Column: RUC increase will hurt economy

By: Nick Leggett, RTF CEO

Trucking companies have over the last few weeks had to endure yet another RUC increase, says RTF


Trucking companies have over the last few weeks had to endure yet another RUC increase.
Despite the RTF talking directly to the transport minister and asking for the increase not to go ahead, RTF member association National Road Carriers delivering a 16,000-strong petition to Parliament, other industry bodies’ pointing out it was the wrong time for this increase and general public concern, the Government has ploughed ahead with a 5.3% average RUC increase across the board.

As most New Zealand businesses struggle with the economic hit from COVID-19, it’s hard to think of a worse time to impose more tax burden on the trucking industry. It doesn’t take an economics degree to know that much of the increase in RUCs will flow through the rest of the economy and end up costing consumers when they buy their groceries or pick up dinner from the local takeaway shop.

Some trucking operators may attempt to absorb the increase but that in itself just further erodes the already small margins in our industry. Most will and should pass it on. At the end of the day, though, the question needs to be asked, does the Government actually need this tax revenue to carry out its work plan in transport?

When we look at it, spending from the National Land Transport Fund (NLTF), where RUC and petrol excise goes, was about seven percent under budget in the year to 30 June 2019 and about five percent below budget in the first quarter of the 2020 financial year. Surely, it would have been more prudent at a time like this for the Government to tap into this underspend rather than imposing more costs on our fragile economy.

We can only hope that the revenue raised through this increase is wisely invested in improving the safety and efficiency of our transport system and that projects that have been a focus for the road freight sector, such as road maintenance and renewals, are prioritised. But we’ll just have to wait and see.

I do welcome the fact that transport minister Phil Twyford has guaranteed there will be no further increases to RUCs and petrol excise duty for the next three years. That will at least provide some certainty to our industry going forward.

The other big piece of news, especially for Aucklanders, has been the cancellation of the Auckland Light Rail project. While this has left the Government with some egg on its face after promising the project for so long, at the end of the day, cancelling it was the right decision.

The estimated cost of $6 billion was probably far more than what the country can afford at this time, especially when you consider that government investment in transport must now be retargeted to help our waka go faster.

The Light Rail project was, however, a big part of the justification for both the Auckland Regional Fuel Tax and the RUC and excise increases. If it’s not going ahead then road users, and particularly Auckland road users, deserve to know what it will be used for. We are calling for the money to be transferred to more mainstream roading capacity improvements around Auckland.

The long-anticipated but much-delayed East-West Link should be right at the top of the priority list. The congestion problem in the Penrose-Onehunga corridor is not going to
go away on its own. The only way to solve it is by committing the necessary investment and getting on with it.

We know well-thought-out roads can have an immediate impact on reducing congestion, improving safety, and facilitating fast freight movements. We just need the political will to build them. 

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