New Transport Funding Bill Modernises Tolling and RUC for NZ’s Future Roads

The Bill introduces the most significant set of tolling reforms in more than a decade, giving the Government the tools it needs to accelerate major road projects and ensure users benefit fairly.

The Government has introduced the Land Transport (Revenue) Amendment Bill to Parliament, launching a major upgrade to New Zealand’s transport funding system. The Bill aims to create a fairer, simpler, and more future‑ready model for paying for roads by modernising both tolling rules and the country’s decades‑old Road User Charges (RUC) framework.

Transport Minister Chris Bishop says the reforms are essential to ensuring that the transport network keeps pace with regional growth, modern technology, and the demands of New Zealand’s ambitious new Roads of National Significance (RoNS) programme.

“A core principle of our transport funding system is fairness: that all road users should contribute in proportion to their use of the roads,” Bishop said. “This Bill prepares New Zealand for the next generation of road building.”

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A Stronger, More Flexible Tolling System

The Bill introduces the most significant set of tolling reforms in more than a decade, giving the Government the tools it needs to accelerate major road projects and ensure users benefit fairly.

Key Tolling Changes Include:

🔸 ‘Corridor Tolling’ to Unlock New Projects

For the first time, tolls can be applied to sections of existing roads where users clearly benefit from a new, nearby infrastructure upgrade.

This means that if a new expressway, tunnel, or bypass reduces travel time, improves safety, or enhances reliability for drivers on an existing road, those users may contribute through tolling.

🔸 Managing Traffic Diversion

Diversion onto unsuitable alternative routes has long been a problem on tolled roads. The Bill introduces tools to address this, including:

• Ability to restrict heavy vehicles from using unsafe or inappropriate detour routes

• Allowing toll revenue to fund maintenance of alternative local roads when councils are unable to fund repairs

This ensures safety and fair cost‑sharing across the network.

🔸 Predictable Pricing with Annual CPI Adjustments

Instead of irregular toll increases, tolls will now be indexed annually to inflation, providing certainty for users and making cost adjustments more transparent.

🔸 Shifting Liability from Drivers to Registered Owners

To improve collection rates and simplify enforcement, the registered owner of a vehicle—not the individual driver—will be responsible for paying tolls, aligning toll payment with registration records.

Bishop says the reforms will deliver “a more consistent, more flexible tolling framework so we can build big upgrades faster and support regional economic growth.”

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Modernising Road User Charges (RUC) for the First Time in 50 Years

New Zealand’s RUC system, first created in the early 1970s, still relies heavily on manual processes, including:

• Odometer self‑reporting

• Paper labels

• Paper licences displayed on windscreens

The new Bill modernises the system with a suite of digital‑friendly changes.

Key RUC Improvements:

🔸 New Subscription and Post‑Payment Options

Drivers will be able to pay for RUC the same way they pay for modern utilities:

• Automatic subscriptions

• Post-payment billing

• Third‑party provider options

This will reduce administrative burdens and make compliance simpler.

🔸 In‑Vehicle Distance Technology Approved

The Bill future‑proofs the system by allowing accurate in‑vehicle technology—such as GPS or digital odometers—to record distance automatically.

This technology is already used overseas and will provide:

• More accurate charges

• Less paperwork

• Stronger compliance

🔸 Separating NZTA’s Regulatory and Retail Roles

To create a competitive market for RUC services, NZTA’s regulatory role will be separated from its retail service role, allowing private companies to compete on equal terms.

This opens the door to simple, app‑based RUC solutions offered by banks, insurers, telematics firms, or mobility apps.

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Preparing for the Future: RUC for Light Petrol Vehicles

The Bill lays the groundwork for a potential transition away from the traditional petrol excise tax.

With more electric, hybrid, and fuel‑efficient vehicles on the road, petrol tax revenue is becoming less reliable. The Government plans to:

• Assess the new RUC system in 2027

• Decide whether to transition the country’s 3.5 million petrol vehicles into the RUC system

This decision will shape the long‑term sustainability of road funding.

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Next Steps: Parliamentary Process Underway

After its first reading, the Bill will be reviewed by the Transport and Infrastructure Select Committee, where public submissions and expert evidence will be considered.

The Government expects the legislation to pass in 2026, followed by phased implementation.

“These reforms are essential to building a transport system that is fair, modern, and ready for the future,” Bishop said.