NZ Passes Time-of-Use Charging Law to Cut Congestion

The Land Transport Management (Time of Use Charging) Amendment Bill provides the legal foundation for localised, targeted road pricing schemes designed to manage peak-hour traffic volumes.

New Zealand has taken a major step toward easing gridlock and improving productivity with the passing of the Land Transport Management (Time of Use Charging) Amendment Bill at its third reading in Parliament.

The legislation, passed unanimously, enables local authorities to introduce time-based road charging schemes in partnership with Waka Kotahi – New Zealand Transport Agency (NZTA), marking a pivotal shift toward smarter, data-driven transport management.

Transport Minister Chris Bishop hailed the law as “a common-sense reform that has been decades in the making,” saying it would help New Zealand’s busiest roads flow more efficiently, reduce congestion costs, and support the country’s economic recovery and growth.

“Sitting in traffic wastes time, costs money, and drags down productivity,” said Mr Bishop. “Travel times in our major cities are up to 30 per cent longer than in comparable Australian cities. In Auckland alone, congestion could cost up to $2.6 billion by next year. This law is about getting New Zealand moving again.”

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What the New Law Does

The Land Transport Management (Time of Use Charging) Amendment Bill provides the legal foundation for localised, targeted road pricing schemes designed to manage peak-hour traffic volumes.

The law allows councils and NZTA to jointly develop and operate time-of-use (TOU) charging systems, where motorists pay variable fees depending on when and where they travel.

The intent is not to penalize drivers, but to encourage behavioural change—motivating commuters to travel during off-peak times, use alternative routes, or switch to public transport when possible.

“Time-of-use charging is a practical, proven tool to make better use of our existing roads,” Bishop explained. “It’s not about punishing people; it’s about rewarding smarter choices that keep everyone moving—whether you’re a parent on the school run, a tradie heading to work, or a truckie getting exports to port.”

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How Time-of-Use Charging Works

Under the new system, local authorities can:

• Introduce variable tolls depending on time of day and road congestion levels.

• Set up electronic charging zones, using automatic number plate recognition (ANPR) or transponder technology.

• Reinvest collected revenue into public transport upgrades, local road improvements, and emissions-reduction initiatives.

• Work with NZTA to ensure consistent design, technology standards, and data protection.

Charges will be targeted to specific congestion hotspots, such as major arterials or central business districts, rather than applied as a flat national levy.

The framework also requires public consultation and cost-benefit analysis before any scheme can be approved.

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Auckland to Lead the Way

The Government has confirmed that Auckland Council will be the first local authority invited to partner with NZTA on a pilot scheme, given the city’s economic significance and severe congestion challenges.

“Auckland is the logical place to start,” said Bishop. “It’s our largest city, the heart of our freight network, and the engine of our economy. The council and officials are already working together to explore where and how a pilot scheme could be introduced.”

Initial focus areas are expected to include State Highway 1, the Auckland Harbour Bridge corridor, and key commuter routes into the central city.

The pilot will inform a national framework for other regions such as Wellington, Tauranga, and Christchurch, where congestion patterns are worsening due to urban growth.

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Learning from Global Success Stories

Minister Bishop pointed to international examples, including New York City’s congestion-pricing scheme, which launched in early 2025 and has already delivered significant benefits.

“In Manhattan, traffic delays in the Congestion Relief Zone are down about 25 per cent, peak-hour speeds are up between 5 and 10 per cent, and travel times have improved by as much as 30 per cent on key corridors,” Bishop said.

The New York scheme is projected to generate US$500 million in net annual revenue, all reinvested in public transport upgrades — a model New Zealand intends to follow.

Other successful examples include London, Singapore, and Stockholm, where dynamic tolling has led to reduced congestion, improved air quality, and better public transport reliability.

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A Bipartisan Achievement and Public Collaboration

The Bill’s passage received cross-party support, an increasingly rare achievement in transport policy. Lawmakers across the political spectrum agreed that congestion pricing is a non-partisan, evidence-based solution to a growing problem.

“After years of discussion, it’s great to see all of Parliament united behind practical solutions to reduce congestion and improve productivity,” said Bishop.

The Minister also acknowledged public submissions that shaped the final version of the Bill during the Select Committee stage. Feedback from local governments, transport planners, freight operators, and citizens helped strengthen accountability measures and ensure that revenues are transparently reinvested in the communities they affect.

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Economic and Environmental Benefits

The introduction of time-of-use charging is expected to yield broad benefits:

• Reduced congestion and faster travel times for commuters and freight.

• Higher productivity, with businesses saving on logistics and transport delays.

• Lower vehicle emissions, as smoother traffic flow and fewer idling vehicles cut pollution.

• Better use of existing infrastructure, delaying the need for expensive new road projects.

• Improved funding for public transport, with revenues supporting more buses, trains, and cycling networks.

According to Ministry of Transport projections, congestion pricing could reduce peak traffic volumes by up to 15 per cent and generate hundreds of millions annually in reinvested revenue.

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Accountability, Equity, and Next Steps

The government has emphasized that time-of-use schemes will be locally led and publicly accountable. Each proposal will require Cabinet approval and must include equity safeguards, such as:

• Discounts or exemptions for low-income commuters, disabled drivers, and essential workers.

• Investment in alternative travel options, ensuring drivers have practical choices.

• Transparent reporting on how revenues are spent.

“We want people to see where their money is going — into better roads, faster buses, safer cycling routes, and smarter urban design,” Bishop said.

The next step is for Auckland Council and NZTA to prepare a joint feasibility study, with pilot design and public consultation expected to begin in mid-2026.

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A National Vision for Smarter Mobility

The Land Transport Management (Time of Use Charging) Amendment Bill represents a cornerstone of the Government’s 2025 Q4 Action Plan, which includes reforms aimed at boosting infrastructure efficiency, reducing emissions, and lifting productivity across sectors.

“We know time-of-use charging works — the evidence is clear,” Bishop concluded. “This is a crucial step toward a modern, efficient transport system that keeps New Zealanders and our economy moving.”

As cities grow and congestion worsens, the Bill signals a decisive move toward 21st-century transport management, where innovation, technology, and data drive better outcomes for people, businesses, and the environment alike.