National implied during the election campaign that it could deliver on its big transport promises without lifting taxes on drivers. They played voters like a bassoon.
Everybody knows that things cost money. Yet politicians repeatedly claim they have come up with a clever plan that means voters can have their cake without paying for it.
Labour has been guilty of this. For example, it talked about Three Waters as if ratepayers would be rescued from big bills — when really it was just shifting the cost to water levies.
National’s promise to axe the Auckland Regional Fuel tax and not raise fuel taxes (in its first term) were popular rallying cries on the campaign trail, but it was also just shuffling costs.
One wonders how much emphasis was put on the critical qualifier ‘in the first term’ when talking about this promise in town halls?
It probably wasn’t followed by an explanation that three years’ worth of fuel tax increases would happen at the start of the second term, and that car rego costs would go up instead.
There is only a six month difference between Labour’s gradual path to a 12 cent fuel tax increase and National’s all-in-one go hike in 2027 (with another 10 cents to follow).
Motor vehicle licensing costs will increase 50% over the next two years for most vehicles and the actual transport component of that total will more than double. Surprise!
But these unsignaled fish hooks are not just necessary to fund upgrades to the transport network, they actually don’t go far enough.
The Crown will still be borrowing money to make up the shortfall and seeking advice on how to raise even more revenue from the transport network in the future.
The catch
Raising the vehicle licensing fee to pay for roads is odd. That money is supposed to be for maintaining the motor vehicle register, and the draft Government Policy Statement says so.
“The fees are intended to contribute to the maintenance of the Motor Vehicle Register where the details of motor vehicles are recorded,” it reads on page 42.
One reason why it hasn’t been increased since 1994 could be because the cost of maintaining the register has not increased at anything like the cost of inflation.
Even if that isn’t the case, already a chunk of the revenue reaped from that fee makes its way into the general National Land Transport Fund where it used to pay for other things.
It appears to cost about $54 million to provide the licensing service while the fees raise closer to $200 million, according to a document released by the Ministry of Transport last year
An associated funding and fees review found charges for driver and vehicle licenses had been subsidizing other activities. National’s proposed change increases that subsidization.
This is unfortunate because it means levying all car owners equally, regardless of how much they use the transport network. People who drive less will subsidize those who drive more.
Road user charges and the fuel levy are both a ‘user pays’ type tax. The more you drive, the more you pay into the National Land Transport Fund.
Levying money from licensing fees means a person who walks most places, but owns a car for rainy days, will experience the same tax increase as somebody who drives every day.
Someone who owns two cars will contribute more than someone with one car — despite only being able to drive one at a time. Or, think of a retiree who drives just short distances...
We are only talking about a tiny portion of transport funding here, it’s not the end of the world, but it shows why it might be better to lift user pay taxes by an equivalent amount.
The only good reason to do it this way is because National painted itself into a corner with a purely political promise not to increase certain taxes.
Transport Minister Simeon Brown has kept his party’s election promise but has found a loophole big enough to pull $530 million through.
Interest.co.nz readers and government ministers alike understand there is a lot of infrastructure to be built and that New Zealanders will have to pay for it.
The only debate is about how best to structure that funding; anyone who says otherwise is trying to pull a fast one.
54 Comments
Even Fulton Hogan came out a few months ago with an article questioning how effective cones and traffic management are.
I think it can be safely said that contractors are equally frustrated with the proliferation of road cones. I agree in some situations closures with a sea of orange cones can be quite confusing at times. In this mix add workers in orange dayglows which blend into this panorama.
More importantly, while Fulton Hogan’s broader safety statistics continue to incrementally improve year-on-year, injuries to our employees working in the road corridor and exposed to public traffic are not reducing.
This is despite the increasing controls now employed. This can only lead one to question other factors in play such as driver behaviour, lack of traffic enforcement and the severity of consequences, increasing worker exposure to traffic on the road and the narrow carriageways we have in most rural parts of New Zealand in which to work, noticeably different from Australia.
https://contractormag.co.nz/contractor/contractor-comment/fulton-hogan-…
It's like occupational health and safety in the workplace.
