Summary
The New Zealand Initiative self-identifies as a “Wellington-based think tank supported primarily by major New Zealand businesses“. The think tank’s Senior fellow, Dr Matthew Birchall, authored a report that promotes the future introduction of universal road pricing in New Zealand through a Smart Road User Charges system. The electronic system would replace fuel tax and combine road user charges, congestion charges, and road tolls into one automated “pay-as-you-drive” system.
The report promotes a “user pays” model for paying for roading infrastructure. The report anticipates that the proposed changes will be unpopular and covers a number of examples from other countries where public opposition has stopped similar schemes.
The report proposes a plan for a “paradigm shift in transport funding” which includes:
- Replacing the current fuel excise duty with a Smart Road User Charges system (Smart RUC).
- An “automated “pay-as-you-drive” (PAYD) system, using in-vehicle technology to track road usage”.
- A gradual transition of New Zealand’s entire vehicle fleet to Smart Road User Charges over five years.
- Mandating that “all new vehicles entering the fleet must have electronic distance recorders installed”.
- Retaining the option of people buying traditional road user charges for older vehicles in the earlier years of the 5-year-plan (this option appears to be unavailable after year five).
- Financial penalties applied to those who do not install Smart RUC devices in their vehicles during the middle years of the 5-year-plan.
- The complexity of the road pricing increasing in years three and five of the 5-year-plan with prices changing based on “vehicle type, weight, emissions and usage patterns” and “real-time congestion and corridor pricing”.
- Privacy protections based on the “principle of data minimisation” and “strict data security protocols”.
- The need for an “effective communications strategy to sell the benefits of congestion charging” and to “shift the public narrative”, while also challenging “long-held assumptions about the “right” to drive”.
- All road maintenance and improvements funded in the National Land Transport Fund by Smart RUC by the end of the 5-year-plan.
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Report Details
Title: Driving Change – How road pricing can improve our roads
Authored by: Dr Matthew Birchall
Published on: July 2024
Published by: The New Zealand Initiative
Page Count: 44
Link:
Archived Link:
Important Quotes
“As an economist, I have long been a proponent of road pricing. How could any economist not be?
Road pricing is a simple idea, grounded in basic economic principles, that has the potential to revolutionise how we manage and fund our transport infrastructure. Yet, despite its clear benefits, road pricing has often struggled to gain political traction. The public resistance to the idea, fuelled by misperceptions about fairness and fears of increased costs, has been a formidable obstacle.”
Dr Oliver Hartwich (Executive Director of The New Zealand Initiative) in the foreword to DRIVING CHANGE How Road Pricing Can Improve Our Roads, The New Zealand Initiative, July 2024
“Technology is no longer a barrier to the implementation of a road pricing system based on distance, time and location. This is not to say that it will be easy – equipping New Zealand’s entire fleet with devices linked to payment accounts will be a significant challenge for the Ministry of Transport, NZTA Waka Kotahi and private providers. However, we are no longer constrained by the technological hurdles that hindered previous generations from adopting universal road pricing.
The rapid advancement of technologies such as satellite navigation systems, automatic number plate recognition and 5G connectivity heralds a new era for road pricing. This digital revolution enables distance-based, dynamic and location-specific charging that was previously impractical or prohibitively expensive; the future is already here.”
Page 29 of DRIVING CHANGE How Road Pricing Can Improve Our Roads, Dr Matthew Birchall, The New Zealand Initiative, July 2024
“Some road users may indeed face higher costs, while others may see a drop in what they pay for using the roads. This is because the charges will be directly linked to actual road use and the associated costs imposed on the network. Those who drive more, especially during peak hours and in heavier vehicles that cause more wear and tear, will likely pay more than they do under the current fuel tax system.
On the other hand, those who drive less, travel during off-peak times or use lighter, more efficient vehicles may see a reduction in their costs. This is not about punishing anyone, but rather about ensuring that everyone pays their fair share based on their actual use of the roads. It is a more equitable and transparent approach that aligns the costs and benefits of road use, encouraging more efficient use of our transportation infrastructure.”
Page 31 of DRIVING CHANGE How Road Pricing Can Improve Our Roads, Dr Matthew Birchall, The New Zealand Initiative, July 2024
“Smart RUC is not just about plugging a funding gap. It is about fundamentally rethinking the way we pay for and manage our roads. Under Smart RUC, those who use the roads the most, and cause the greatest wear and tear, would contribute the most towards their upkeep. Those who drive less, or who opt for lighter or more eco-friendly vehicles, would pay less. This is a model grounded in both economic theory and common sense – one that guarantees the costs of our transport infrastructure are borne by those who use it, while incentivising more efficient use of the network.”
Page 32 of DRIVING CHANGE How Road Pricing Can Improve Our Roads, Dr Matthew Birchall, The New Zealand Initiative, July 2024
“Of course, the transition to Smart RUC will not be without its challenges. Change on this scale never is. There will be concerns about privacy, fairness and technological reliability. But as this report has shown, these potential obstacles are far from insurmountable. Careful planning, close collaboration between government and industry, and a commitment to public engagement and transparency will enable us to navigate these issues.
Perhaps the greatest challenge will be one of political will. Moving to a comprehensive road pricing model will require firm leadership and a willingness to champion a policy that, while in the long-term public interest, may be initially unpopular. It will require a sustained effort to shift the public narrative, to challenge long-held assumptions about the “right” to drive, and build a shared understanding of the need for change.”
Page 32 of DRIVING CHANGE How Road Pricing Can Improve Our Roads, Dr Matthew Birchall, The New Zealand Initiative, July 2024
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