Press Statement: Government embraces fairer road funding long championed by The New Zealand Initiative
Correction – 6 August 2025
A previous version of this press statement did not accurately describe how some vehicles, including electric vehicles, already pay Road User Charges (RUC). The statement below is the corrected version.
Wellington (Wednesday, 6 August 2025) – The New Zealand Initiative welcomes the Government’s decision to replace petrol taxes with a universal Road User Charges (RUC) system, marking the most significant change to road funding in decades.
Transport Minister Chris Bishop confirmed that the Government will phase out the Fuel Excise Duty and move all 3.5 million light vehicles to RUC, where motorists pay for road use based on distance and vehicle weight. The reforms will begin with legislation to update the RUC system and allow private‑sector providers to deliver new, technology‑enabled services.
“This reform is long overdue,” said Dr Oliver Hartwich, Executive Director at The New Zealand Initiative. “Petrol excise is no longer a good way of funding roads. Hybrids and petrol vehicles both impose wear and tear on roads, but hybrids pay far less of their share of the burden.”
The Initiative has advocated for this shift for over half a decade. Its Driving Change report showed how a universal, usage‑based system would fund roads more fairly and sustainably. Fuel excise revenue has declined as vehicles become more efficient or electric, while the cost of maintaining and improving the network continues to rise.
Similar usage‑based charging models have already proven successful overseas. Germany’s electronic system for heavy vehicles and mileage‑based trials in several US states demonstrate that funding roads by distance and weight is both practical and reliable.
“Everyone contributes in line with the distance they travel and the weight of their vehicle,” Dr Hartwich said. “That ensures funding keeps up with road use without unfairly relying on some motorists more than others.”
The Government’s plan to modernise the system and open it to private service providers reflects the Initiative’s call for a market‑friendly approach that uses technology to make paying RUC straightforward.
“This is about fairness and sustainability,” Dr Hartwich said. “New Zealanders deserve a roading system that reflects how we drive today and that funds itself responsibly for the future. Today’s announcement is an important step toward that goal.”
ENDS
The New Zealand Initiative's Chief Economist Dr Eric Crampton is available for comment. To schedule an interview, please contact
Jamuel Enriquez, Marketing and Communications Manager
E: jamuel.enriquez@nzinitiative.org.nz
P: 021 022 34451
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