New Zealand road user charging 'open for business' in 2027

New Zealand's government says a national system of road user charging (RUC) will be 'open for business' in 2027.

At present, petrol tax - or fuel excise duty (FED) - is around 70 cents per litre. But drivers of diesel, electric and heavy vehicles in New Zealand are already required to pay a fee based on the distance they travel.

Now the government proposes extending this to all of the country’s 3.5 million light vehicles - and allowing private providers to run the system.

“The abolition of petrol tax, and the move towards all vehicles - whether they be petrol, diesel, electric or hybrid - paying for roads based on distance and weight, is the biggest change to how we fund our roading network in 50 years,” says transport minister Chris Bishop.

He argues that the current, partial RUC system is outdated: "It’s largely paper-based, means people have to constantly monitor their odometers, and requires people to buy RUC in 1000-km chunks."

The "once-in-a-generation change" is "the right thing to do, it’s the fair thing to do, and it will future proof how we fund our roads for decades to come".

Bishop adds: “Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy."

While no date has been set for the full transition of the light vehicle fleet - "that’s a deliberate choice, as we’re focused on getting the system right rather than rushing its roll-out" - the government has set out steps towards full implementation. 

Bishop expects relevant legislation to be passed next year, followed by an updated Code of Practice for RUC providers. 

"We will also engage with the market in 2026 to assess technological solutions and delivery timelines," he says. "In parallel, NZTA [NZ Transport Agency Waka Kotahi] and police will upgrade their systems to support enforcement in a digital environment."

By 2027, third-party providers will be "able to offer innovative payment services", with NZTA as regulator.

The government wants to remove the requirement to carry or display RUC licences and use monthly and post-pay billing models, perhaps bundling charges in with other payments such as tolls.

“For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down," Bishop adds. "For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements."

New Zealand's vehicle parc is also changing, with 350,000 petrol hybrid vehicles on the roads now, compared with just 12,000 in 2015, he says.

“As our vehicle fleet changes, so too must the way we fund our roads. It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often.”

“This is a change that simply has to happen," Bishop concludes. "The government has recognised reality and is getting on with the transition."