Car rego hike to fund $20b plan for transport

The Government has unexpectedly announced a $50 hike for car registration fees to pay for a $20 billion transport plan that includes 15 four-lane highways, a $500m pothole fund, and $2b for rail and Auckland bus corridors.

Among the South Island projects in the plan is the Belfast to Pegasus motorway and Woodend bypass, a so-called “road of national significance”, which will be a four-lane, separated highway and delivered “as quickly as possible”.

The Government says it wants to “progress” a second Ashburton bridge, while there will also be Crown funding for a “Canterbury package”, a “Queenstown package”, bridge upgrades and replacements and better transport connections in the tourist town, and an Ashburton freight hub. It is unclear exactly when work on these projects might start.

The National Party campaigned on redirecting transport spending into road building, promising at the same time to reduce living costs by pausing increases to petrol taxes and road user charges.

Now, faced with the prospect of paying for its transport plan, the National-coalition Government has decided a hike to car registration fees and a delayed but heftier increase to petrol taxes and road user charges will pay for it.

“We need to ensure that we have got revenue to be able to invest in the road network,” Prime Minister Christopher Luxon said.

“I think the way we’re trying to digest it, in two $25 increments, is actually a smart way to go about it.”

The abrupt announcement of the provisional transport plan came after a Cabinet meeting yesterday, at a press conference at which Luxon was expected to face questions about his quick reversal over claiming a $52,000 accommodation “entitlement” and the Government’s response to the closure of one of the country’s major news producers, Newshub.

The Government Policy Statement on land transport outlined at a high level the coalition Government’s transport projects for the coming decade, and $20b of spending in the coming three years.

Broadly, the Government is focusing on major road building at the expense of hundreds of millions of dollars the prior

Labour Government intended to spend on public transport and walking and cycling improvements.

Labour leader Chris Hipkins said the proposed increase in fuel taxes would be a “massive blow to low income households”.

“Christopher Luxon made cost of living his number one election commitment. He said that they weren't going to be introducing new taxes, he said that they weren't going to be increasing fuel taxes. In fact, they're doing both of those things.

“The Government [have] got their priorities wrong when they're doing things like hiking fares for public transport users, cutting public transport, increasing vehicle registration fees, and increasing fuel taxes, when they said during the election that they were going to make cost of living the number one priority.”

Green Party transport spokesperson JulieAnne Genter said the transport plan was “extreme” and doubled-down on the “failed approach of the last century”.

“It looks like they're completely gutting walking and cycling and, buried in the detail, it says that big roading projects cannot use their funding for walking and cycling improvements, which is a huge departure from even the last National Government.

"This is totally unbalanced. I think Steven Joyce as transport minister was more balanced than (Transport Minister) Simeon Brown. It's like he has a vendetta against anyone not using a car.“

Motor Trade Association spokesperson Simon Bradwell was sympathetic to the increased costs motorists would face while already grappling with the cost of living crunch. “No one needs another hit on the wallet.”

However, he noted the work was “essential” as the state of New Zealand’s roads were “not great”. He said potholes plaguing parts of the country would only get worse because of climate change. “The pothole problem is nationwide.”

Bradwell said New Zealand's registration fees were “very low by world standards” and had not been substantially changed for some time – the last was in October 2023, when administrative fees for vehicle licensing renewals increased between $4.56-$5.16.

Central to the Government’s plan is the return of four-lane highways called “Roads of National Significance” that are promised to be built.

This list includes parts of the Whangarei to Auckland road, Tauranga to Auckland route, Mill Road and East West Link and North West Alternative highway in Auckland, Hamilton Southern Links, Petone to Grenada Link road in Wellington, the Hawke’s Bay expressway, and a second Mt Victoria tunnel.

Public transport projects to be prioritised include completion of rail projects in the lower North Island.

Additional reporting Gianina Schwanecke