Requirements keep going up, but sadly so to do injury and death. It's almost like mandating safety policy works against human's own survival instincts.
It's funny, you go to safety training, and at the end, the tutor often says something like "when you're back at work, be extra vigilant, because accidents usually go up a bit for people that have recently gone on a training course".
To me its about balance, at the beginning adding safety helps a lot, at relatively low cost, but as you add more an more procedures, they become more expensive to implement, and result and very little gain. People become less likely to follow more and more anal rules to ensure their safety. Its human nature you can preach safety as much as you want but they will not in practice follow trivial rules, they will say they do but they won't. The attitude that 1 life is to many may sound good but I think its the wrong one, if we all spend our lives being scared of dying or getting hurt most will not accomplish much in the lives we have. Here is an example if say safety increases housing cost by 50% less people will be able to afford a home so they will not have a decent place to live, so more die earlier due to bad living conditions.
Also it could be that the perception of safety leads worse outcomes, like some roads where lanes are removed actually saw a reduction in accidents.
Also if you want people to slow down for road works I would suggest taking the signs down when there is no actual road works going on. If 98% of the time when you pass road works there are no road works happening you are much more likely to ignore them.
Health and safety practises wouldn't be going anywhere soon if this got legs.
https://www.nzherald.co.nz/nz/the-11m-price-tag-faced-by-business-owner…
20% is peanuts..... Cameron rd Tauranga initial cost $45M ...Now $97.5M ....lol "Sunlive 11 Feb 2022" — 'Cameron Road has blown out from $45m to $74.5m on the Commission's watch,” she says. Kim is also concerned that the spending will continue to ... NEKMINIT ... "Sunlive 7 Jul 2023" — The project is currently forecast to cost around $97.5 million and runs 3.5km from Harington Street to 17th Ave. That's about $27,857 per metre ...
All that money and its still only 2 lanes each way as it was before they started .... not to mention the businesses that have hit the rocks since construction began... can we even call it construction....destruction more like it....
phalanax,
as I understand it, that's just stage 1, with stage 2 to start next year. I live in Matapihi, so have watched as the Bayfair saga has dragged on for 6/7 years and it will be 'interesting' to see the final cost. In the morning, traffic coming from Papamoa and beyond is backed up past the new flyover, so travel time cannot be faster than before the work started.
I agree maintaining a database of cars, seems to be massively overpriced if you say its $100 per person a year, it isn't exactly huge it would fit normal computer, sure you need a backup and a few staff but hell it will be in the hundreds of millions of dollars a year. I should have got way cheaper since the cost of computing has gone way down.
Also a learners license price is ridiculous too $96.10 to do an computerized test that nobody has to even mark, ridiculous.
Yeah, learners - restricted - full - each coming with a separate cost, I think.
In my day in the US - the computerized test (on road rules) is administered in secondary school - for free; we had simulator's for drivers training - for free; your parents took you out in their car (or you might hire a driving instructor) - and then you paid for a road test with an assessor. Pass that - you got your drivers license but you couldn't drive past midnight until you turned 18 years of age. In other words, the restriction was 'built in' to your age, not your license type.
At least that's how I remember it. The only thing my parents had to cough up was the fee for my road test.
'Interest.co.nz readers and government ministers alike understand there is a lot of infrastructure to be built and that New Zealanders will have to pay for it.
The only debate is about how best to structure that funding; anyone who says otherwise is trying to pull a fast one.'
No Dan, they don't. And it is not. We aren't even able to maintain our current collection of infrastructure, all succumbing to entropy. We are over the peak in global resource and energy terms, and beginning to fight over what's left.
https://www.rnz.co.nz/national/programmes/sunday/audio/2018928484/timot…
Mora doesn't ask 'why? But we don't 'need' more roading where we are headed.
https://www.resilience.org/stories/2024-02-28/unsustainable-goose-chase…
Note his pedigree.
And money is NOT a store of wealth - it a forward bet on energy and resources (sigh). At this late stage, it won't be enough, and being debt, it won't really be anything anyway. Funding is not the issue; supplying stuff is the issue - Marsden Point was a signpost along the way....
