Tolling policy superseded March 2020

Archive - this information is for reference only and no longer maintained.

This policy was superseded in March 2020 by a new Tolling policy.

Introduction

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 said infrastructure.

This section sets out the guidance on assessing the potential to toll new roading infrastructure as a means to support either the funding of new infrastructure or investment in general from the National Land Transport Fund.

Tolling is consistent with Waka Kotahi NZ Transport Agency’s beneficiary pays principle because tolling roads and using toll revenues collected to build roads shifts the National Land Transport Programme towards an increase in ‘value of service’ customer payments.

The Waka Kotahi strategic options toolkit(external link) outlines that the purpose of tolling suitable state highway links can be either to advance projects through toll-funded borrowing and/or to raise additional land transport revenue. The toolkit provides several case studies, including Auckland’s Northern Gateway.

Tolling assessment

Any decision to establish a tolling scheme is made in accordance with the Land Transport Management Act on the recommendation of the Minister of Transport. This is separate to the decision to build any particular road (that may be subject to tolling), which is made by Waka Kotahi when approving a project for funding.

Assessment based on project outcomes

The decision to proceed with tolling requires an assessment of the impact of tolls compared to an untolled case. The balance between the impact of tolling on project outcomes and the relative importance of project outcomes are factors for consideration, and will be determined on an individual project basis. This policy considers tolling from revenue and welfare perspectives rather than just operational matters.
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Statutory requirements
As per section 48(external link) of the Land Transport Management Act (2003), a road tolling scheme may be established to provide funds for the purposes of one of more of the following activities regarding new roads:
- planning
- design
- supervision
- construction
- maintenance
- operation.
This is provided that the Minister of Transport is satisfied that:
- the relevant public road controlling authorities (including Waka Kotahi) have carried out adequate consultation on the proposed tolling scheme;
- the level of community support for the proposed tolling scheme is sufficient;
- if an existing road is included in the scope of the tolling scheme, it is physically and operationally integral to the new road in respect of which the tolling scheme will be applied;
- a feasible, untolled, alternative route, is available; and
- the proposed tolling scheme is efficient and effective.
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Criteria for a toll road

A number of criteria apply to determine whether a new transport project will be recommended for tolling. Waka Kotahi will also investigate further practical and financial matters when assessing toll road projects.

Criteria
The following criteria will be used to determine whether new transport projects will be recommended for tolling;
- the application of tolling is consistent with key project outcomes
- tolling should be able to provide net financial benefits and not result in the project’s benefit-cost ratio falling below 1
- tolling must be implemented in a cost-effective manner that is convenient to users.
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Further investigations
In assessing potential toll road projects, Waka Kotahi will also investigate whether:
- the tolling scheme achieves the government’s priorities as set out in the Government Policy Statement(external link) on Land Transport
- the project is large enough in scale to be able to support the fixed costs of tolling
- the number of vehicles expected to use the road (and therefore pay the toll) more than covers the toll-collection costs
- the toll revenue makes a meaningful contribution to the road’s construction costs (after deducting the operating and maintenance costs of the road and the tolling mechanisms)
- it would be physically or practically possible to charge tolls.
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Matters to be taken into account

The requirements of the Land Transport Management Act and Crown Entities Act(external link) need to be met and recommendation of the Minister of Transport is required to implement a tolling scheme.

Setting the toll price

Toll prices need to strike the right balance between recovering costs and pricing benefits.

To maximise the potential returns for our customers, Waka Kotahi needs to have the flexibility to set prices in ways that reflect infrastructure cost, ongoing operational costs and customer value, recognising that these may vary at different times and locations and for different customer groups and that this variation can contribute to the customer value proposition.

Toll price principles
In determining the price at which the toll should be set Waka Kotahi will consider the following toll price principles.
Toll prices should:
1. preserve the project’s investment outcomes.
2. reflect the underlying costs.
3. reflect the value proposition to the user.
4. consider how they can influence smart travel choices.
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