A consultation on regulations for a new road user charging framework has just closed, but the public were never given the opportunity to consider the most important question:
Why is this change necessary in the first place?
The consultation: ‘Proposals for regulations under the Land Transport (Revenue) Amendment Bill Consultation on requirements for road user charges’ discussed electronic distance recorders, approved providers, privacy safeguards, performance standards, and alternative payment schemes. We were told the system will be modern, innovative, flexible, customer-focused, and future-ready.
New Zealand is proceeding with a technically sophisticated and commercially innovative ‘smart’ road user charging reform that would ultimately bring all vehicles into a largely privatised digital charging ecosystem, yet there has been no comprehensive public examination of its implications for privacy, data governance, civil liberties or the particular transport realities of New Zealand. The reforms contemplate telematics, electronic distance recorders, alternative payment schemes and multiple private providers, but there is no overarching framework that limits data collection to what is strictly necessary, constrains future uses of mobility data, or prevents function creep across agencies and commercial operators.
In the recent consultation people were only given minor decisions to make – but not provided the capacity to disagree or not on the fundamental policy itself and comment with the long-term vision expressed in the Cabinet documents.
Shifting policy from a fuel excise tax to electronic road user charge (RUC) model was a predetermined decision – an election commitment to the ACT and National Party Coalition Agreement to “Work to replace fuel excise taxes with electronic road user charging for all vehicles, starting with electric vehicles”.
In most areas of public policy, governments are expected to demonstrate necessity before expanding administrative systems and information collection. Apparently, a pre-election decision between ACT and the National Party (that did not reflect any broader public call) appears to be enough justification.
Unlike a 2025 European analysis that primarily envisages distance-based charging as a supplement to fuel taxes and focuses initially on EVs and heavy vehicles, New Zealand is moving rapidly toward a universal electronic RUC model that would ultimately replace fuel excise for the entire light vehicle fleet. This places New Zealand at the leading edge of road-pricing reform and raises governance, privacy and proportionality questions that receive relatively little attention in the international literature.
Remarkably little research has been undertaken globally or in New Zealand – because New Zealand is going where no-one is. International discussions of road user charging have largely concentrated on economics, engineering and congestion management. Far less attention has been paid to the governance challenges created by nationwide mobility-data systems, including function creep, commercial access to travel data, telematics integration, multi-provider arrangements and the absence of clear legal limits on future uses of that information. Seow and Pistorius’ 2024 Policy Quarterly paper stands largely alone, yet concludes that a Privacy Impact Assessment should be undertaken before implementation and that any data collected should be limited to what is strictly necessary for the stated purpose. That has not occurred.
The reform effectively assumes that privacy can be managed through provider compliance with the Privacy Act. However, privacy law is not merely concerned with secure handling of information once collected; it also requires consideration of whether the collection itself is necessary and proportionate in the first place.
RUCs, telematics, insurance & tolling – a corporate Godsend
New Zealand is able to move more swiftly than other countries, as unlike most, we already operate a public distance-based road user charge (RUC) system. This system applies primarily to diesel-powered light vehicles and all heavy vehicles regardless of fuel type – this is why diesel at the pump seems cheaper. The road tax is collected separately as RUC. It was legislated in 1977 and substantially updated in 2012 and the current legislation is focused on financing roads. Unlike the UK, Australia or the United States, which are still trying to build the political case for distance-based charging from scratch, the RUC system has evolved iteratively since it was first legislated in 1977, and the government is taking an iterative approach to expanding the system to include electric and petrol passenger vehicles.
The objective of the future Bill?:
The Bill aims to modernise the RUC system and remove barriers to the future transition of all light vehicles from fuel excise duty to RUC. By allowing for a more flexible ‘outcomes-focused’ approach, the regulations are more likely to accommodate novel technologies for electronic distance recording as they become available. For example, instead of a separate device, built- in vehicle telematics could serve as an electronic distance recorder if it meets the accuracy and integrity standards set by the RUC Collector.
