On Friday the government announced it would double the number of toll roads in New Zealand as well as make a few other changes to how toll roads are used in the country. The real issue though is not that tolling is being used but the suggestion it will make any kind of material impact on how much infrastructure gets built as tolling revenues will be a drop in the bucket compared to the cost of the projects it’s used on.
The Government has agreed key policy changes to enable tolling of roading infrastructure, helping bring forward critical investment in New Zealand’s transport network, Transport Minister Simeon Brown says.
“Tolling is a tool used around the world to accelerate investment in roading infrastructure, and the changes the Government is making will allow this approach to be applied in New Zealand more effectively.
“These reforms ensure that those who benefit from new and improved roads share in the cost of building them, making it possible to deliver infrastructure sooner and more efficiently.
“The Government is taking a user pays approach which optimises toll revenues to build the modern roading infrastructure which will improve economic productivity by helping Kiwis get to where they want to go quickly and safely.
Key changes include:
- Enabling tolling of an entire corridor, including existing roads that gain capacity or are extended by new projects.
- Automatically increasing toll prices by inflation, ensuring users contribute fairly over the lifetime of the road.
- Requiring a free viable alternative, while enabling tolling schemes to require heavy vehicles to use toll roads where the toll road is designed to divert traffic away from built-up or suburban areas.
- Making it more efficient to set up and collect toll revenues.
“These changes will enable the New Zealand Transport Agency (NZTA) to consider tolling in circumstances beyond what is currently possible. This approach is designed to bring forward investment in critical new roading projects across the country,” Mr Brown says.
“For example, corridor tolling could help deliver extensions to key roads sooner, with those who benefit contributing directly to the cost of building the extension or additional capacity on those roads.
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In general the changes to tolling policy do seem sensible, such as automatically increasing toll prices by inflation (though the cabinet paper says this will only occur every three years) and making the set up and collection of tolls more efficient as currently that eats up a large amount of toll revenue collected. NZTA’s most recent annual report shows that currently around a third of all tolling revenue collected goes towards the operating the tolling system.
The report also helps highlight just how little of toll revenue goes towards paying for project. The Tauranga Eastern Link is the only one where the debt the toll is contributing towards sits on NZTA’s books. In total the road, which was completed in 2015, cost $455 million and the tolls are paying off just $107 million of that. But just like a home loan, most of what is left after paying for the operational costs is going towards paying off the interest on that debt. It means that from nearly $10 million collected from drivers, just $0.7 million went towards actually repaying debt.
With the cost of some of the new toll roads all being much more than that of the Tauranga Eastern Link, tolls will play an even smaller role in funding them.
I pulled together a few quick figures about those existing toll roads.
| Annual Average Traffic Volume | Current Toll | Original Cost | Debt Proportion | Opened | Length (km) | ||
| Northern Gateway Toll Rd | Light | 22,192 | $2.60 | $360m | $158m | Jan-09 | 7.5 |
| Heavy | 1,644 | $5.60 | |||||
| TOTAL | 23,836 | ||||||
| Tauranga Eastern Link | Light | 10,137 | $2.30 | $455m | $107m | Aug-15 | 15 |
| Heavy | 1,370 | $5.60 | |||||
| TOTAL | 11,507 | ||||||
| Takitimu Dr | Light | 11,781 | $2.10 | $65m | $65m | Purchased 2015 | 5 |
| Heavy | 2,192 | $5.40 | |||||
| TOTAL | 13,973 |
I do wonder how they’ll police the heavy vehicle requirement though as there are bound to be lots of cases where trucks will need to continue using existing roads for things like deliveries.
The smaller part of the announcement but the one that’s probably the most important is the confirmation of new toll roads.
The Government has also agreed to toll three new roads following public consultation:
- Ōtaki to north of Levin
- Takitimu North Link
- Penlink
“Tolling on these roads will support the ongoing cost of delivering these roads and maintaining and operating them. This will help motorists in Auckland, Tauranga, and Greater Wellington gain faster, safer, and more reliable journeys. Each of these routes retains a free, viable alternative route.
“The Government has also confirmed that tolling will not be applied to the new Manawatū – Tararua Highway, as late consultation and timing constraints mean it would not be cost-effective to implement tolling until well after the road’s completion, placing it outside the Government’s expectations for new road tolling.”
Let’s take a look at what’s proposed for each of these.
Penlink
Penlink was always been planned as a toll road and was announced as one when the last government committed to it in 2020. They also agreed to it being a toll road following consultation however I understand they never actually progressed the paperwork for it so this government reviewed things but have ultimately come to the same conclusion.
