Yearly fuel tax rises proposed to fund new transport projects

The government’s unveiled its draft Government Policy Statement on land transport, which includes a plan to increase petrol tax in order to pay for major roading projects.

Announced by prime minister Chris Hipkins and transport minister David Parker in Auckland this afternoon, the proposal includes 14 “nation-building” transport projects, including a Warkworth to Whangārei motorway, an Avondale to Onehunga rail link, a second Mount Victoria tunnel and a mass transit corridor from Wellington CBD to Island Bay. There are also new bypasses and motorway extensions in the South Island.

“These routes include a balanced mix of public transport and roads, which require work as a priority to reduce congestion, manage emissions, improve safety, grow the economy and open up areas for housing,” said Hipkins.

It’s standard business for a government to set out a draft statement on transport in order to set priorities for the years ahead. While this does come ahead of the October election, today’s announcement is technically separate from Labour’s own transport priorities for the campaign.

National has labelled the announcement “cynical” and said it plucked from its own previously announced transport policy.

“It’s great to see that Labour has finally accepted that they have been wrong about roads and that they are endorsing National’s transport plan – but no one believes they will actually, finally deliver,” Simeon Brown said.

Also as part of the announcement today was the revelation that petrol will become more expensive in order to fund the projects. Parker said that some of the additional funding will come from fuel tax and road user charges. “These sources fund the core of our transport networks. Past governments have regularly increased these charges, and this will commence again,” he said.

“The increase in the first year is proposed to be split into an initial two cent increase, with another two cents six months later. This is to be followed by a four-cent annual increase in 2025 and again in 2026 – a total increase of 12 cents over three years.”

The $1.4 billion expected to be raised from fuel taxes was only a small amount compared with the overall $5.3 billion increase to transport funding as part of the proposal, said Parker.