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This page relates to the 2018-21 National Land Transport Programme.

Introduction

Waka Kotahi NZ Transport Agency's policy on tolling for state highways.

Date of issue: March 2020 | Investment policies will be reviewed every three years or when a new Government Policy Statement on land transport is released

Purpose

This policy provides a framework for Waka Kotahi NZ Transport Agency to decide when tolling is feasible and appropriate for state highways, as provided for under section 46 of the Land Transport Management Act 2003 as a mechanism for funding road infrastructure projects.

Definition of terms

Public private partnership (PPP) is a long-term contract for the delivery of a service, where provision of the service requires the construction of a new asset, or enhancement of an existing asset, that is financed from external (private) sources while full legal ownership of the asset is retained by the Crown.

Tolling is a method of raising revenue from transport infrastructure which involves a charge or fee imposed on the user in return for the benefits received from using that infrastructure.

Policy statement

Purpose of tolling

Tolling is a revenue collection mechanism Waka Kotahi may establish under the Land Transport Management Act 2003(external link), which enables users of a road to contribute to its cost over time.

Under section 46, revenue from tolling may be used to contribute towards the ‘planning, design, supervision, construction, maintenance, or operation of a new road’:

 

Assessing whether tolling is suitable for a new or upgraded state highway

Waka Kotahi assesses all new state highways and significant upgrades to existing state highways for tolling suitability.

Waka Kotahi may assess all state highways and significant upgrades at two separate stages and for different purposes:

  1. Detailed business case: assessing the use of tolling to advance the construction of a road.
  2. On approval for construction: assessing the use of tolling for PPP (or similar) repayments and/or the operation and maintenance of the road.

Tolling assessments pass through a three-gate process, designed to apply a series of lenses to the complex issue of determining tolling feasibility, and provide the information required for robust decision-making. This three-gate process aims to weight the potential toll road against the requirements of the Land Transport Management Act and investment principles, while ensuring that the Waka Kotahi Board, the Minister of Transport and the public are involved appropriately.

The criteria for each stage of this assessment are as follows:

Gate one: legislative requirements and practicality tests

  • The road is new or is an existing road undergoing significant upgrade.
  • There is a feasible free alternative route available for use.
  • More than 10,000 vehicles are likely to travel the road per day.
  • Tolling infrastructure can be installed in a manner that is cost-effective to the project and reasonable; and within time periods required by the Land Transport Management Act.

Gate two: (A) value for money and investment rationale tests, and (B) policy and project alignment tests

  • The toll rate is reasonable and does not result in a traffic volume change that unduly impacts the wider network.
  • Tolling infrastructure costs no more than 20% of anticipated toll revenue.
  • Estimated tolling revenue will result in a meaningful contribution to the road cost.
  • Tolling delivers value for money and public good to New Zealanders and Waka Kotahi.
  • Tolling does not significantly reduce project outcomes.
  • Tolling aligns with the GPS priorities of: inclusive access, economic prosperity, healthy and safe people, environmental sustainability, and resilience and security.

Gate three: public interest

  • An effective and transparent public consultation process has been completed.

 

Public consultation

The public must be consulted on all proposed tolling schemes. Consultation happens after the assessment outcome has indicated tolling is feasible and the Minister of Transport has agreed, upon the recommendation of the Waka Kotahi Board, to progress to scheme development.

To be effective, public consultation will run for at least four weeks, and will involve a combination of the following (not an exhaustive list):

  • the development and release of a plain-English document explaining the tolling scheme
  • public workshops
  • public information evenings
  • public assemblies
  • question and answer opportunities
  • other discussion and information opportunities.

All submissions and feedback collected via the public consultation will be used to inform the final recommendation to the Minister of Transport on whether to progress the toll road.

 

Approval process

1. Waka Kotahi Board

The Waka Kotahi Board holds the delegation for recommending a toll road to the Minister of Transport. This recommendation will occur:

  • after gate two, if the assessment shows the road is suitable for tolling, and where the recommendation will include permission for public consultation on the tolling scheme; and
  • after gate three, when the final recommendation is to recommend tolling to the Minister of Transport, following the outcome of public consultation.

2. Minister of Transport

The Minister of Transport holds legislative power to recommend a road for tolling to Cabinet, provided the minister is confident the requirements of the Land Transport Management Act have been met.

Although not a legislative requirement, it is considered best practice to ask the Minister of Transport’s permission to publicly consult on the proposed toll road.

3. Cabinet

Cabinet holds the power to recommend the making of an Order in Council to the Governor-General.

4. Governor-General

The Governor-General holds the legislative power to approve and sign the Order in Council, thereby establishing a toll road.

 

Timings

Because Cabinet must approve the establishment of a toll road, the process can be time intensive. These timings are constrained by the requirement for the Order in Council (that is, the lawful ability to toll) to be in force no later than the day the road is opened.

Waka Kotahi will endeavour to begin all assessments of new roads under the three-gate process no less than three years before to the opening date of the road, and, wherever possible, in conjunction with the road design process.

 

Tolling and travel demand management

The Land Transport Management Act does not provide for establishing a toll for travel demand or congestion management purposes. Although as part of the assessment and development of a tolling scheme, the impacts of tolling on the wider transport network must be considered, this will occur within the context of potential benefits or dis-benefits that relate specifically to the financial viability and effectiveness of the project as outlined in ‘Assessing whether tolling is suitable for a new or upgraded state highway’ above.

 

Proactive release of information

Waka Kotahi will, unless there is a justifiable reason, proactively release the results of tolling assessments and its recommendations once the decision whether to toll has been publicly released.

Any proactive release of information may be subject to redactions, where appropriate, under the Official Information Act 1982.

Related legislation

In the course of delivering tolling, Waka Kotahi must consider and be aware of its obligations under the following legislation:

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