The project is 7km long and currently expected to cost around $830 million and be completed in 2026. It will differ from the existing toll roads in that it will have variable tolls depending on the time of day with drivers travelling from Whangaparaoa to SH1 paying $3 at peak and $2 off peak. There are smaller tolls for other trips along the road while heavy vehicles will pay double that of light vehicles
The modelling for NZTA suggests that at opening around 9-11k vehicles will use the road daily, rising to as much as 16,500 by 2048. This equates to annual revenue of $12-14 million at opening rising to as much as $22 million by 2048.
Takitimu North Link
Currently only the 6.8km, $655 million first stage for this project is under construction however, Stage 2 is listed as a Road of National Significance by the government which the latest figures suggest will cost between $900 million to $1,400 million for an additional 8km of road.
Like with Penlink, the tolls will vary based on the time of day. The tolling consultation was for both sections of the project the cost for travelling each section individually are:
| Time of day | Light vehicles | Heavy vehicles (Over 3500kg gross vehicle mass) |
Peak (7am–9am and 4pm–6pm) | $3.10 | $6.20 |
Off-peak (9am–4pm and 6pm–7am) | $2.10 | $4.20 |
While the cost to travel the length of both sections is another $1 for light vehicles and $2 for heavy vehicles.
The NZTA have some extremely optimistic growth figures for the road. Currently around 24,000 vehicles a day travel along it and they claim that by 2031, without the road it will grow to around 30,000. With the new road they estimate it will increase to between 39,100 and 44,600 per day depending on if tolling is applied or not. These numbers seem like classic modelling junk to me.
Even if you assume every vehicle is traveling the full route and doing so only at peak, after applying some assumptions around heavy vehicle volumes, the agency might collect around $34 million. However, the that’s on what is likely to end up a $2 billion project.
I also noticed this comment from them in the consultation
Further improvements to the existing SH2 would be made through the revocation process, and this would become a local road.
NZTA have promised improvements to existing roads as a part of the revocation in the past but I’m not sure I’ve ever seen them follow through with it. It’s hard to see this time being any different.
Ōtaki to north of Levin
The project is 24km in total and cost was last updated in 2021. At time it blew out to $1.5 billion and I wouldn’t be surprised if it ends up higher again.
The proposal was only to toll the southern section of the project and there are no peak/off-peak tolls proposed.
| Section | Light vehicles | Heavy vehicles (Over 3500kg gross vehicle mass) |
Southern half interchange to Tararua Road interchange | $2.70 | $5.40 |
Tararua Road interchange to northern end of Ō2NL | No toll | No toll |
Currently around 19,000 vehicles a day travel along SH1 south of Levin and the NZTA claim that without the project, that will rise to 27,500 over the next 15 years. Interestingly they suggest that tolling will result in more people using the existing road than the new highway. If a small toll is enough to put people off using the new $1.5 billion road then perhaps they should question just how valuable the project is to begin with.
Over 35 years the modelling assumes that around $620 million of net revenue will be collected but as highlighted above, a lot of that will be needed just to pay interest on loans to build part of the project.
It is good that this government are less scared of tolling than the previous one. Labour were far too scared of upsetting people when it came to tolling and is why projects like Puhoi to Warkworth weren’t tolled despite NZTA proposing to do so. But they shouldn’t pretend this is going to enable lots more roads to be built. As highlighted above, toll revenues will barely scratch the surface of these big projects. What they are good for though is helping to manage demand and particularly on projects like Penlink and Takitimu North that could be quite valuable.
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The small amounts proposed to be paid by the users of the toll roads,is essentially continued subsidizing of the roading network by all taxpayers. It is not “user pays”,it is user contributes. A quick look across the Tasman,shows what “user pays” looks like, the Transurban website,a major supplier of Australian tollroads,has a model ,that shows the cost of using toll roads in Australia, one example showed around $20 (Penrith to Downtown Sydney.
Transurban have been in negotiations with State governments in Australia, with the governments trying to negotiate a cheaper toll rate. Private enterprises, like Transurban,clearly know what roads cost to build and operate,spoiler alert,lots,they should be invited here to quote on future expansion of our roading network,l suggest the figures would be astronomic.
Disclaimer,l have shares in Transurban, l belive they have an important role in the transport system,they demonstrate the true cost of a roading network,not what the politicians want us to believe.
Let me change a word or two in your first sentence for balance.
The small amounts paid by the users of passenger rail ,is essentially continued subsidizing of the rail network by all taxpayers. It is not “user pays”,it is user contributes.
lol well said Blackfan too true. Both modes of transport deserve a subsidy I don’t know why some people here are so anti car they can’t see reality.