Unlike the current public RUC system the government has chosen to privatise the delivery layer. Rather than simply adapting the state RUC collection system, it is creating a regulated market for private RUC providers with NZTA as the backend ledger only. This should please the World Economic Forum and its consultancy and digitech partners immensely, after all the hard work they put into policy development in the mid-2010’s on.
The pressure catalyst, as everywhere, is electric vehicles (EV). However, this ‘catalyst’ enables rentier opportunities beyond EV issues and the need to fund road maintenance. In an early New Zealand Transport consultation in 2022 the scope of ‘costs’ stretched to encompass greenhouse, pollution and (of course) the administrative charges of any more expensive digital surveillance architecture that would (have to) oversee a future system. This early New Zealand Transport consultation broadened the ‘externalities’ that the RUC could pay for – but it did not broaden the discussion on privacy, equity and trust concerns.
No wonder ACT is so interested. It is a massive privatisation opportunity. The PTOLEMUS Consulting Group, a specialist in telematics, insurance and tolling, produces detailed industry-intelligence. PTOLEMUS have forecast that the global electronic toll collection and road usage charging market will grow at 13% CAGR to 2030. Companies are gearing up for business.
This is an explicit commercial opportunity for the telematics, fintech and mobility service industries. The reform explicitly contemplates congestion and time-of-use pricing as a future layer.
Modern vehicles are data generating devices. Telematics are ‘the use of wireless devices to transmit data in real time back to an organization. The data recorded in telematics devices can be used to develop more accurate pricing, improve the granularity of risk management techniques and reduce losses by enabling better claims assessments’ (2015).
However, official agility and speed is not matched by official attention to safety and security. Instead, it involves shifting away from a simple publicly administered system to a system of extraordinary complexity, many, many layers, significant privacy concerns and a risk that expansive knowledge of citizen data can and will lead to multipurpose applications that undermine trust and transparency.
Who decides which of all the other costs are suitable? Who controls the layers of costs and expenses? Who makes the decision about the pricing in distance travelled? Extending the scope of costs beyond immediate road costs exposes a hydra of decision-making. In transport pricing reform internationally, equity protections that are not baked into the enabling legislation tend not to appear in the implementation, because by then the commercial and administrative architecture is set and the political moment has passed.
They’re planning a networked grid – they’re just not consulting on it
Technologies often begin with narrow purposes but evolve into forms of comprehensive data collection. While the just-finished consultation was primarily pitched as a technical consultation on regulatory settings, related Cabinet papers and the Regulatory Impact Statement (RIS) indicate that the framework can expand to support future location-based charging, time-based charging, tolling integration, and more dynamic road pricing.
Yet these wider objectives were not clearly disclosed nor discussed in the consultation document itself. The public were not permitted to comment on such issues. The policy documents did not establish why a revenue collection system requires the creation of a substantially expanded vehicle-use data ecosystem when a less intrusive alternative already exists.
The logic, the affordability and the practicality of retaining the status quo was never addressed. The consultation proceeds from the assumption that replacing fuel excise duty with electronically administered road user charging is the preferred policy direction. The accompanying Regulatory Impact Statement (RIS) had expressly excluded consideration of retaining the current fuel excise system.
The policy response should be proportionate to the policy problem
Is replacing a simple fuel excise system with a data-intensive charging architecture a proportionate response to the problem identified. The documents never compared the privacy, governance and administrative implications of a distributed electronic charging system against the principal advantage of fuel excise: that it raises substantial revenue without generating ongoing vehicle-use datasets. Instead, the analysis moves directly from identifying a revenue and fairness problem to proposing a data-dependent solution, without undertaking a meaningful assessment of whether the additional information collection is necessary or proportionate. That should concern citizens regardless of their views on privacy.
