New Zealand’s current fuel tax-based system is outdated and unfair, according to a new report from The New Zealand Initiative.

Authored by senior fellow Dr Matthew Birchall, the Driving Change: How Road Pricing Can Improve Our Roads report calls for a comprehensive reform of the country’s transport funding model.

It proposes a new “Smart Road User Charges” (Smart RUC) system to replace the current fuel excise duty. Under Smart RUC, all vehicles would be charged based on actual road usage, time of day, and vehicle type.

The proposed system aims to reduce congestion, improve road maintenance, and ensure a fairer distribution of costs. The report outlines a five-year implementation plan, allowing for a gradual transition.

The report addresses common concerns about road pricing, including privacy and equity issues, and draws on successful international examples from cities like Singapore and Stockholm.

“This is not just about raising revenue,” said Dr Birchall.

“It’s about creating a more efficient, sustainable, and fair transport system for all New Zealanders,” he said

“The New Zealand Initiative calls on policymakers to seriously consider this proposal as a solution to the country’s growing transport funding crisis.”

Road freight association Transporting New Zealand welcomes the New Zealand Initiative’s report.

“Increasing levels of congestion and the declining state of our roading network are disrupting the supply chain and restricting economic growth,” said Billy Clemens, policy & advocacy lead at Transporting New Zealand.

“It also makes achieving safety and emissions improvements difficult. We need innovative policy solutions that make our roading network function better for everyone.”