The Coalition Government is proposing hiking car registration fees by $50 to help fund a draft transport plan worth $20 billion over the next three years.
This would raise an extra $660 million to contribute to the transport plan. Revenue from fuel taxes, road user charges, and the licence fee will bring in $14 billion across three years.
National has kept its promise to not lift fuel taxes this term but instead plans to deliver a supersized 12 cent hike in 2027 with six and four cent increases thereafter.
While still in Government, Labour proposed lifting the fuel tax by the same 12 cents by 2026 — except it would do so in smaller steps of 2 cent or 4 cent increases each year.
National opposed this, saying it was able to deliver its transport plan without the “heavy burden” of petrol tax hikes in its first term.
It did not say it would merely delay the hikes, nor that it would significantly increase motor vehicle registration fees.
The proposed $25 increase at the start of 2025 and 2026 would increase the annual cost of registration by 50% for most vehicles. The licence fee component would more than double from $43.50 today.
Transport Minister Simeon Brown said the licence fee hadn’t been increased since 1994 and inflation had effectively halved its value.
“We need to fund the infrastructure New Zealanders expect to maintain our network and build the roads and rail infrastructure required to unlock growth and economic growth and productivity,” he said.
Prime Minister Christopher Luxon said the economy will be in better shape by 2027 and therefore households would be able to afford the 12 cent tax hike.
The Crown will also borrow an additional $3 billion to give to NZTA/Waka Kotahi to help cover the funding shortfall that comes from delaying the tax increases.
Even once all the new tax increases have kicked in, the road network will not be raising enough revenue to cover the Government top-ups being offered this term.
The agency has been instructed to find ways to raise even more money from things such as road tolls, congestion charging, and transitioning all vehicles to road user charges.
What will it all be spent on?
The draft transport plan proposes spending $6 billion upgrading state highways, $2.1b building public transportation, $1.2b improving local roads, and $510 million on walking and cycling.
There will be $4.8 billion set aside for “pothole prevention” on state highways and local roads in addition to a $4b “operations” budget for those two types of roads.
Pothole prevention money has been ring-fenced to be spent on resealing, rehabilitation, and maintaining drainage. This used to be included in a general maintenance category.
Public transport services would get $2.3 billion across the three year period and the rail network another $1.6b.
The Coalition has also outlined 15 “roads of national significance” which will be prioritised for funding. These will be large four lane highways and would be eligible for fast-track consents.
Brown said he wanted as many as possible to include private investment and could be funded through tolls, or even be privately owned and operated.
Eight of these roads would be connected to Auckland and three would be in the South Island.
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