Fuel excise, i.e. a tax on fuel at the pump, does not generate headlines about digital transformation. But it possesses several qualities that good public policy should value. It is simple and relatively cheap to administer. It is collected through a small number of collection points. Most importantly, it does not require the routine generation, collection, storage, transfer, auditing, and governance of vehicle-use information.
The proposed model introduces electronic distance recording, approved providers, monitoring systems, compliance mechanisms, auditing requirements, alternative payment schemes, and extensive information governance arrangements. The Government presents these as features of a modern system.
We can see that a vast range of actors would profit from such a move, from software development, to IP ownership of the different forms of surveillance and data processing software to the digital storage and of course, the management consultancies who would help deploy the policies.
These policies -laundered in via an election agreement – were not led by consumer demand.
The value led, qualitative work relating to data capture, privacy and equity is being publicly funded so that the broader academic community could explore it (outside of the gung-ho ministries). The Ministry of Business, Innovation and Employment (who control the research and science purse-strings) does not fund such research.
There’s been no evaluation of how a well-designed fuel duty with targeted relief for low-income households might be less regressive than a private-market RUC system with no built-in equity mechanism. Even if low-income households drive less in absolute terms, transport costs represent a larger share of their budgets. There is no pricing design that solves this without explicit redistribution of revenue, and the NZ government’s current RUC reform framework is primarily focused on market design and revenue collection, not redistribution.
‘Fears about privacy blocking necessary reform’
The New Zealand Initiative’s (NZI) 2024 Driving Change presumes that ‘privacy concerns can be addressed through robust data protection safeguards.’
The NZI report assumes that privacy concerns can be addressed through technical safeguards after the policy decision has been made. It does not require that a comprehensive privacy and data governance framework be established before implementation, nor does it assess whether such a framework would remain effective as technologies, institutional arrangements and legislative purposes evolve over time. The report doesn’t seem to discern between the relative simplicity of the current public RUC system and the proposed multi-provider, data-intensive model involving insurers, private service providers, road managers and government agencies.
The report draws extensively on international examples from dense urban environments, and justifying such policies via congestion management and economic efficiency objectives.
New Zealand is already an expensive country to live in
If New Zealand does not sit near the top of the OECD for transport costs relative to incomes, it is difficult to see which countries would. We are a geographically dispersed, car-dependent nation with limited public transport outside a handful of cities, high fuel prices, and a population that must import virtually every vehicle it drives. For many households, the cost of mobility is already one of the largest expenses after housing.
The policy literature frequently treats driving as a behavioural choice to be nudged away through pricing mechanisms. It is not. New Zealand’s physical geography is fundamentally different from the cities and corridors where distance-based charging has been modelled, piloted and politically sold. Singapore is a flat island grid. Stockholm has a compact peninsular centre with radial rail. Oregon’s pilot involved suburban commuters on a highway network. None of these bear much resemblance to a country where volcanic terrain, coastal geography and fault-line topography routinely mean that the direct route simply does not exist, where A to B requires going via C and D not by choice but because there is no straight road, no alternative corridor, and often no road at all in the other direction.
Yet any distance-based charge treats a kilometre as a kilometre. A farm worker in Waikato, a nurse commuting from the Kapiti Coast, a plumber servicing the Tokoroa Region, people caring for extended family on different sides of a city – these people are not driving further because they are inefficient or making poor choices. They are driving further because the landscape imposes it. A flat per-kilometre charge that takes no account of distance that geography compels rather than preference generates is directly punitive toward the communities that are already stretched thinnest by cost-of-living pressures.
Most cities outside Auckland, Wellington and Christchurch are essentially car-dependent.
New Zealand’s small-business economy compounds this. The movement of tradespeople, goods, care workers, agricultural inputs and hospitality staff across dispersed, low-density geographies cannot be adequately by a public transport system. Small businesses are the productive backbone of the economy, and their route distances are set by geography and client location, not by congestion avoidance or leisure preference.
