Proposed electronic road user charges system “likely to become an expensive lemon"

The government’s proposal to charge all vehicles for the distance they travel is likely to end badly, says the car review website dogandlemon.com.

Motoring expert Clive Matthew-Wilson says:

"The government wants electric vehicles to pay their share of road costs. That's fair enough; few people would object to this. But around three quarters of the NZ vehicle fleet is petrol-powered, and will be for a long time. For efficient petrol vehicles, the existing system works well, so there's little to gain by changing it. Despite claims by the government that ordinary drivers may save money by switching to the new road user charges system, I doubt the ordinary driver is going to save much at all. Many will pay more."

“For example, most taxis in New Zealand are Toyota petrol hybrids. While the government taxes petrol at the gas station, these petrol hybrids get rewarded for their efficiency. If the government switches to taxing the distance these hybrids travel, these taxis will be penalised, along with the passengers who ride in them. Worse, under the government’s proposed system, rich people in gas-guzzlers could be rewarded, because they tend to travel shorter distances than taxi drivers. Therefore rich drivers may pay less. So the owners of taxis may be charged unfairly while the owners of gas-guzzlers get an easy ride."

Massey University mathematics professor and climate writer Robert McLachlan said moving to road user charges would increase taxes on the drivers of the country's 300,000 or so non-plug-in hybrid vehicles, including fuel-efficient models such the Toyota Prius or Aqua. "It'll increase the cost of driving a low emissions vehicle and I suspect there'll be a lot of angry hybrid drivers," he said. He calculated it would increase the running costs of the lowest-emitting hybrids by 39 percent - while lowering by 6 percent the cost to run the most gas guzzling petrol cars, models that burn 10 litres or more of fuel per hundred kilometres.

Matthew-Wilson believes the costs of setting up and maintaining the proposed new system are going to be very high, with a high risk of ongoing expensive problems.

"The current system, which taxes petrol cars when they fill up at gas stations, is an incredibly efficient way of collecting taxes. The fuel companies add taxes to the cost of the petrol they sell you at the gas station; the Customs department collects these payments from the fuel companies. This system is extremely difficult to cheat, because there are clear records every time a vehicle fills up.”

The current system brings in around $2 billion a year, with very low collection costs (about $20 million).

“By comparison, under the government's proposed system, every moving vehicle is going to have to be electronically monitored. That's not such a problem on very modern cars, because many of these cars are already set up with telematics systems for this purpose. But New Zealand's vehicle fleet is old and mostly not set up to be electronically monitored, so owners are probably going to have to pay for the electronic device that tracks their vehicles. In addition, taxing all vehicles for the distance they travel will require a huge electronic infrastructure to record every movement of every vehicle. This is not nearly as easy as the government seems to believe.”

"It’s easy enough to toll vehicles driving down a section of highway or vehicles entering and leaving a city. But to keep track of millions of vehicles over thousands of roads over millions of kilometres, is a major logistical task that is likely to cost a significant percentage of the revenue it collects.”

"There's also the issue of enforcement; one of the great benefits of the existing system for taxing petrol sales is that the tax is paid as the car's petrol tank is filled up. There's no additional debt. By introducing road user charges for petrol sales, customers are going to have to fill their vehicles and pay for RUCs at some other time. Intead of one simple transaction, you've got two separate transactions."

"Well-off motorists will probably use some system that automatically debits their bank accounts when their RUCs drop too low. What about the poor drivers? Poor families frequently skip or delay all sorts of payments; so these families are probably also going to be slow or late paying RUCs. Families who are strugglng to pay the rent or mortgage may simply stop paying RUCs entirely. What will happen to these families? Are they going to be banned from buying petrol? Are they going to be fined? The new system will inevitably make criminals of thousands of motorists who would otherwise have paid their share of tax when they filled up their vehicles. It's already common for light diesel vehicles to end up carrying thousands of dollars worth of unpaid RUCs, plus fines. So what's the sense of imposing this messy process on petrol buyers as well?"

"Taxing vehicles using their odometers is probably impractical, due to the ease with which odometer readings can be fraudulently altered."

“So why is the government taking this approach? The answer is depressingly simple: road user charges are effectively a toll road system; you pay for every trip down every road. The government has made it clear that the new system will be privately owned and run. So this scheme isn’t really about just collecting road tolls; this scheme part of an overall plan for privatising the most profitable parts of our roading system.”

