As expected, today the government announced that petrol taxes and road user charges will increase (by 2c a litre and 4.1% respectively), as of August 1st.
Transport Minister Gerry Brownlee has today confirmed increases in petrol excise duty of two cents a litre and an equivalent increase in road user charges of an average of 4.1 per cent.
The increases will take effect from 1 August and the additional revenue will go into the National Land Transport Fund to assist investment in transport projects throughout the country.
An increase in petrol excise duty and road user charges of 1.5 cents a litre was originally scheduled to take effect in July 2011. However, the government deferred the increase due to the challenging economic circumstances New Zealand was experiencing as it continued to recover from the global financial crisis and the Canterbury earthquakes.
There’s a table at the bottom of the Minister’s media release, which shows the breakdown of how the transport fund is spent – highlighting, in my opinion, its severely unbalanced nature: I don’t really have a problem with increasing petrol tax, as the higher cost of petrol is something we need to get used to. However, I suppose the critical question is whether the general public are actually better off being taxed a bit more to build a package of state highways that doesn’t really stack up economically, or whether they’d be best off if they could keep that money. Or, whether the country as a whole would benefit even more from spending that money elsewhere – either elsewhere on different transport projects or elsewhere on other areas of spending. It’s a very sad situation that we never see such ‘trade-offs’ being investigated further.
If the RoNS projects aren’t delayed, or killed off entirely, their drain on the transport budget and therefore the requirement for ongoing and possibly progressively larger increases to petrol taxes and road user charges, seems likely to increase. This was highlighted in one of the reports NZTA put together on the RoNS package, which includes this graph: This seems to show the amount of money being sucked up by the RoNS increasing from around $900 million a year now to over $2.2 billion in 2023/24. That’s going to both squeeze out an increasingly large portion of other transport projects and/or require some pretty massive increases to petrol tax levels, especially as traffic volumes aren’t increasing at the rate NZTA requires to fund the government’s demands.
I really do wonder whether a couple of the most stupid RoNS projects might be quietly dropped in the next few months.