Global and local RUC reform documents contain almost no engagement with New Zealand conditions. The modelling, the market-sounding respondents, and the think-tank advocacy all lean heavily on urban efficiency narratives borrowed from international experience in places nothing like New Zealand. A reform that is serious about geographic equity would need route-adjusted charging, explicit rural rate differentiation, or meaningful distance caps for communities beyond viable public transport reach.
Big Tech knows exactly how much data capture can occur
The private sector is acutely aware of the commercial opportunities associated with road-pricing reform and works through international policy networks, consultancies, industry bodies and public-private partnerships to help shape policy-relevant information. For example, World Economic Forum (WEF) think tanks have led RUC policy development. System Initiative on Shaping the Future of Mobility, formally launched around 2016, became the WEF’s central ‘platform for business leaders from transportation, technology, energy, infrastructure, insurance, health and other related sectors to partner with policy-makers to shape the future of mobility (and) accelerate the transformation to a global mobility system that is clean, safe, secure, inclusive and smart.’
By 2016, the Field Guide to the Future of Mobility was published, framing telematics and connected vehicle data as foundational to next-generation transport systems and explicitly highlighting connectivity, automation, telematics and new capabilities of small and big data analytics among the key enabling technologies for urban transport transformation.
In 2018, partner Deloitte released a Seamless Integrated Mobility System (SIMSystem) white paper. The SIMSystem platform would determine what multimodal operations could be used and require extensive data collection. The paper recognised that opportunities for private sector actors could include ‘building solutions that generate viable business models. These businesses could be based on the use of assets or delivery of services, or could be rooted in licensing and usage fees for data, analytics or operational responsibilities.’
The data capture would be extraordinary:
A SIMSystem requires information about supply (number and utilization of modes, operating times, total capacity, prices, accessibility, container characteristics, etc.), demand (starting and ending locations of trips, price elasticity across modes, etc.) and the environment (traffic conditions, road delays/closures, weather, accidents, etc.). It also requires thinking through the entire data lifecycle. Data will need to be created, captured, acquired, standardized and stored. It will need to be reliable and have syntactic and semantic meaning for the various entities using it. Data must move from where it is created or stored to those entities within a SIMSystem who need it. Analysis will be needed to extract meaning, gain insights and make decisions.. and drive ….system-wide learning.
Partner the Boston Consulting Group then produced a 2018 WEF/BCG report on autonomous vehicles and urban mobility. Large-scale simulations claimed the benefits of active policy intervention, implicitly including pricing, to prevent AV adoption from worsening congestion. The WEF then launched the Global New Mobility Coalition (GNMC) (2019), based around reducing passenger car emissions. Road pricing was embedded in their policy toolkit from the outset.
WEF’s calls to direct costs to the consumer ‘according to their ‘real’ cost or ‘impact on society’ have grown more vocal. Road-pricing and parking fares continue to be framed as cost levers to ‘internalise true mobility costs’ – i.e. increase costs to the consumer.
In parallel, the International Transport Forum (ITF), the OECD’s transport body, established a Corporate Partnership Board, composed of major automotive, logistics and technology companies, making this a direct industry-policy co-production initiative. The ITF view RUC as a means to ensure road users account for the costs their road use imposes on others, and as a way to raise funds and nudge users towards more sustainable transport use.
A framing shift occurred when the fuel duty revenue crisis created by increasing EV adoption was used to argue for distance- and location-based charging as a structural fiscal necessity, not merely a congestion management tool. A distance travelled tax was proposed as an infrastructure funding mechanism to replace or supplement the fuel tax.
The privacy dimension was simultaneously surfaced as a known obstacle requiring technical resolution. Privacy was not ignored. Rather, it was increasingly framed as a technical design problem to be managed through architecture, governance controls and privacy-preserving technologies. The possibility that citizens might object to the creation of large-scale mobility-data systems on democratic, ethical or civil-liberty grounds has received far less attention. The WEF and associated actors consistently positioned privacy-preserving telematics architecture (that they would design) as the technical solution to this political obstacle.
