Everything you need to know about toll roads

Government policy supports using tolls as an additional source of revenue to help build and maintain roads.

The New Zealand Transport Agency Waka Kotahi (NZTA) has been working on a national tolling plan for several months.

Officials working on the plan say it does not refer to levying motorists on existing roads.

Consequently, any new toll road charges are likely to be placed on new roads built.

What toll roads exist in New Zealand?

There are currently three toll roads in New Zealand, all concentrated in the upper North Island.

Levies are collected from drivers using the Auckland Northern Gateway Toll Road, the Tauranga Eastern Link Toll Road and the Tauranga 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. It is projected to cost $830 million.

Other new highway projects such as Takitimu North Link in Tauranga and Ōtaki, north of Levin, are also believed to be in line to get them.

Can drivers avoid toll charges?

Toll roads are clearly marked before drivers enter electronic toll collection facilities.

If drivers don't want to use toll roads, they can follow detour signs along the following three routes to circumvent them:

• Northern Gateway Toll Road bypass: State Highway 17 is a highway with coastal scenery, so traffic volume can be large during holidays.
• Tauranga Eastern Link bypass: This route takes drivers down to the Te Puke Highway through Te Puke.
• Takitimu Drive Toll Road bypass: Alternative routes can be accessed via Cameron Road or Cambridge/Moffat Roads.

Who pays for roads to be built in the first place?

Funding for the construction of toll roads comes from the National Land Transport Fund (NLTF), with any shortfall supplemented by government loans to accelerate the construction process.

For example, the Northern Gateway Toll Road was estimated to cost $375.7 million to construct. NLTF funding covered $217.7 million of this total, while debt financing from the government accounted for the remaining $158 million.

The pricing standards for tolls are adjusted annually based on the increase in the consumer price index. At present, toll road levies are adjusted approximately every three years.

Why are users charged a fee to drive on these roads?

Since the roads were built with loans, the tolls collected are mainly used to repay debt, interest costs and operating costs.

A toll fee is split into three separate parts:

• Goods and service tax
• Debt repayment (principal and interest)
• Operating costs (people, bank charges, depreciation, information technology support, maintenance, upgrades and other operating costs)

Most of the money goes towards debt repayment, with 80 cents of every individual payment going towards operating costs and a percentage on tax.

Are toll fees permanent?

Toll fees will be removed after the debt to build the road has been repaid.

According to NZTA's current estimate, the earliest of the three toll roads to repay its debt will be Takitimu Drive, which is expected to be toll free by 2031.

The Northern Gateway is forecast to be paid for by 2039, and the Tauranga Eastern Link by 2040.

Can we expect new toll roads to operate?

In addition to the existing three highways, three roads are expected to charge tolls after they are constructed:

• Penlink: A new seven-kilometre highway connecting Whangaparāoa Peninsula to State Highway 1, which is expected to alleviate traffic pressure in Silverdale
• Takitimu North Link: A two-stage project connecting Tauranga to Te Puna (stage one), and Te Puna to Ōmokoroa (stage two)
• Ō2NL: A new highway between Ōtaki and Levin, running partially parallel to State Highway 1, located in the eastern part of Levin town centre

Are any other funding methods being considered?

Transport Minister Chris Bishop has previously said the government would explore a new charging model - toll concessions.

This is a new type of public-private partnership model, in which the private sector contracts the operating rights of a certain section of the road.

During the contract period, the toll revenue generated by this section of road belongs to the private enterprise, which is also responsible for the maintenance work of this section of road.

However, the state still owns the road, and the operation rights will be transferred to the Crown after the contract period ends.

In return, the private sector - called concessionaire - interested in contracting the franchise rights needs to make an upfront capital payment (such as a contracting fee) to the government in advance and, with this cash flow, the Crown can continue to invest in new infrastructure projects.

If the public-private partnership model proved to be successful, it might be expanded to other new infrastructure project areas in future, Bishop said.

"Toll concessions have several key benefits, including generating upfront payment of capital which can be reinvested into new infrastructure projects, increasing efficiency by utilising the private sector's expertise in construction, maintenance and tolling operations as well as their technological innovations, and sharing operational risks with a private operator such as increases in maintenance costs," Bishop said in March.

Could this be the end of additional toll roads beyond what has been announced?

Possibly.

"Toll concessions are used widely overseas," Bishop said in March.

"A relatively local example of a successful toll concession is WestConnex in Sydney, Australia," he said.

"WestConnex is a 33km toll road including Australia's longest tunnel at 22km, completed in November 2023," he said.

"It was delivered through concessions to build, operate, finance, maintain and toll this road in three stages."

Bishop said public-private partnership pilot projects may be conducted in some areas to explore the feasibility of the concession model in supporting public infrastructure construction.

Such pilot projects could be introduced in the construction of the road between Cambridge and Piarere; the Hawke's Bay Expressway; the Belfast-to-Pegasus Motorway and Woodend Bypass, and SH29 west of Tauriko, Tauranga.

"While decisions have not yet been made, all Roads of National Significance are being assessed for tolling," Bishop said.

The Government Policy Statement on Land Transport sets out the government's intention to consider concessions for delivering large infrastructure projects.

It also expects that all Roads of National Significance will be assessed for tolling.