Government Introduces Land Transport Bill for Fairer Funding System

The Government has introduced the Land Transport (Revenue) Amendment Bill to Parliament, taking the next step towards a fairer, simpler, and more modern transport funding system.

Transport Minister Chris Bishop says the Bill makes important changes across both the road user charges and tolling frameworks, ensuring New Zealand is ready for the next generation of road building.

A core principle of our transport funding system is fairness: that all road users should contribute in proportion to their use of the roads, Mr Bishop says.

A stronger, more flexible tolling system to deliver new roads Mr Bishop says the Bill makes important improvements to tolling - a key tool for delivering the Government’s Roads of National Significance programme.

Tolling helps us bring forward investment and build the roads New Zealand needs sooner. The Bill provides the flexibility required to support major projects, including our new Roads of National Significance.

Key changes include enabling ‘corridor tolling’, which allows tolling on parts of an existing road where users receive clear, demonstrable benefits from a new project in the same corridor.

The Bill also introduces new tools to manage diversion from toll roads, including the ability to restrict heavy vehicles from using unsuitable alternative routes, and allowing toll revenue to help fund maintenance of alternative roads when councils are unable to do so.

To make tolling fairer and more predictable for users, the Bill mandates annual CPI adjustments instead of ad-hoc increases. And to improve collection efficiency, liability for paying a toll will shift from the driver to the registered person.

These changes will give us a more consistent, more flexible tolling framework so that we can deliver big road upgrades faster and support regional economic growth.

A modernised RUC system The Bill also provides improvements to the outdated RUC system. It was designed in the 1970s and still relies on manual paperwork and paper licences, Mr Bishop says.

Right now, drivers paying RUC have to track their odometer readings and stick paper labels to their windscreen.

This Bill enables new payment models like subscriptions or post-payment, and allows private companies to offer easy, set-and-forget billing options - similar to how many of us already pay for power or streaming services.

It also future-proofs the system by allowing accurate in-vehicle technology to record distance, and separates NZTA’s regulatory role from its retail role so third-party providers compete on a level playing field.

These changes are the first step towards replacing petrol tax with RUC for light petrol vehicles. We’ll assess the improved system in 2027 before deciding on next steps for transitioning the remaining 3.5 million vehicles.

Next steps Following its first reading, the Bill will be considered by the Transport and Infrastructure Select Committee. The legislation is expected to pass in 2026.

Notes to editor: A Request for Information (RFI) will be released on the GETS website later in November to test options with potential market providers on the design of new third-party RUC payment services.

The RUC system currently applies to all diesel vehicles, heavy vehicles (over 3.5 tonnes), and light electric vehicles, including plug-in hybrids. These changes will improve the system for existing users and prepare it for the eventual transition of 3.5 million light petrol vehicles.