As expected, today the government announced that petrol taxes and road user charges will increase (by 2c a litre and 4.1% respectively), as of August 1st.
Transport Minister Gerry Brownlee has today confirmed increases in petrol excise duty of two cents a litre and an equivalent increase in road user charges of an average of 4.1 per cent.
The increases will take effect from 1 August and the additional revenue will go into the National Land Transport Fund to assist investment in transport projects throughout the country.
An increase in petrol excise duty and road user charges of 1.5 cents a litre was originally scheduled to take effect in July 2011. However, the government deferred the increase due to the challenging economic circumstances New Zealand was experiencing as it continued to recover from the global financial crisis and the Canterbury earthquakes.
There’s a table at the bottom of the Minister’s media release, which shows the breakdown of how the transport fund is spent – highlighting, in my opinion, its severely unbalanced nature: 
I don’t really have a problem with increasing petrol tax, as the higher cost of petrol is something we need to get used to. However, I suppose the critical question is whether the general public are actually better off being taxed a bit more to build a package of state highways that doesn’t really stack up economically, or whether they’d be best off if they could keep that money. Or, whether the country as a whole would benefit even more from spending that money elsewhere – either elsewhere on different transport projects or elsewhere on other areas of spending. It’s a very sad situation that we never see such ‘trade-offs’ being investigated further.
If the RoNS projects aren’t delayed, or killed off entirely, their drain on the transport budget and therefore the requirement for ongoing and possibly progressively larger increases to petrol taxes and road user charges, seems likely to increase. This was highlighted in one of the reports NZTA put together on the RoNS package, which includes this graph:
This seems to show the amount of money being sucked up by the RoNS increasing from around $900 million a year now to over $2.2 billion in 2023/24. That’s going to both squeeze out an increasingly large portion of other transport projects and/or require some pretty massive increases to petrol tax levels, especially as traffic volumes aren’t increasing at the rate NZTA requires to fund the government’s demands.
I really do wonder whether a couple of the most stupid RoNS projects might be quietly dropped in the next few months.
Processing...
It sounds like we should expect to see 26 cent/litre increases in fuel tax and around 50% increase in RUC to pay for the planned increase in Roads of National Significance spending.
PT and “other” is 13%?!
Again- 13%?!
Between the Trucking Minister and the evil/stupid/naive folks at NZTA we’re never going to get that changed- unless….
You can show simply, visibly that they are stealing $$$ out of honest citizens pockets and wasting them on uneconomic roads. Every “colour” of voter will understand that.
Remember- you only have to show 81% of kiwis feel a certain way, and the gummint will bow to our wishes.
81%….
A far bigger issue is intergenerational equity of maintaining a PAYGO system for large capital expenditure on assets with depreciated lives of 30-90 years plus. Quite why current road users should pay the full capital costs of works that benefit multiple generations of future road users (or indeed rail if you want to argue whether more should go into rail capital from the NLTF) is astonishing. No longer are airports, ports, telecommunications or electricity infrastructure capital paid for by waiting for surplus revenue every year from users, but rather by borrowing and charging the future users their share of the depreciated capital value.
Current users should be paying for their “consumption” of current capital, then the opportunity costs of these grand large scale projects would be charged to them – in the form of interest – and the capacity and willingness of motorists to pay for them would be factored into planning, prioritisation and the raising of finance for them.
Excluding this cheapens the cost of these projects relative to other infrastructure spending (except urban passenger rail, which is subject to a similar distortion, except the users can’t even afford to pay for the opex let alone the capex, although if roads were efficiently priced it may be different).
A very different scenario would exist if the state highway network had to be financed by an SOE borrowing against future revenues determined by a renewed arms-length independent funding agency (as Transfund once was).
Nup, still doesn’t know what an economy is. I’ll give you a couple of hints: It’s not based upon money and everything that’s done today must be paid for today.
What you’re really asking for is that the government borrow on a permanent deficit so that a few people can then live like parasites off the interest.
If you’re worried about pay as you go, the more significant issue is superannuation. When combined with this plan to blow all today’s cash on country motorways, National sure appears convinced to screw over our future generations.
> No longer are airports, ports, telecommunications or electricity
> infrastructure capital paid for by waiting for surplus revenue
> every year from users, but rather by borrowing and charging the
> future users their share of the depreciated capital value.
There is a limit to this. The more you borrow the more you’re exposed to the risk of debt slavery. If you go in deep enough you could find yourself in the situation whee you are only able to pay off the interest. So, choose wisely, eh?
With the politicisation of transport spending I’d be pretty concerned about going into massive debt for one government’s transport wet dreams. The PAYGO system is a pretty useful at moderating these excesses.
I really do wish that the government would drop the petrol excise duty and just put mass based RUCs on all vehicles. Doing so would kill the cross subsidies that trucks presently get from private cars.
My guess is that this government will quietly put them back expecting the next government to can them at which point they will whinge about it.
Meh, 2 cents. Does anyone worry about such things? Petrol has come down 8 cents in the last week alone. In fact it’s no dearer today than it was four years ago, despite various tax add ons over the past few years. It’s a non-issue really. If they added the tax today, it will probably be wiped off again within a few days.
@Geoff
Another 3 cent reduction today
http://www.stuff.co.nz/business/money/7094200/Petrol-prices-fall-again
This morning BP cut 3 cents from the price of regular unleaded petrol, taking the price at sites controlled by the company to $2.059. Diesel prices were cut 2c to $1.459.
You probably won’t like this possibility then:
It’s entirely possible that those petrol price drops are the global economy dropping back into recession. With the last few years of anemic growth it certainly isn’t a good sign.
Yeah, from the govt’s perspective there is no point in cancelling the RoNS. instead they can just let the timetable on some of them slip further and further back. Then a new govt will come in, look at the books and cancel them. By doing so, this new govt will instantly earn the hate of large numbers of rural/small town NZers who wanted their 4 lane motorway (regardless of the fact that only 10,000 people drive down it a day and it makes no economic sense).
Really, it’s a win, win, win for the govt – they get to increase their popularity with road lovers, save the money on motorways they won’t build, and make the opposition look bad. The only way to change it would be to convince the govt that their motorway building policies are actually hurting their popularity which would take a really sustained high level campaign for several years. Because this government is so heavily dependent on focus groups/polling, i think such a campaign would also actually need to shift the views of the substantial proportion of National voters (many of whom live in rural, highly car dependent areas) who support the govt’s current policies. whether that is possible or not is debatable. I think it might be because I suspect that even though most rural NZers are generally pro-road, they probably don’t quite appreciate the scale of investment going into the RoNS compared to other modes of transport.
Then there’s this in the ‘Life & Style” (i.e. the fluffy) section of the Herald: http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10812719. But there’s no attempt to correlate the increased risk with the lower price or, for that matter, to anything else irrational about oil-based consumption like building motorways to nowhere.
I would like to see more bias to charging ACC transport levies on to fuel rather than the yearly cost of relicencing a vehicle.
The present system does not “reward you” for not using the car and using public transport.
More than that, it actually punishes you for having two vehicles, it doesnt reward you for wanting to own an extra fuel efficient vehicle such as a small car or motorbike that could save money.