Therefore, by 2019, the WEF and its partner ecosystem had assembled a coherent, interlocking argument: fuel duty revenues were in long-term structural decline due to EVs; congestion and emissions externalities required pricing interventions; telematics and connected vehicle data made sophisticated, multi-parameter charging technically feasible; privacy-preserving architectures could neutralise public opposition; and the “user pays” principle legitimised the shift from flat taxation to individualised usage-based fees.
Policy development arose from public-private co-production – but was not led by civil society. The ITF Corporate Partnership Board, the WEF’s GNMC, and university policy centres like Berkeley TSRC all served as venues where automotive, telematics and tech industry actors participated directly in the production of “policy research” that then circulated to governments as expert guidance.
The pivot to telematics-based RUC requires onboard devices, data processing infrastructure, account management platforms, and potentially third-party service providers, all market opportunities for the connected vehicle industry – as PTOLEMUS forecast demonstrates.
Privacy is treated as an engineering question
The Berkeley briefs, PTOLEMUS reports, and WEF documents consistently positioned privacy concerns as a solvable technical challenge for system architects, rather than a legitimate democratic objection to the underlying surveillance architecture that location- and time-based charging inherently requires.
ITF papers in 2015 and 2022 have drawn attention to privacy concerns ‘ability to associate data with the identity and behaviour of a specific person represents a serious challenge to privacy rights. Even data stripped of direct and even indirect identifiers may still be used to re-identify natural persons.’
Expanding the rationale: The real problem of function creep
The problem becomes more apparent when the consultation is considered alongside earlier Ministry of Transport and Cabinet documents. A 2022 Ministry paper described road user charges primarily as a mechanism for recovering infrastructure costs according to road use and road wear. Heavy vehicles impose greater costs on roads and bridges, and the charging framework was designed accordingly. Weight, axle configuration, and distance travelled were the key variables. The focus was engineering, cost allocation, and fairness.
By 2025, the rationale had expanded considerably. Cabinet papers and the Regulatory Impact Statement refer to future-proofing, market-led innovation, integrated road pricing, dynamic charging, location-based charging, time-of-use charging, and future transport pricing frameworks. These issues weren’t substantially addressed in the Consultation document. The objective was no longer simply to recover infrastructure costs. The objective had become the creation of a platform capable of supporting a much broader range of charging mechanisms.
If the policy problem is that fuel efficiency reduces fuel tax revenue, then a distance-based charging mechanism may be justified. If the problem is that heavier vehicles impose greater costs on roads, then weight and distance may be relevant factors. But neither of those problems automatically justifies a system capable of supporting location-based charging, time-based charging, behavioural pricing, toll integration, or access to increasingly sophisticated vehicle telematics – which is what the new system would have the capacity to transition to.
Such (background) objectives require increasingly granular information about vehicle use than is necessary for simple revenue collection. Yet the consultation largely presents these proposals as technical
measures required to administer electronic RUC. This creates a risk that submitters are being consulted on the means while not being fully informed about the intended ends.
‘Function creep’ concerns the gradual expansion of an activity beyond what was originally foreseen – ‘an imperceptibly transformative and therewith contestable change in a data-processing system’s proper activity.’ Function creep is closely connected to ‘purpose creep – the tendency to use information for more and more purposes – also those that are unrelated to purposes for which the information was originally collected.’
Over time, additional uses emerge. New agencies become interested. New policy problems appear. The literature already describes the phenomenon that we can imagine.
International research on automated vehicle-recognition systems illustrates the pattern. Technologies introduced for parking management, environmental compliance, or border enforcement, expand into broader surveillance and intelligence functions. Data retention periods increase, new analytical uses emerge and information becomes linked with other datasets. The process is often incremental, expanding the use of that data from the original purpose for which the system was established.
The consultation does little to address this issue.
Once databases, monitoring systems, analytics tools, compliance mechanisms, and information-sharing pathways are established, future governments inherit capabilities that did not previously exist. The question is not whether current officials intend future expansion. The question is whether the system creates the conditions under which future expansion becomes easier.
