NZ Government Introduces Monthly Fuel Price Adjustments to Support Transport and Construction Sectors

The Government is backing New Zealand’s transport and construction sector by ensuring public transport operators and infrastructure contractors have greater flexibility to manage rising fuel costs, Transport Minister Chris Bishop says.

Rising fuel prices are putting pressure on Kiwi businesses, including the public transport operators keeping our buses and ferries running, and the contractors building and maintaining our roads and infrastructure, Mr Bishop says.

Most NZTA contracts already include fuel price adjustment mechanisms, but they’ve typically only been applied quarterly. When prices move quickly, as they have recently, that creates cashflow pressure for operators and contractors who have to carry those higher costs until the next adjustment.

We’re fixing that. NZTA is moving to monthly interim fuel price adjustments across its public transport, construction and maintenance contracts so operators and contractors are not left waiting months to recover rising costs.

This is a practical, common-sense change. It doesn’t increase the overall cost of contracts, but it does smooth cashflow and reduce risk, particularly for smaller operators who don’t have the balance sheets to absorb rapid cost increases.

Mr Bishop says the change will help keep public transport services running reliably and ensure critical infrastructure projects stay on track.

Public transport operators play a vital role in keeping our cities moving every day. This change gives them greater certainty and helps ensure services remain reliable for passengers – especially important when Kiwis are increasingly choosing to take public transport in response to rising fuel prices.

Mr Bishop says the Government’s approach to providing support with higher fuel prices driven by the Middle East conflict is to ensure that it is temporary, targeted and timely.

This change meets that test. It uses existing contract settings, applies for as long as volatility persists, and can be scaled back when conditions stabilise.

The updated approach has been communicated to industry and applies to all relevant public transport, construction and maintenance contracts.

NZTA is in regular contact with operators, contractors and the wider sector, and I expect that engagement to continue.

Mr Bishop says the Government will continue to monitor global fuel markets closely.

New Zealand’s fuel supply remains stable, and there is currently no need for restrictions. But we are planning carefully, acting early where needed, and making sure we are well positioned to respond to any disruption.

Our focus is straightforward: keep fuel flowing, keep people moving, and keep the economy going.

Notes to editor All bus and ferry operating contracts co‑funded from the National Land Transport Fund (NLTF) with a term of more than 12 months include an NZTA‑approved indexation mechanism.

Once fuel prices stabilise, NZTA will return to quarterly indexation updates, and will notify stakeholders before this takes place.

NZTA will publish the interim public transport index values each month as soon as possible following the release of the latest Statistics New Zealand data.