NZ leads the road user charge

by Keri Molloy

New Zealand is the first country to propose road user charges (RUC) for all vehicles.

The operation will see every Kiwi’s driving tracked to calculate fees, raising major concerns about privacy. And then there’s cost and control.

The government assures us that the app based payment model will be user-friendly. Others warn it will help create a digital cage for individuals, that will be difficult to avoid.

The proposed system may be innovative but it may cost you more, it may be cumbersome and it could carry a social credit element.

Background

Legislation is planned for 2026 to amend the Road User Charges Act that will enable the use of built-in or electronic devices. The government is presently assessing proposed technologies including a GPS-linked tracking system and aims to start the operation in 2027.

What it means is that your every movement can become recordable. You can be tracked and you will be subject to digital enforcement.

We are talking about compliance, driver behaviour and video telematics, a technology that connects driver behaviour data and analytics with video footage. This footage is uploaded to the Cloud for review.

All light vehicles, including petrol, diesel, electric and hybrid, will pay these road-user charges, based on distance travelled and vehicle weight.

NZ Transport Authorityand police systems will be upgraded to support digital enforcement.

Critics warn that you will be surveilled and your ability to move freely could be at risk.

Privacy

The Office of the Privacy Commissioner has warned that data gathered could “reveal a lot about a person’s life and habits” and noted the need for privacy protections.

Indeed digital surveillance of vehicles fits neatly into the global ‘smart city’ and Net Zero agendas. Cars and fuel consumption are key elements of these ideologies. The Road User Charge (RUC) comes up often in Net Zero transport policy because, as cars move away from petrol and diesel, governments lose fuel tax revenue, which funds roads and infrastructure.

RUC comes with control and surveillance, enabling restrictions on travel, work, or consumption that could be imposed to cut greenhouse gas emissions.

So far, no country has implemented any “climate lockdown” but a digital surveillance and enforcement regime, such as that proposed in New Zealand, will make such orders easy to implement.

As the first off the block, New Zealand will be the global model for driver surveillance and the creation of a system to monitor individual mileage and behaviour.

New Zealand’s Attorney General Judith Collins holds the portfolio for Digitising Government in the present government.

She boasts of championing new search and surveillance laws to boost tools available to law enforcement agencies.

“We have been hard at work to ensure that all Government agencies are ready and able to issue digital credentials, and that our statute books are enabling, not restricting. For example, the New Zealand Transport Agency is actively working on the design and development of a digital driver licence, the Department of Internal Affairs has developed a proof of concept for a digital photo ID, and Immigration New Zealand is exploring opportunities for a digital visa ID.” – Judith Collins, addressing the Digital Identity New Zealand Hui on August 12.

Cost

Transport Minister Chris Bishop has promised the new tax regime will make petrol cheaper by removing fuel tax and GST. But many drivers – especially those using efficient petrol or electric vehicles – may end up paying more per kilometre than they do under today’s petrol tax system.

For example, if you drive a Toyota Corolla your charges are likely to increase from about $46 per 1,000 km to about $76 per 1,000 km.

A ThreeNews investigation, based on available information, found the average petrol car driver would be paying around an extra $270 a year under the new scheme.

Transport business operators carrying lighter loads in high-capacity trucks are particularly worried about inflated charges that don’t reflect real usage.

The NZ Herald reported that one transport wholesaler estimated an increase of NZ$200,000 per year, under the new system.

Many carriers warn that cost increases are likely to pass through to consumers via higher prices.

Farmers are worried too. Currently, light diesel vehicles under 3,500 kg, including many utes used in farming, remain exempt from RUC. Maintaining this exemption would help avoid additional costs for many farmers, especially those using vehicles off-road or intermittently.

The technology

New Zealand has officially launched a Request For Proposal (RFP) to identify suppliers for a digital credential issuance platform that will be used by the ‘NZ Government Digital Wallet’.

The issuance platform will be managed by the Department of Internal Affairs and used by government agencies to issue digital IDs and other credentials stored within the wallet. The wallet itself is part of the NZ Government Mobile App, designed to bring together government services and credentials. The app is expected to go live before the end of 2025.

Analysis

Northlander Mignon Beren-Zwart runs a business processing road user tax exemptions. She warns that people will stop complying if the new regulations are more expensive.

She has written to government ministers expressing her concerns.

“The current way in which the excise tax is charged means that everyone buying petrol must pay, making it impossible for those buying fuel to avoid paying the tax – only those who have owned electric vehicles have had the luxury of avoiding paying this tax.”

She points out that there are people today who do not buy their diesel Road User Charges and continue to drive on the roads thus avoiding their contribution to road maintenance.

“Charging the road tax at the pumps is the only fair way to ensure everyone who uses, contributes.”

She adds that the proposed changes will also put an unnecessary strain on the police force.

She urges the government to continue to charge tax at the petrol pump and do the same for diesel, to maintain the country’s roads – with electric vehicles also paying their share.

She says statistics show that there are currently only 115,000 electric vehicles registered in New Zealand: sales for EVs are slowing down, and equating to only 3% of all sales (as at Dec '24). Currently 89% of all the road vehicles in New Zealand are petrol – 3,500,000. With the average number of kilometers driven in New Zealand sitting around 14,000, she says:

“To overhaul the excise tax system, to try and capture additional funding from 3.2% of vehicles on the road, does not make financial sense. Currently all of those 3,500,000 petrol vehicles are paying excise tax, with no possible way of avoiding doing so. The current system also means all recreational petrol boat users and jet ski users are also all paying excise tax which has an immediate flow on effect by helping to fund Maritime Safety initiatives.

“The move to RUCs risks being overly complex, costly to administer, and regressive in impact, disproportionately affecting lower-income earners and those in regions where public transport options are limited”.

Online commentators are more blunt One online post reads,“Wow, huge amount of regulation involved in this – because what we all needed was more red tape just to drive to work. Now we’ll need to log our kilometres manually or install GPS tracking devices, purchase RUC licences regularly instead of just paying at the pump, have odometer readings recorded at every Warrant of Fitness, risk fines or audits if the numbers don’t match, and deal with new bureaucracy, apps, or third-party systems to stay compliant.”

Others said they refused to be tethered to a system they didn’t trust. One put it candidly: “I’m not carrying a phone just so I can drive. Stick it where the sun doesn’t shine.”

The Regulatory Systems (Transport) Amendment Bill has now passed its first reading in Parliament.

The bill seeks to expand the definition of a driver’s licence to include both electronic and physical versions. It also creates a framework to allow the Government to introduce further legislation regarding digital licences.

Public Consultation on RUCs for all vehicles is expected before the system goes live in 2027.

Watch government announcements and make a submission when they call for public feedback.