Advocacy Update: National Road Carriers views on the Land Transport Revenue Amendment. Bill Part 1 Amendments relating to road tolling schemes.

Late last year the Government introduced the Land Transport Revenue Amendment Bill Part 1 which contained amendments to how tolls are applied in New Zealand.

NRC submitted on the Bill in January, and we appear in front of the select committee in February.  

Our concern is not with tolling per se, but with how the Bill proposes to exercise pricing and access powers over what are, in effect, essential freight corridors.

NRC takes particular exception to two features of the Bill:

1. The absence of any mandatory upper limit or independent oversight of toll levels, especially where heavy vehicles have no practical alternative route.
   
   
2. The proposed power to restrict heavy vehicles from using the untolled “alternative route”, effectively converting many freight movements into compulsory tolled trips.
   
   

We propose targeted changes that would retain the core intent of the Bill – modernising tolling and enabling private capital – while embedding fair protections for freight users and aligning with international good practice.

Problem 1: lack of effective upper limits on tolls

As drafted, the Bill:

• requires tolls to at least keep pace with CPI;
• enables recovery of capital plus a commercial return for private operators;
• allows, but does not require, tolling orders to specify maximum toll limits;
• does not provide any independent economic oversight of toll levels over time; and
• does not require explicit consideration of affordability for road-freight users on freight-critical routes.
  
  

This framework creates the risk that:

• tolling becomes a mechanism for extracting unconstrained revenue from freight users who have no viable alternative route; and
• freight-dependent businesses and communities face higher and more volatile transport costs, undermining competitiveness and regional development.
  
  

From an NRC perspective, the principle is straightforward:

• Tolling should not become a mechanism for extracting unconstrained revenue from freight operators who have no viable alternative route.
• Heavy vehicles should have confidence that toll levels will be fair, predictable over the life of the asset, and subject to meaningful public-interest constraints.

NRC proposal to fix the problem

Principle 1: freight pricing must be fair, predictable, and contestable

We ask that the Bill be amended to:

1. Require explicit maximum toll levels or formulas
   • Tolling orders should be required to set explicit maximum toll levels or escalation formulas for each vehicle class, including heavy vehicles.
   • These caps could be expressed as CPI or CPI+X, or equivalent, but should provide clear, binding ceilings.
     
     
2. Add freight-specific affordability and competition tests
   When making a tolling order, the Minister should be required to consider:
   • the cumulative cost impact of tolls and road user charges on freight users; and
   • the risk of monopoly pricing on freight-critical corridors (for example, access to ports, major freight hubs, and key primary production routes).
     
     
3. Provide for periodic, transparent review
   • The legislation should require periodic review of toll levels and their impacts on freight and supply chains, with input from industry (for example, every five years).
   • The review could be carried out by an independent body or the Ministry, but should be transparent and publicly reported.
     
     

These changes would still allow tolling to recover appropriate costs and support private investment, while giving freight users confidence that the system cannot be used to impose unbounded charges.

Problem 2: power to restrict heavy vehicles from alternative routes

The Bill also introduces a new power under which:

• the Minister may, by notice, designate an “alternative route” associated with a tolled road; and
• specified classes of heavy vehicle may be prohibited from using that alternative route, other than for limited local access (for example, pick-up and delivery or returning to base).

The original logic of tolling in New Zealand has been that a “feasible, untolled alternative route” remains available, so that tolling is a genuine choice: users pay more to receive a better level of service.

The new power to prohibit heavy vehicles from the alternative route effectively converts many freight journeys into compulsory tolled trips.

NRC proposal to fix the problem

Principle 2: real route choice and network resilience for heavy vehicles

We ask that the Bill be amended to:

1. Remove, 46D Road tolling order may authorise Minister to restrict use of alternative route and section 54 (1)

Reasons:

1. • The clause restricts the heavy vehicles to Toll Roads only, removing their ability to choose a route based on its performance.
   • The bill does not contemplate how drivers will be able to leave a Toll route to refuel, take a rest break or in the case of a bus visit a location other than to set down or pick up passengers.
   • Incentives are lowered for toll road operators to provide genuine productivity or safety improvements for heavy vehicles that have no choice but to use the road.
   • Mandated use of toll roads will drive an expectation among nearby communities that trucks will be removed from their roads, creating a social licence issue for drivers that are allowed to be there, and raising the risk of encouraging further truck bans
   • Toll road operators will be placed in a position where they have captured road freight users who are compelled to use the road, combined with an unchecked ability to drive up toll charges (similar to the recent major port access charge increases where transport operators are a captive customer)
   • It is too soon to mandate we do not have resilient network with alternatives for many.
   • If the Toll Road is built to a higher standard that provides increased mass etc then it will attract traffic without the need to obligate use.
   • Rural contractors, trades vehicles, horse floats etc will all be captured.
   • Compliance and enforcement will detract from a positive Toll Road experience
   • The framework fails to allow for the resilience role of alternative routes and ensure that heavy vehicles retain access in emergencies and for critical freight operations.
     
     

Members can download our full submission from our website.