GUEST BLOG: Ian Powell – When the privatising rubber hits the climate change denial roads

First a disclosure. I’m the co-owner of a plug-in hybrid car. It cost in the vicinity of $20,000 more than if it had been completely petrol fuelled. A key factor in the purchase decision was to make a small contribution to reducing carbon emissions.

Then along came the National-ACT-NZ First coalition government’s decision to introduce road user charges (RUCs) for fully electric and hybrid vehicles.

It felt like a kick in the teeth to those trying to do their bit for reducing climate change driven carbon emissions.

Not just because of this decision, it has become obvious that this is a government that resides within a spectrum between climate change indifference and climate denial. Roads is one of the big areas where this indifference is being played out in real time.

Transport Minister Chris Bishop announced replacement of petrol tax with road user charges

But now, following the Government’s announcement by Minister of Transport Chris Bishop to replace the petrol tax with road user changes for all vehicles, privatisation is being used to strengthen the Government’s ‘journey of travel’.

On 6 August two helpful explanatory articles spelt out the details of the announcement. One was by James Ensor in the NZ Herald (6 August): Road user changes for all. The other was Bridie Witton in The Post (6 August): Petrol tax replaced by RUCs.

In his announcement Minister Bishop called it “the biggest change to how we fund our roading network in 50 years”.

He argued that the “surge” in fuel-efficient, hybrid and full electric vehicles had eroded the longstanding connection between petrol consumption and kilometres driven.

He received ‘cheer leader’ support from Stuff Political Editor, and a former leading player in the rightwing NZ Initiative thinktank, Luke Malpass in his paywalled article arguing that the decision would bring the country into the 21^st century; The Post (7 August): Cheerleader support.

There was also strong support from the NZ Initiative’s chief economist Eric Crampton who drills down further in a considered Newsroom column (12 August): Better transport funding. Although I disagree with his approach to the issue, I readily acknowledge that it is thoughtful and considered.

The announcement

Chris Bishop expects the legislation to pass in 2026, with the system becoming operational by 2027. In summary the announced decision involves

1. Scrapping fuel excise duty and move all vehicles to a RUCs system.
2. Charges would be based on distance travelled, vehicle type, time and location.
3. In the name of “modernisation” the current RUCs paper “labels on windscreen” system would be replaced by a fully digital e-RUC system.
4. The New Zealand Transport Authority’s (Waka Kotahi) dual role as both regulator and RUC retailer will be split with NZTA losing the latter role.
5. Private firms taking over the collection and administration of RUCs charges (the above former role).

Distinguishing facts from political fiction

Stuff journalist Bridie Witton’s second article cautionary over claimed benefits

Following the initial coverage of the Transport Minister’s announcement, Bridie Witton wrote a second cautionary piece casting doubt on the claimed benefits.

Published on 8 August in The Post she suggested that most vehicle owners might not benefit: Most vehicle owners unlikely to come out ahead.

Witton’s piece included Professor Simon Kingham, former chief science adviser to the Ministry of Transport, observing said the new system would to be more expensive to operate. Consequently, the increased costs had to come from somewhere.

Kingham, as reported by Witton, explained that:

This was because every car would need a transponder or some kind of digital device to  track road use and report the data back, potentially to an app, for the easy digital payment Bishop envisioned.

He noted the Government’s roading ambitions cost more than it was raising in revenue, adding that it wasn’t certain whether the Government planned to pass the new costs on to consumers or offset it through taxes.

Bishop has confirmed it will bring in more revenue, which suggests people will pay more.

Kingham also warned that a distance- and weight-based system could disincentivise people from moving to fuel-efficient vehicles.

“It will be relatively more expensive in fuel-efficient cars, and relatively more cheaper in gas-guzzling cars. If it’s entirely based on distance, then everybody pays the same.”

He said there was potential for more sophisticated pricing, such as charging more around schools or at peak times, but that could mean every driver has a tracking device in their car, which he said was “moving into ‘Big Brother’ territory”.

Dropping the fuel tax also made it less attractive for people to transition to electric vehicles, he added.

Ideologically driven privatisation

Prime Minister Christopher Luxon’s government ideologically prone to climate change indifference and privatisation

Just as Christopher Luxon’s government has become increasingly known for its indifference to (and among some, especially NZ First, denial of) climate change, it also has become increasingly known for its ideological preference for privatising functions of public utilities.

I’ve discussed privatisation promotion in public hospitals

I have discussed the latter in the context of outsourcing planned surgery which would normally be undertaken by public hospitals. See my Newsroom columns (12 March and 16 June respectively): Increased risk and Follow the money.

Also see my health systems blog Otaihanga Second Opinion (14 July): Who benefits.

Under the PR guise of “modernisation” private firms are to take over from NZTA the collection and administration of road user charges.

This is based on the simplistic ideological assertion that this will drive innovation and reduce compliance costs by allowing the market to offer high-tech solutions, such as integrations with in-car computers.

In Chris Bishop’s words:

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

Embellished nonsense! As a reluctant user of NZTA’s current system of managing RUCs payments I find it straightforward and efficient. Eric Crampton expresses a similar view in his above-mentioned article.

No reason is given as to why NZTA itself could not be allowed to implement the proposed new system efficiently and effectively as private firms might be able to. There is every reason to believe that it could.

Deputy Prime Minister and ACT leader David Seymour ideologically addicted to privatisation (Yeo, Otago Daily Times)

There is a strong addiction within the government to privatising public utilities. Arguably the most addicted is ACT leader and Deputy Prime Minister David Seymour. This addiction extends to privatising tax collection of RUCs.

The biggest beneficiaries will be the private corporates who take their cut to gather the tax. Why should this not surprise anyone!

Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Political Bytes