Thursday, May 07, 2009

Road User Charges review sensible outcome

Transport Minister Steven Joyce has just released the results of the Independent Review into the Road User Charging system. Given that, with one exception, nobody else in the blogosphere knows this area more than I do, I thought I'd give it the once over.

Overall, most of its conclusions are wise. There is no case for diesel tax, as diesel tax would not be a charge for using the roads, but a tax on fuel. 36% of diesel is used off road, so those users would need to be refunded if a diesel tax were about road use. Diesel tax is easier for governments to siphon off for other purposes, but road user charges have always been dedicated to the land transport fund.

The economically rational idea of charging an access fee for road users was never going to fly, although I'd advocate getting rid of rates funding for local roads and for local road owners to charge access fees for driveways for adjacent properties.

Beyond that, the report recommends many tweaks to the system, including (finally) moving to buying RUC licences online, and the NZTA commit itself to improve service delivery. Frankly it needs to be open to competition from service providers, with NZTA wholesaling the activity.

Reviewing RUC annually would be helpful too, review meaning rates can go in BOTH directions.

A trial of an electronic system should be welcomed, but a far better approach would be to set the road operators free. The state highway network should be split from NZTA into a SOE, which could set its own charging system directly with road users if they wished. Council roads should be set up similarly, and all of these road companies would receive money based on usage, and would be able to raise and lower charges as they saw fit.

Funnily enough this was National Party policy until 1999, and is currently ACT policy. It's simple - bureaucrats cannot run an efficient customer service or pricing system that is responsiuve to demand and costs, and avoid politicians siphoning off the funds for other purposes. The sooner roads are commercialised, and then a trial of privatisation (the Auckland Harbour Bridge and its approaches are a good start), the better!

UPDATE: The Institute of Professional Engineers of NZ is supporting the outcome of the review. Given IPENZ understands highway construction and maintenance I am not surprised.

The Motor Industry Association is upset, because it supports a diesel tax (because it is simpler), and thinks that RUC is unfair because it doesn't recognise environmental advantages of diesel. Well, a system designed to pay for road maintenance wouldn't be, would it? Government doesn't pay environmental "costs", so you might ask why it should charge for them.

Tony Friedlander for the Road Transport Forum is pleased with the recommendations, no doubt focusing on introducing a new access fee that would mean RUC drops!

1 comment:

StephenR said...

"Given that, with one exception, nobody else in the blogosphere knows this area more than I do"

Who might that be? Kevyn at frogblog is a bit of a nerd..?