Fuel Tax Increase Deferred


The Government’s planned fuel tax increase of 1.5 cents per litre which was due to come into effect on July 1 has been deferred while economic conditions remain tight.

The increase was part of a package of changes agreed to by the government in March 2009, designed to make the funding of New Zealand’s land transport system simpler and more efficient.  The package included the cancellation of the economically inefficient regional fuel taxes and their replacement with smaller national increases.

Transport Minister Steven Joyce says given the ongoing economic impact of the global recession and the Christchurch earthquakes, it makes sense to hold off on the increase for another year so as not to add further costs to the economy.

“The government’s $11 billion roading programme will not be significantly affected over the ten year plan for the programme. In fact, ongoing investment in transport infrastructure and services, which is a key economic driver, has never been higher.”

Officials are currently working on the next Government Policy Statement for Land Transport Funding (GPS), which sets out the government’s transport priorities and how they will be funded.  The 2012/13 – 2021/22 GPS will include support necessary to repair Canterbury’s transport infrastructure.

Mr Joyce says it will also provide certainty for the rest of the country on the government’s commitments to supporting transport projects and economic growth.

“In order to deliver this programme of investment, it is likely that the government will need to increase FED and RUC in future years.  These could be in the order of 2 cents a litre in 2012 and 1.5 cents a litre in 2013.

In New Zealand, all revenue from RUC and fuel excise is paid into a dedicated National Land Transport Fund (NLTF) to meet the investment required to support road users.

In 2009/10, NLTF revenue was over $2.6 billion, all of which was used to fund the land transport related activities outlined below.

Contractors’ Federation chief executive Jeremy Sole said the move would particularly help members who were still struggling to get through the effects of the financial crisis, including the lack of work from local authorities.

He also welcomed Transport Minister Steven Joyce’s statement that the next Government Policy Statement for Land Transport Funding would provide certainty for the country on the Government’s commitment to supporting transport projects and economic growth.

“We are pleased that the Government has again reinforced its commitment to building the infrastructure that underpins its GDP growth agenda,” said Mr Sole. “While that might look like self interest from our point of view, maintaining a strong civil construction industry with plenty of healthy competition in the market is in the interests of the entire country. “It will limit cost increases as much as possible and will ensure visibility of forward work in the uncertain times the industry is currently facing.”




  1. Patrick R says:

    Well that 1.5c was to replace the regional fuel tax [why do you call it inefficient?] so was to pay for electrification and buy the trains in AK. So is this Joyce trying to find yet new ways to claim that there is no money for PT investment? Also the 200mil or so that this represents is more than enough to cover a 2b loan to build the CBDRL. A crazy attempt at an election year bribe that no one will notice at the pump. But we will notice the lack of investment in rail.

  2. Andrej says:

    And why Auckland Council has not implemented a congestion charge yet like we see in London or Stockholm? I remember holidaying in Northland a year ago when we decided to make a trip to Auckland. We parked a car in Albany and took the NEX, then Linkbus around the CBD and eventually rail to the Waitakeres. That was great and why shouldn’t be for others? I partly can agree with this government that Auckland has to find the sources to finance its own transport initiatives, apart government support too of course and though, motorways are good, I really don’t like some of the roading projects taking precedence over rail in Auckland. Or what about start to tolling some sections of motorways in urban Auckland area, e.g. the Harbour Bridge?

  3. Scott says:

    Andrej: the council cannot toll the motorway as it does not belong to them. There is opportunity to implement congestion charging on other roads however. I don’t think a London CBD cordon style system would be effective here as our CBD and PT links are not as strong. There is a possibility our CBD could shrink or die. I think a congestion charge in Auckland would need to be cover a much larger are, and as such would more complicated to implement.

  4. Matt says:

    Andrej, the Council doesn’t have the legal authority to implement a charge. The government would need to pass a law providing for the Council to levy congestion or other road use charges, and there’s not a snowball’s chance in hell that Rodders (it’d be a Local Government bill) will support any such thing.

    Councils can only do as much as the government allows. They can’t just decide that they want to impose some new charge, there has to first be legislative authority to do so. Otherwise they’re ultra vires (over-reaching their power) and the charge can be ignored, challenged in court, or even see the council sued.

    Oh, yeah, and what Scott said about the motorway not being the Council’s to levy charges over, even if they do have the authority to congestion charge local roads. NZTA are the only body that can levy charges on motorways, because they “own” them.

  5. BD says:

    This isn’t fair at all, the government makes my blood boil, they keep telling us that there is no more money left for Public Transport and that we must save as much as we can to allow Christchurch to rebuild, then I find out information that the government has drafted out before the cabinet meetings about spending even more money on Motorways.

    The worst one that I found out was on the Auckland Transport Blog website, is an investigation into a Cambridge to Taupo route, which carries less than 6500 vehicles a day. This has an even lower cost benefit ratio than Holiday Highway, this could soon become a RONS if we are not careful.

    All the local roads will be left to decay as there’s hardly any money allocated for them as well as public transport. Seems that the government is trying desperately hard to not let Christchurch get in the way of their road building programme, which in reality they don’t have enough money to build in its entirety, only 20% or less is what they can afford if that.

    We must stand up to the government now and not let them do this! Not let them ruin our futures!


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