Govt unveils next steps to roll out eRUC for all vehicles

Transport Minister Chris Bishop says Cabinet has agreed to a suite of legislative reforms paving the way for a “once-in-a-generation” overhaul of how New Zealanders pay for roads — moving away from fuel excise tax towards electronic road user charges (eRUC) for all vehicles.

Currently, drivers of petrol vehicles pay around 70 cents per litre in fuel excise duty (FED), which is funnelled into the National Land Transport Fund. Meanwhile, diesel, electric and heavy vehicles already pay road user charges (RUC) based on distance travelled.

Replacing petrol tax with distance- and weight-based charges for all vehicles (whether they be petrol, diesel, electric or hybrid) marks the most significant shake-up of road funding in half a century, Bishop says.

“For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down,” he says.

“For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements.”

He pointed to the rapid rise in petrol hybrids, with just 12,000 on the road in 2015 compared to more than 350,000 today.

“It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often,” he says.

“This is a change that simply has to happen. The government has recognised reality and is getting on with the transition.”

Under the new system, all vehicles would eventually pay based on distance travelled and vehicle weight, regardless of fuel type.

Bishop says the process will begin with regulatory reforms to modernise the current “outdated” RUC system, which is still largely paper-based and requires odometer tracking and pre-purchased 1000km chunks.

“We’re not going to shift millions of drivers from a simple system at the pump to queues at retailers,” he says.

“So instead of expanding a clunky government system, we will reform the rules to allow the market to deliver innovative, user-friendly services for drivers.”

E-RUC is already in use for about half the country’s heavy vehicle fleet, and Bishop says several domestic and international firms have technologies ready to make compliance cheaper and easier.

Key legislative changes will include:

• Removing the requirement to carry or display RUC licences in favour of digital records.
• Enabling a broader range of electronic RUC devices, including in-built vehicle systems.
• Allowing post-pay and monthly billing models.
• Separating NZTA’s regulatory and retail functions to allow fairer competition.
• Bundling RUC, tolls and time-of-use pricing into single payments.

“The changes will support a more user-friendly, technology-enabled RUC system, with multiple retail options available for motorists,” Bishop says.

“Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy.”

He says legislation is expected in 2026, followed by a new Code of Practice and a market engagement process to identify suitable technology providers. Enforcement systems at NZTA and Police will also be upgraded to support a fully digital environment.

“By 2027, the RUC system will be ‘open for business’, with third-party providers able to offer innovative payment services and a consistent approval process in place.”

However, Bishop says no date has been set for full transition of the light vehicle fleet, noting “that’s a deliberate choice, as we’re focused on getting the system right rather than rushing its rollout”.

“This is a once-in-a-generation change. It’s the right thing to do, it’s the fair thing to do, and it will future proof how we fund our roads for decades to come.”

The work progresses the National-ACT coalition agreement to replace fuel excise taxes with electronic road user charging.

Auto Media met with the Transport Minister in June, where he confirmed progress was well underway on shifting all light vehicles to road user charges, though stopped short of committing to a rollout this parliamentary term.

He said any changes would not be immediate. “It’s not going to happen between now and the end of next year, but it will be some point after that. There’ll be a turn-on date, or probably a staggered turn-on date.”

Bishop said the aim was a fully digital system, supported by fallback options. “Almost inevitably it will involve electronic road user charges in some way, shape or form… with a manual backup.”

*Read the full interview with the Transport Minister here.