I’ve written twice previously (here and here) about the National Land Transport Programme. This post is just a quick one to highlight a point a lot of New Zealanders don’t get.
This webpage here tells us where the money comes from to pay for the country’s roads, rail, footpaths, cycleways and public transport.
I’ve taken numbers straight from the Waka Kotahi page and just graphed it into a simple pie chart.
It shows that around a quarter of the money comes from Road User Charges (diesel), another quarter from fuel excise (petrol), and a sliver from vehicle registrations.
A fifth comes from local rates, and the remaining 24% comes from various crown packages (general taxation).
Overall 56% comes directly from motorists using the road network, 44% comes from general taxation and rates.
Secondly, I’ve graphed how the money gets spent. This is shown on the same webpage – all I’ve done is taken the numbers and graphed them.
This graph shows Road Operations and Maintenance is the biggest chunk, followed closely by road improvements. Road safety improvements round out the top three. These three blue components providing for motorists make up 69% of our total land transport spend.
So motorists directly contribute around 56% of transport funds, whilst getting back 69%.
Thirdly I’ve repeated the previous graph but for just the Canterbury Region rather than the whole country.
This shows a similar pattern but even more pronounced, with the blue motorist components comprising 78% of the investment in Canterbury.
These numbers show that the revenue we collect from fuel tax and registrations is not sufficient to fully cover the cost of the roads that motorists use, let alone subsidise other travel modes. We have to top up this revenue from other sources; namely local rates and general taxation.
If you ever hear anyone say that motorists subsidise people who walk, bike and use public transport, you can point them to this data, which shows that the contrary is in fact true – taxpayers and ratepayers are subsidising motorists.
11 thoughts on “National Land Transport Programme 3”
With regard to your final conclusion, you have not mentioned dollar amounts, so cannot draw that conclusion. If motorists pay 56% of $1, and get back 69% of 67 cents, they are being subsidized by nobody. Also part of the general taxation component paid to roading costs will come from GST paid on most of these other levees, and from general taxes paid by the motorists on other things. So unless the actual $ figures are produced by someone, no subsidy conclusion can be drawn either way!
The dollar amounts in and out are exactly the same (they have to be) – about $24 billion over the next three years. Even if you added GST to the 56% motorists pay, you would still only get to 64% of the revenue. But motorist GST paid is a drop in the ocean in general taxation – it will total $2 billion over the next three years, compared to $60 bn total GST collected over that period and $250 bn total taxes of any form collected.
GST paid by fuel purchaser will be less than 15% total surely as any GST registered purchaser will claim this as a cost in there GST calculations. Sure
a GST component for fuel will show in the end good sold this fuel has contributed to but how do you calculate that?
You can go to the pages linked to and do the maths yourself (I just did). It is the same sum of money ($24.3b). On that page, as Chris says, they show what they spend and where it comes from, and the spending matches the funding
Yea it’s true a lot of ratepayers and tax payers are motorists, as many are pedestrians, cyclists and public transport users. So the conclusion is really just that driving is subsidised in the same way that walking, biking and bussing are subsidised.
This is just for NZTA-funded work right? I wonder how big the motorist subsidy gets when the ratepayer-funded work is factored in.
About 2/3 of what Christchurch City Council spends on Transport work is ratepayer-funded.
This is anything that is funded through the NLTP which I thought included most council work- their contribution is the 20%. I know their is some stuff council does that is not through the NLTP but I thought that was a really small amount.
+1. Great article
Motorists are very heavily subsidised in NZ (and most of the world) & we wonder why NZ cities sprawl. It also makes it harder to reduce carbon emissions (bigger vehicle fleet and used more often)
a) The current government has a policy of not increasing fuel excise tax (the crown loan wouldn’t be needed if this policy was not in place)
b) NLTP propped up by taxpayer subsidy for NZUP works (should be funded by road users)
c) Ratepayers heavily cross subsidise vehicle users. There should be close to zero ratepayer funding of transport given that vehicle drivers dont pay their full internal or externality costs & we even have to design the roads to provide safe space for cyclists, micro-mobility and pedestrians away from vehicles.
d) One can even argue that vehicle owners (richer) should pay some of the public transport costs (transport for the poorer) as a simple tax transfer to ensure the poorer in society actually have access to transport to participate in society). Given vehicle users dont mitigate their current costs this is more equitable than ratepayers or taxpayers funding it.
e) No congestion tolls which means too many road network improvements are being built that wouldn’t be needed if congestion tolling was in place. (our roads are only busy for 2-4 hours a day the rest of the time there is space capacity)
f) No air pollution levy
g) Underfunding by motorists of full crash costs
h) Developer contributions subsidising road users. Its not the developers who cause the traffic issues, its the road users.
Thanks Chris. Excellent point and great to have those pie charts.
Of course, the subsidy to driving is far bigger than this because of all the externalities that driving puts on society. The public health costs due to air pollution and the physical inactivity due to car dependence; crash trauma costs, grief and ongoing disability costs, the waste of people’s potential. The carbon emissions – which will be paid as carbon credits initially and later in terms of all the mitigation work, disaster management, and the consequential further public health costs due to pests, diseases, environmental stress, etc. The poor urban form resulting from the sheer space that cars – moving and parked – take up, with all the social ills that come from the dispersed amenities that happen when carparks push them all apart. The stunted children’s development due to their lack of independent mobility that traffic danger imposes. And so on.
We can safely say that having a car each was an interesting social experiment that proved it is a poor idea, and now we need to quickly reserve driving for special purposes.
Yea agree, this is just the direct financial costs, not all the external impacts you mention.