Matthew-Wilson adds:

“Whether the corporation controls the entire road or just the revenue collection, the outcome is much the same.”

“Once you have 24/7 electronic surveillance of the national vehicle fleet, it’s also inevitable that this technology will be given additional uses. For example, insurance companies are using telematics to spy on drivers.

"Consumers also don't appear to understand that road user charges can be raised at any time. For example, the government plans to charge you more for using busy roads, even though these congestion charges discourage car-pooling and encourage wealthier people to use cars."

"The government could also decide to raise the cost of using highways during busy holiday times. This would discourage poorer families from taking the family away for a holiday by car. Such a system could also ensure a clearer road for rich people. It's win-win for wealthy drivers."

Experience from Australia and elsewhere suggests that tolling roads often creates as many problems as it solves.

A 2024 report to the New South Wales government stated bluntly: “Sydney’s toll road network is a poorly-functioning patchwork of numerous different price structures that will cost motorists $195 billion … in tolls over the next three and a half decades on top of the billions they have already paid.”

As Dr Scott Elaurant, chair of the Engineers Australia Transport Society put it:

“In reality, we’ve created private monopolies over essential infrastructure. These companies are motivated to maximise revenue, not deliver public value. With rising toll prices and persistent urban congestion, the inefficiency of this model becomes evident.”

Matthew-Wilson adds that the people planning the government’s toll system appear to assume that all vehicles are easily traceable, which is simply not true.

“According to various credible estimates, approximately 9% of cars lack registration, while an estimated 400,000 cars are driving around without a current WoF. My guess is that these figures are conservative. Without a registration, you can't get a WoF. Without a WoF, you can't get a registration. Within 12 months, your vehicle will simply drop out of the system, even though you may be driving it every day. The government can't track and tax vehicles that aren't in the system."

“[1] The police can prosecute these 400,000 drivers, but many of these drivers can’t afford to pay the fines they already have. It’s common for poor people’s vehicles to be seized by bailiffs over unpaid fines for WoF and registration.  After one car goes, the same poor families scratch together enough money to buy another cheap car and the process repeats. Remember, you’re talking about hundreds of thousands of vehicles here. There’s no prison large enough to hold even the worst offenders.”

Ironically, Matthew-Wilson believes that law-abiding motorists, whose cars are safe and legal, will be potentially subject to unprecedented levels of state surveillance.

"The possibilities for law enforcement are endless; at the touch of a button, the government can find out where you've been, where you are and who you're probably with. And, soon, the government will know your exact speed, anywhere, anytime. This will be the same as putting a speed camera on every single road in the country."

 "And, if the police don't like the way you're driving, they could easily shut down your vehicle. In case you don't know it, many cars are already fitted with devices that can shut them down without warning."

“There are solid law-enforcement reasons for fitting every car with shut-down technology. But there are also frightening implications in such a move. For example, the government could decide it didn’t want protestors in a particular time and place. Using remote technology, the government could simply track the protesters then shut down their cars at the side of the road.”

“Politicians almost never willingly give up the power they already have, but inevitably look for new ways of increasing it. That’s a simple reality. The government has the right to introduce new systems for revenue collection, but voters have the right to be correctly informed about these systems, before they're imposed on us.”

How universal RUCs will change the cost of driving for someone driving an average distance of 11,000km per year (including fuel/electricity and RUC).

• Ford Mustang V8 petrol - decrease $261 a year
• Ford Ranger diesel ute - no change
• Mitsubishi Outlander 4WD - increase $35 a year
• Toyota RAV4 petrol - increase $118 a year
• Toyota RAV4 hybrid - increase $302
• Toyota Corolla petrol - increase $223
• Toyota Aqua Hybrid - increase $419
• Seven-seater Kia EV9 AWD electric vehicle - no change .
• Tesla Model Y AWD - no change

  Source: Rewiring Aotearoa

(Both the Kia EV9 AWD and Tesla Model Y save around $1000 per year on RUCs and fuel/electricity combined compared to equivalent petrol vehicles, but much of this saving will be lost by the higher purchase prices of these vehicles compared to their petrol equivalents, and, probably, the higher cost of insurance)