Fuel tax hike planned to pay for rail lines

Backed by her transport minister and associate ministers, Jacinda Ardern outlines the Government's proposed land transport policy. Photo by Lynn Grieveson

The Government’s draft land transport policy promises big rail investments paid for by an increase in petrol taxes, Thomas Coughlan reports.

The Government released its Draft Government Policy Statement (GPS) on land transport on Tuesday, promising big changes in what types of transport get funded and who pays for them. The Government has proposed an increase in fuel tax of between 9 to 12 cents per litre over the next three years on top of the 10 cents per litre regional fuel levy that Aucklanders will pay from July 1.

The policy was outlined by Prime Minister Jacinda Ardern, Transport Minister Phil Twyford and the two associate ministers of Transport, Julie Anne Genter and Shane Jones in the Beehive theatrette on Tuesday.

For the first time spending on rail infrastructure will be included in the land transport policy. This means that the bids for rail infrastructure funding will be considered alongside those of other transport. Rail funding will now consider issues such as improving overall transportation by decreasing freight times and taking trucks off the road. Currently, rail funding is siloed and bids for capital funding are considered independently.

One of the ways this will be funded is through an increase in petrol taxes of between 9 to 12 cents a litre. This will be especially noticeable for Aucklanders, who will already be paying an additional ten cents a litre from July 1.

This proposed system means that road users will be paying up to 22 cents a litre extra in excise to fund rail and road infrastructure. Depending on when this rail infrastructure falls, it could also mean that regional road users are left with a large bill for urban rail projects. The total spend allocated to rail will be less than ten percent of total spending.

Rapid Transit was also included in the GPS for the first time. This funding will exclusively benefit urban areas.

But the regions will not lose out completely. Equity between regions and centres was a theme of the report, particularly when it comes to safety upgrades.

Twyford said NZTA advised there were $800 million worth of safety upgrades needed on local roads alone. He said that once complete they could prevent 160 deaths and serious injuries per year.

Genter told reporters that the Government would be looking to invest in safety upgrades on local roads across the country, rather than large highways. This was a barb at National, whose transport policy included the costly Roads of National Significance, which were widely derided as unnecessary and costly.

She said safety upgrades were “desperately needed” on local roads where people are doing most of the driving. The road toll has increased in recent years. This Easter was the deadliest in eight years.

“For half the cost of the East-West link motorway project, only a few kilometres long we could afford median barriers down every kilometre of state highway in the country,” Genter said.

She said the Government was proposing to invest $1.5 billion in regional and local roads in the next three years because that is where the “vast majority” of car and truck driving takes place.