Government Supports Tolling to Fund New Road Infrastructure

New Zealand's Government has officially endorsed tolls as a key funding mechanism for new road developments, with the National Transport Agency (NZTA) actively working on a national tolling strategy. The plan aims to ensure long-term sustainability in road construction and maintenance, while also exploring innovative funding models such as public-private partnerships.

Current Toll Roads and Future Projects

Currently, there are three toll roads in operation in the North Island: the Auckland Northern Gateway Toll Road, the Tauranga Eastern Link Toll Road, and the Takitimu Drive Toll Road. A fourth toll road is set to open in 2026, connecting State Highway 1 to the Whangaparāoa Peninsula north of Auckland, with an estimated cost of $830 million.

Additional toll road projects are also in the pipeline, including the Takitimu North Link in Tauranga and the Ōtaki to north of Levin highway. These projects are expected to be funded through a combination of the National Land Transport Fund and government loans.

How Do Toll Roads Work?

Toll roads are clearly marked with signage before drivers enter the tolling zone. Electronic toll collection systems are in place, and drivers can choose to take alternative routes to avoid tolls if desired. For example, the Northern Gateway Toll Road can be bypassed via State Highway 17, while the Tauranga Eastern Link and Takitimu Drive can be circumvented through other regional highways and local roads.

Funding and Debt Repayment

Construction costs for toll roads are primarily funded by the National Land Transport Fund (NLTF), with government loans used to cover any shortfalls. For instance, the Northern Gateway Toll Road required a total of $375.7 million for construction, with $217.7 million coming from NLTF and the remaining $158 million from government debt financing.

Toll fees are designed to cover debt repayment, operational costs, and goods and service tax (GST). Approximately 80 cents of every toll payment goes toward operating expenses, while the rest is allocated to debt and GST. It is expected that tolls will be removed once the debt for each road is fully repaid. For example, Takitimu Drive is anticipated to be toll-free by 2031, the Northern Gateway by 2039, and the Tauranga Eastern Link by 2040.

Public-Private Partnerships as a New Model

Transport Minister Chris Bishop has highlighted the potential of toll concessions as a new funding model. Under this public-private partnership approach, private entities can contract the operational rights of specific road segments. During the contract period, the toll revenue is retained by the private entity, which is also responsible for construction, maintenance, and toll operations.

Upon the conclusion of the contract, the operational rights revert to the government. In exchange, the private operator provides an upfront capital payment, which the government can then reinvest in other infrastructure projects. This model is already in use in other parts of the world, with the WestConnex toll road in Sydney serving as a successful example.

Future Road Projects and Tolling Considerations

While toll roads are expected to remain part of the infrastructure landscape, the government is also assessing the feasibility of toll concessions for future projects. Potential pilot projects include the road between Cambridge and Piarere, the Hawke’s Bay Expressway, and the Belfast-to-Pegasus Motorway. These projects will be evaluated for their suitability for tolling and public-private partnership models.

All Roads of National Significance will be considered for tolling under the Government Policy Statement on Land Transport. This initiative aims to ensure that road infrastructure development remains financially viable and sustainable in the long term.