Rates of petrol excise duty and road user charges Te pāpātanga o te tāke penehīni me ngā utu mō ngā kaiwhakamahi rori

In response to continued high fuel prices placing pressure on household budgets, the Government has announced an extension to the temporary transport support measures:

• Petrol excise duty remains at its current reduced rate of 45.02 cents per litre until 30 June 2023
• Reduced road user charges rates have been reintroduced and apply until 30 June 2023. All rates are reduced by 36 percent. You can contact Waka Kotahi with questions about individual rates.
• Public transport fares remain at half price until 30 June 2023. Community Connect (ongoing half-price public transport for community services cardholders) will commence on 1 July 2023 and half-price fares for Total Mobility users will continue indefinitely.

The Government has announced(external link) the end dates for the temporary transport measures. It has been announced:  

• petrol excise duty will increase by 12.5 cents per litre on 28 February 2023 and 31 March 2023 
• the standard rates of road user charges will apply on 1 February 2023 
• half-price public transport ends on 31 March 2023. 

The Government has announced a further extension to the reductions to petrol excise duty and road user charges. Half-price public transport is also being extended.

The extension means:

• 25 cents per litre reduction to petrol excise duty will be extended until 31 January 2023 (instead of ending on 15 August 2022)
• 36 percent reduction to legislated rates of road user charges will be extended until 31 January 2023 (instead of ending on 21 September 2022)
• half-price public transport will continue until 31 January 2023 (instead of ending on 31 August 2022).

As part of Budget 2022(external link), focused on supporting New Zealanders with the rising cost of living, the Government is extending the temporary reductions to petrol excise duty, road user charges and public transport fares for two more months.

This means:

• the 25 cents per litre reduction to petrol excise duty is extended until mid-August 2022
• the 36 percent reduction to legislated rates of road user charges is extended until mid-September 2022, and
• half-fare public transport is extended until the end of August 2022.

Fuel prices increased substantially across the globe and in New Zealand following Russia's invasion of Ukraine and increased demand as the world recovers from COVID.

In response, the Government announced(external link) a three-month reduction to petrol excise duty and road user charges to help support families and businesses facing higher fuel costs. To support the uptake of public transport, public transport fares were also reduced (halved).

The temporary rate of petrol excise duty is 45.02 cents per litre of petrol, down from the ordinary rate of 70.024 cents per litre. This reduction was put in place by an Order in Council, namely the Excise and Excise-equivalent Duties Table (Temporary Reduction of Motor Spirits Duty) Amendment Order 2022 (copy below).

An equivalent reduction (36 percent) applies across all legislated rates of road user charges. The reduced rate will be in place from 21 April 2022 to 21 July 2022, as announced(external link) by the Minister of Transport. Road user charges for a light vehicle will cost $49 per 1,000 kilometres during the reduction period, down from the ordinary rate of $76 per 1,000 kilometres.

The reductions to RUC were put in placed by the Road User Charges (Temporary RUC Reduction Scheme) Amendment Bill 2022(external link).

Road users may purchase discounted road user charges until 21 July 2022 from Waka Kotahi. Road user charges should only purchase enough kilometres for three months of travel. This Act includes “safeguards” to prevent and address road users stockpiling the cheaper road user charges. This includes:

• Waka Kotahi issuing invoices/assessments for purchases that are unreasonable or excessive or abuse the temporary reduction scheme. Waka Kotahi invoices road users at the normal (non-discounted) rate of road user charges for any distance purchased that is unreasonable, excessive or abusive.
• any road user charges licence purchased for a heavy vehicle whilst discounted becomes invalid 1 month after the discounted period ends.

Further information, including guidance on purchases, may be found here on Waka Kotahi’s website.(external link)

Key policy papers, subject to necessary redactions, will be published on this webpage when they become available.

On 1 July 2020, PED increased 3.5 cents per litre and RUC was increased by 5.3%.

From 1 July 2020, the rate of PED is 70.024 cents per litre and the cost of a RUC distance licence for a light vehicle — for example, a car, van or ute — is NZD$76 per 1000km, including GST.

Road User Charges (Rates) Amendment Regulations 2020(external link) 

Road User Charges Amendment Regulations 2020(external link)

We prepared a regulatory impact assessment (RIA) on the increase to RUC. The increase to PED for 2020 was legislated in 2019 as part of budget legislation — the Excise and Excise-equivalent Duties Table (Budget Measures—Motor Spirits) Amendment Act 2019.

