Why distance-based road charging is a step forward – but needs to be smarter!

The Government’s recent announcement to replace the fuel excise tax with a distance-based road user charge (RUC) system is a welcome evolution in transport funding. By charging vehicles based on how far they travel and their weight, the system better reflects the physical costs they impose on our roads. It’s a fairer, more transparent model that aligns with the user pays principle.

But road wear, and addressing the funding shortfall in our transport system, is only part of the story. Vehicles also impose significant public health and road safety costs, and these should be considered as part of any changes to the RUC framework.

Emissions: The Hidden Cost of Combustion

It is well recognised that internal combustion engine (ICE) vehicles emit pollutants that contribute to a range of respiratory illnesses and other diseases, as well as climate change. These emissions, particularly nitrogen oxides (NOx), particulate matter (PM), and carbon dioxide (CO₂), have well-documented impacts on public health. Children, the elderly, and people with pre-existing conditions are especially vulnerable.

For example, and based on extensive research, the International Agency for Research on Cancer (IARC), which is part of the World Health Organization (WHO), classified diesel engine exhaust as carcinogenic to humans (Group 1). Diesel exhaust causes cancer – Fact.

Electric vehicles (EVs) and, to a lesser degree plug-in hybrids (PHEVs), produce zero tailpipe emissions. Yet under the proposed RUC model, a heavy EV/PHEV and a similarly heavy diesel ute would be charged the same per kilometre. This ignores the vastly different health and environmental impacts of each vehicle. If the goal is to reflect the true cost of vehicle use, emissions must be part of the equation.

A more equitable system would include emissions-based pricing, where vehicles with higher pollution levels pay more. This would incentivise cleaner technologies and help reduce the burden on our healthcare system.

Safety: Not All Vehicles Are Equal

Vehicle safety is another critical, but overlooked, dimension. For example modern EVs often come equipped with advanced safety features and consistently achieve higher safety ratings¹. These vehicles are less likely to be involved in serious crashes and, when they are, they better protect occupants and other road users. In contrast, some heavier vehicles - like utes and older SUVs - may pose greater risks due to poorer crash performance, higher rollover rates, and increased pedestrian harm. The societal cost of road injuries is immense, including emergency response, hospital care, rehabilitation, and lost productivity.

Therefore a vehicle that reduces the likelihood and severity of injury should be recognised in a system designed to reflect societal costs. Incorporating safety-based modifiers into RUC could reward vehicles that meet high safety standards and encourage people to prioritise safety – after all, its our families, loved ones and community members who suffer in the event of a crash on our roads (those same roads were are looking to pay for!)

A Holistic Approach to Road Charging

The current RUC proposal provides a solid foundation, but it needs refinement. A truly equitable system would:

• Incorporate emissions-based pricing, rewarding low- and zero-emission vehicles.

• Factor in vehicle safety ratings, recognising the reduced injury risk of safer models.

While it can be argued that safety and/or emissions are captured through the ACC levy as part of vehicle registration or the existing Emissions Trading Scheme (ETS) which fuel importers must pay –

and ultimately pass onto consumers, these are fundamentally embedded fees for which the consumer has limited visibility and/or awareness. If, however, on a regular basis, they see how much driving a more fuel efficient or zero emission vehicle would save them, or how much extra they are paying for a less safe vehicle, that would help change behaviour.

This isn’t just about fairness - it’s about aligning transport policy with broader public goals: cleaner air, safer roads, and healthier communities.

As the regulatory and legislative process progresses , there’s an opportunity to build a charging system that not only funds infrastructure but also promotes public health, environmental sustainability, and road safety. Let’s take it.

To learn more about how a holistic approach to road charging can contribute to cleaner air, safer roads, and healthier communities, please visit our website or reach out to our transport planning and funding experts.

¹ You can find vehicle safety ratings at www.rightcar.govt.nz