Ultimately the data will hide inside the new mega-Ministry, MCERT
Indeed, some of the most significant aspects of the proposal are left to future administrative discretion. Parliament is not being asked to define clear limits on what information may be collected, retained, accessed, shared, or repurposed over time. Instead, many of the critical details are deferred to operational policies, provider arrangements, future regulatory decisions, and administrative interpretation.
The Ministry of Transport will shift to be housed within the mega-ministry, the proposed Ministry of Cities, Environment, Regions and Transport (MCERT). As a result, information initially collected for road user charging purposes may ultimately be held, managed, or accessed within a significantly larger institutional environment than that described in the consultation documents.
The governance risks associated with a dataset are determined not only by the information collected, but also by the number of functions, agencies, regulatory objectives, and decision-makers that may eventually interact with it.
The creation of a large, multi-functional ministry substantially increases the risk of purpose expansion and administrative drift. Information collected for one purpose can become increasingly attractive for policy analysis, compliance activities, enforcement functions, economic regulation, infrastructure planning, behavioural interventions, or future charging mechanisms. Even where individual uses are lawful, the cumulative effect may be a gradual widening of access and use beyond what was originally contemplated by the public when the information was first collected.
The current consultation has not adequately assessed how future institutional restructuring, cross-agency information sharing, or expanded regulatory functions could alter the governance environment in which information provision, system logs, monitoring, auditing, and future technological capability and the connected datasets operate.
These future organisational changes may materially alter the risks associated with the proposed system.
Cost-of-living consequences – A tipping point?
The social consequences were dismissed by the Cabinet paper that stated that there are no cost-of-living implications at this time. Yet this conclusion overlooks a problem faced by people in New Zealand already who own a diesel vehicle and must pay separate road user charges. These fees quietly accumulate, and become distressing when they have burgeoned without the driver being fully aware.
In comparison, fuel excise is paid incrementally at the pump. Road user charging introduces a separate liability that motorists must actively monitor and manage.
For many households, particularly younger people, families, casual workers, and those living week-to-week, this distinction matters. Finding twenty dollars at the fuel pump is different from receiving a larger periodic bill for accumulated road use. While the consultation views this as a payment-system issue, in reality, it is a budgeting issue that may tip many people into debt.
In addition, the proposal also transfers a significant administrative burden from the revenue collection system onto individual citizens by requiring them to establish digital accounts, monitor balances, manage payment arrangements, navigate provider systems, and remain compliant with an increasingly complex framework. These burdens are unlikely to fall evenly across society.
Good public policy begins by asking whether a power is required before determining how it should be exercised. The current consultation reverses that logic. It begins with the assumption that the system will exist and asks how it should operate.
We’re given permission to provide a little bit of input into how an electronic road user charging should work but we’re not permitted to ask whether New Zealand needs it at all.
In an ancient age, it was widely recognised that the funding of public infrastructure, from energy to health to transport and education directly resulted in providing the circumstances that would enable citizens to thrive and be most creative and productive.
Government papers and think tank reports treats road users largely as individual consumers responding to price signals. They pay comparatively little attention to the role of roads as essential public infrastructure that underpins regional economies, social participation, emergency access, health services, agricultural production and freight connectivity.
They ignore the privacy implications that present itself from a broader perspective. Yet private-sector actors discussing telematics, mobility data, pricing algorithms, connected vehicles and platform governance, have understood from the outset that these systems would generate valuable datasets and new commercial opportunities.
Yet public consultations tend to present reforms as narrow exercises in revenue collection or transport efficiency rather than as the creation of new information infrastructures.
I’m not sure if members of Parliament understand this.
Before creating new information infrastructures, expanding administrative complexity, and establishing systems capable of future behavioural pricing, location-based charging, and data-intensive governance, the Government should be required to demonstrate something far more basic.
None of this has happened.
