Revenue for land transport comes mostly from motorists through fuel excise duty (petrol tax), road user charges on diesel vehicles (RUC), and vehicle licensing charges. The Land Transport Management Act 2003 ring-fences this revenue for investment in land transport, including building and maintaining State highways and local roads.
State highways are funded entirely by central government, with maintenance responsibilities and expenses falling on the NZ Transport Agency(external link).
The costs of building and maintaining local roads are shared between central government (through the NZ Transport Agency) and local councils. Councils contribute to the cost of their land transport activities from rates and borrowing, in what is known as the ‘local share’.
The government’s priorities for land transport funding are set out through the Government Policy Statement on Land Transport, which allocates ranges within which road improvements and maintenance can be funded. Each local council then prepares a Regional Land Transport Plan, which the NZ Transport Agency considers when preparing the National Land Transport Programme (NLTP). The NLTP allocates funding to individual roading projects. This separation of the Minister from individual funding decisions is designed to help avoid perceptions of conflict of interest.
From time to time the government may wish to fund projects which are unable or unsuitable to be funded by charges on motorists alone, or might want to exercise more control over investment than is permitted through this process. In these cases the Crown is able to direct additional funds through the usual Budget processes. Recent examples of this are funding for the Accelerated Regional Roads Package, Urban Cycleways and the SuperGold Card public transport scheme.