I don't disagree with this increase. However in terms of RUCs, weren't RUCs supposed to replace Petrol Excise Duty, as shown by this article during the election?https://www.stuff.co.nz/national/politics/132900566/all-vehicles-to-mov…
Now it looks like National are going to bring in RUCs and also increase Petrol excise duty in the future, rather than reduce it. So isn't this RUC on petrol vehicles now a new tax and a broken promise? Are the mainstream media asking them questions about this?
If the problem is "we aren't spending enough money on infrastructure", then it sounds like we need to have both.
Given how much complaining there is about a lack of infrastructure spend, there seems to be enough public support. Unless they wanted the infrastructure spend, and expected someone else to pay for it.
I feel they are just tricking the public by using loopholes to increase taxes anyway. Labour IMO weren't much better when it came to this, by calling new taxes 'levies' instead etc. The mainstream media and opposition should be asking them some tough questions. But the media is going to be a lot weaker with the loss of Newshub.
looks like the same play book as the key government, increase a plethora of user pays levies and fees,
defund Maintenace on roads to the bare minimum and take all that funding to build new roads.
i was hoping this time around they would use Tolls to pay for new roads whilst leaving funding in place for the maintenance and rebuilding of existing roads.
Wow! This was a real no-no when I worked in the public sector. The Treasury & AG guidelines, which we had to follow, were clear that user fees like registration and driver licensing fees were supposed to only recover the cost of the service. They weren't to be used to fund new roads or other land transport activities - these have their own dedicated taxes/levies (ie petrol excise tax and Road User Charges. The government could also chuck in Crown funding, from general taxation.
This Government must be getting desperate to ignore long established precedent like this.
https://www.treasury.govt.nz/publications/guide/guidelines-setting-char…
https://oag.parliament.nz/2021/fees-and-levies/docs/summary-fees-and-le…
Well, there is some logic in the licensing fee contributing a little bit to road maintenance - if I register a car and only intend to use it on rainy days and to take someone to the hospital, I'd say it is fair to pay to have the privilege of the roads sitting there ready to be used.
In the current dire economic circumstances whilst I don't object to new roads being paid for via a tax being tacked onto vehicle licencing. I do strongly object to such forms of taxation being levied without clarifying that it is a new tax separate from the original purpose of the charge. No doubt we've all had our fill of devious sales tactics of successive Governments, which always eventually backfire in a lack of trust that causes people to seek a change despite that the change will change little in that regard.
However I do very much object to National's proposed "amenity" tax, where properties are subject to taxation of new amenities that increase desirability hence value of a property, such as new roads or a nearby bus stop. Of a similar ilk to a window tax.
Stop telling me I'm going to get a tax cut when you know very well you're going to sweep it all back up with these new fees and levy increases.
Stop trying to be cute and try being honest. Tell us from the start that you're half a billion short and you have to do XYZ. Don't tell me your plan doesn't require an increase to one thing but then not tell me you will be increasing these other things anyway, the net result is the same.
This is why most people don't like you guys.
Nicola Willis needs this to keep her job, as she promised tax cuts or she quits. No problem though as the tax cuts are fully funded and she is 100% sure of her numbers. Would you like to see her modelling? Wont take long as it fits on a page and a half. No cuts to health or education either, so don't worry about that. Everything is in safe, competent, honest hands.
Well, if you don't count school lunches, new classrooms, free public transport to school, ( I'm not sure about school run buses), as part of education costs, yeah. And aren't they talking about canning a new hospital or 2 as well.
But as others said, it's the arrogance and misrepresentation bordering on lying that is getting people upset.
Looting for Landlords, seems to be their mantra. Run down infra and services to benefit property, which they are purely coincidentally heavily invested in themselves. Next they'll be feeling overly entitled to taxpayer allowances while tut-tutting at the poor too...
We already have plenty of roads....
Why do we need new roads -> because we have more cars.
Why do we have more cars -> because we have more and more immigration of people
Why do the immigrants not cover the cost of the new roads they need - > because they arent the skilled immigrants that we need, so taxpayers make up the shortfall.
Solution: encourage existing population to drive less and make sure immigrants will pay enough tax to cover their infrastructure requirements.
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