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Media Release 19 May 2005

Good and Bad News for Motorists in Budget

The Automobile Association has welcomed the Government's announcement that it will invest $100 million per year in the land transport fund from 2006-7 but is unhappy with the levying of a carbon tax which will cost 4.5 cents per litre (including GST) at the pump. In effect motorists will pay 4.5 cents and get 3 cents worth of transport spending in return.

"The Government is right to say that it needs to invest in transport infrastructure due to decades of neglect. We note, however, there is no guarantee that this level of spending will continue after 2009 which is when most of the major projects on the Transit ten year plan start construction." AA Public Affairs Director George Fairbairn says.

AA projections for the next twenty years suggest there is a $5 billion shortfall in road construction looming - mostly in Auckland and the North Waikato. However because these projects are deferred beyond 2015 the $300 million allocated in the budget is unlikely to be able to assist with these. Instead Mr Fairbairn said the AA would like to see the money spent on improving safety.

"Our hope is that the Government use this funding to improve the safety of New Zealand's two-lane highway network. While it will not make a significant difference to the Auckland projects it could buy hundreds of kilometres of passing lanes, median barriers, rumble strips and roadside safety treatment that could many lives. Recent work by the Government suggests that the cost to the people of New Zealand from our poor quality road network is around $670 million a year so such investment could produce significant savings." Mr Fairbairn said.

Mr Fairbairn said the down-side of the carbon charge was that it would cost the average household roughly $50 a year and make almost no difference to New Zealand's emissions liability. Since 1990 (the Kyoto Protocol base year) the increase in the number of vehicles on the road has been 27% and vehicle-kilometres driven 32 percent. But the increase in petrol engine CO2 emissions has been only 17% due to more efficient vehicles. The big increase in the CO2 emissions liability has not come from ordinary cars but from diesel vehicles whose emissions have increased a considerable 182%. Some of this has come from increased economic activity due to farm machinery and trucks but a lot of it has also come from people substituting low emission smaller vehicles for high emission large diesel vehicles, such as sports utility vehicles and urban four wheel drive vehicles.

"An across the board increase in both diesel and petrol costs does not send any useful price signals to motorists. This means there is no intention for people to avoid the tax by changing their behaviour. As such the carbon tax is more of a justification for a tax hike rather than a way of actually reducing emissions. The AA believes there are better ways for the Government to meet its Kyoto obligations while reducing the costs of transport to the public" he said.

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The New Zealand Automobile Association is an incorporated society with over one million members. It represents the interests of road users who collectively pay almost $2 billion in taxes each year through fuels excise, road user charges and GST.

ENDS

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