These things always amuse me, although perhaps they bemuse me.
What is the cost of collecting public transit fares? To upgrade card readers, to ensure their is sufficient security for public transit users, to produce another plastic card endlessly?
Why not just keep increasing fuel tax, surely this is a tidier way to ensure that road users pay for the roads? Differentiating between this road or that road seems odd when we should be ploughing infrastructure money into real infrastructure, like rail and ferry services.
This is no doubt an austere government, but why not use what little we have to help the most we could?
Oh dear, I forget, these are the persons raised on numbers, and they forgot to teach them about humans.
bah humbug
Tolling seems to be more about making something politically possible and tolls being more accepted in theory than higher taxes, rather than whether it’s a good way to raise revenue.
“Rail must pay its way!”
If the national rail network ‘must pay its own way’, it needs to become an ‘open access’ national land transport infrastructure network that allows more train operators using the network whether they are freight only, passenger only and/or freight/passenger, yes the network can reduce tax payer subsidies, through track access and train control fees.
That said, the country’s other major national transport network infrastructure asset – the State Highway network, needs to reduce tax payer subsidies, where all users pay RUC’s, Tolls on 4 lane express ways and increase excise tax on petrol and diesel.
I have often wondered where we would be today if the Auckland Harbour Bridge Toll had remained in place, instead of being ceased.
It could have been used for other (tolled) harbour crossings.
Would there be less congestion today?
They could have enabled two new modes with the additional funds, walking and cycling across the harbour, thus kickstarting Aucklands transformation of car jam to copenhagen, just in time for the eBike and eScooter micromobility revolution we’ve subsequently missed the bus on.
AT announces new LightRail alternative to ease traffic congestion:
See: https://fb.watch/wUbPGA3OXT/
But what does it do about raised tables and 30km/h speed limits in suburban neighborhoods?
Apparently these are the critical points slowing down emergency services responses /s.
The money being used to run the “Auckland Harbour Bridge Authority”, far exceeded the money bing collect from toll.
Instead create a toll of $25 each way to enter Wellington.
Always the question of what is paying for a new road project and what is time of use charging. What we all pay for new roads and the freight carried by them is the bottom line, while watching out for a change to Turnpike State Highways by degrees
“Ask not for whom the road tolls, it tolls for thee.”
The tolling decision for Tauranga and Penlink make sense – they’re new highways with a free alternative. Like you mention, I’m extremely skeptical about any changes being made to the free alternatives though. There won’t be any money sitting aside from NZTA to make changes to the old highways, and local Council’s certainly won’t either. They’ll be left as is and remain as traffic sewers.
Using that argument why wasn’t Transmission Gully tolled?
Transmission Gully should have been tolled, but for whatever reason the Labour government chickened out on this and Puhoi to Warkworth.
Our current government has chickened out as well by not tolling Transmission Gully through to Otaki.
In fairness Peka Peka to Otaki was opened under Labour in 2022 and was funded out of the NLTF. Tolls have only ever been used in NZ when loans are taken out for money not covered by the NLTF.
And another move to make EV owners pay a share of the lost income of the reduced fuel tax and everyone subsidize tax cuts. Yay -.-
I am not against the tolls per se, but this increases the burden on everyone while lightening the load for a few (who often don’t really need it).
I never understood tolls. Why make a small number of people pay for their road while everyone else gets roads for “free”. Why not pay for both new and existing 100% from fuel tax?
“But they shouldn’t pretend it will enable lots more roads to be built”? But it will, because of the political expense of building the roads from raising an astronomical RUC onto everyone compared to a smaller amount plus a toll is too high tolling therefore does exactly that deliver more roads. It’s important to note in the real world this is how things work hence the speed limits going back up sure lowering them may have reduced some DSI but that doesn’t matter in the slightest because people don’t like driving slower. Popularity/Politics will decide everything to do with transport that is the rules. “Facts” and “Evidence” do not trump “vibes” this is a fact.
You question in the article how to get trucks to pay. Just do what is normal elsewhere. Install number plate recognition cameras. Cheap to do and will quickly pay their way. Same applies to red light cameras.
NZ stuck in 1950s thinking. Still.
“Same applies to red light cameras, and to camera that capture people using their cell phones whilst driving.”
Good idea. $500 fine for the first offence, $750 for the 2nd offence etc.
The question was how to enforce heavy vehicles to use a toll road.
There will be plenty of cases where trucks might need to use the old road, e.g. trucks visiting farms, making deliveries etc that will need to travel the full length of the old road.
Probably will be the same way it’s done for Northconnex/Penant Hills road in Sydney.