land Transport Fund.
The AA supports the move to universal RUC over time, as a fairer way to charge for road use.
AA members have shown over many years that they want to see improvements made to the road network.
An efficient collection model is hopefully part of the funding system that will deliver roads that are well looked after, resilient and reliable for communities like ours in Northland.
Roads like the Warkworth to Whangārei Northland Corridor are going to be critical to our region’s future but they come with a hefty price tag.
The new RUC system will be crucial to gathering funding for infrastructure that will help people build better lives.
There are aspirations that the new technology used under a single RUC system will also allow other road charges like, tolls and time of use congestion charges, might be able to be incorporated into a single payment system.
This possibility seems logical, but also raises some privacy issues most particularly around tracking individual vehicles and what data is actually collected.
Cost too is an issue. The average age of the New Zealand car is 15 years.
There is a great variation in existing technology, and how this new system will fit into all of that.
The question also arises about how easily people will transition to a new way of paying for the right to use the road. Excise is collected at the pump while RUC is currently paid for online.
There is a question about how the legitimacy of road use is policed.
The possibility that RUC will be checked every time you get a WOF raises the question about policing of WOFs. The integrity of the collection system needs to be sound for us to be comfortable that we are all being treated equally and fairly.
The AA will be following the work on moving the whole fleet to RUC closely. We want to see costs that are fair and strike the right balance between being affordable, to enable people to travel at a reasonable cost, while also funding the critical road infrastructure our country needs.
New Zealand is the first country in the world, to propose a universal RUC, so there is a lot of territory to cover and we are in relatively uncharted waters. My thanks to the NZAA advocacy team for their help with this independent and helpful assessment about how the system might work.