Excise and Excise-equivalent Duties Table (Budget Measures—Motor Spirits) Amendment Act 2019(external link)

Increasing PED and RUC following COVID-19

Cabinet considered potentially deferring or cancelling the increase to PED and RUC given the impacts of COVID-19 the community. Deferring or cancelling the planned increase would have permanently reduced the amount of money able to be invested in our land transport network. Investing in our transport network helps to stimulate the economy and create jobs which will support New Zealand's recovery from COVID-19. The Government has ruled out any further increases in PED and RUC for the next 3 years.

All the revenue from PED and RUC funds the improvement, operation and maintenance of our land transport network. In addition to transport projects funded by PED and RUC, the Government is funding several transport projects through the New Zealand Upgrade Programme.

New Zealand Upgrade Programme – Transport(external link)

Crown Infrastructure Partners is reviewing ‘shovel-ready’ projects, to help stimulate the economy and support our COVID-19 recovery. 

Shovel-ready projects(external link)

Projects to be funded by the increases

In the coming years, the amount of money available for investment in our land transport network will come under increased pressure. In addition to the Government’s road maintenance programme, funding is needed for:

• existing commitments including the 25-year public-private partnerships (PPP) contracts relating to 2 large roading projects, and
• other major roading projects including the new route replacing the Manawatū Gorge road, and the Mt Messenger bypass.

Cost to households and businesses

The cost varies depending on:

• how many kilometres they travel
• the number of vehicles they own, and
• the fuel consumption of the vehicles.

For example, a household with 1 vehicle that travels the average number of kilometres in a year — about 11,500 — will pay in 2020/21 between NZD$35 and $40 extra a year, or 67 to 76 cents additional each week.

On 1 July 2019, PED increased by 3.5 cents per litre and RUC increased by about 5.5%.

From 1 July 2020, the rate of PED was 66.524 cents per litre and the cost of a RUC distance licence for a light vehicle — for example, a car, van or ute — was NZD$72 per 1000km, including GST.

We prepared an RIA that informed Cabinet’s decision. The Road User Charges (Rates) Regulation was amended in May 2019 to put in place the increased rates.

Road User Charges (Rates) Amendment Regulations 2019(external link)

The increase to PED for 2019 became law under the Excise and Excise-equivalent Duties Table (Budget Measures—Motor Spirits) Amendment Act 2019. The increase to PED on 1 July 2020 was also legislated at this time. 

Excise and Excise-equivalent Duties Table (Budget Measures—Motor Spirits) Amendment Act 2019(external link)

PED increased by 3.5 cents per litre on 30 September 2018 and RUC increased by around 9.7% on 1 October 2018.

From 30 September 2018 the rate of PED was 63.024 cents per litre and, from 1 October 2018, the cost of a RUC distance licence for a light vehicle — for example, a car, van or ute — was NZD$68 per 1000km, including GST.

Excise and Excise-equivalent Duties Table (Motor Spirits) Amendment Order 2018(external link)

Road User Charges (Rates) Amendment Regulations 2018(external link)

How the increases affected RUC

The exact increases to RUC varied depending on the size, weight and axle configuration of a vehicle:

• RUC for light diesel vehicles, up to 3.5 tonnes, increased by around 9.7 %. For example, it cost about NZD$50 more to drive a diesel car 10,000km — that is, 0.5 cents more per kilometre.
• Most small and medium-heavy vehicles of more than 3.5 tonnes and up to 12 tonnes had increases of between zero and 10%.
• Most heavy vehicles did not pay more because the current RUC were at an appropriate level, although RUC for some increased by up to 10%.

On 28 June 2018, the Government announced increases in PED and RUC over 3 years. They came into effect on 30 September 2018, 1 July 2019 and 1 July 2020.

Before the increases were announced, we engaged with the public on the draft GPS on Land Transport 2018. We wanted to find out what stakeholders thought of PED increases of between 3 and 4 cents per litre, with equivalent increases to the rates of RUC, across 3 years. We also prepared an RIA.

Government Policy Statement on Land Transport 2018

Forecasts showed that 3 annual increases of 3.5 cents per litre would produce enough revenue to fund the priorities for land transport in the 2018 GPS.