Road funding at risk from smart car technology

Road funding at risk from smart car technology

image94579_bTransport technologies such as electric cars, car pooling smartphone apps, and vehicle collision avoidance systems are creating risks to New Zealand’s investment in roads says a report released by The New Zealand Institute of Economic Research (NZIER).

As electric and hybrid vehicles become more common, less petrol will be used. Challenges for the government include safeguarding fuel excise revenue that funds transport infrastructure and charging road users fairly and efficiently, says the NZIER report.

Accelerating the adoption of safer car technologies, rather than spending billions on safety works over the next decade is also worth assessing more closely, says the report.

Government will invest $3.4 billion next year and grow spending on land transport to $4.4 billion a year by 2024/25. Investment in passenger transport is also at record levels and could soar higher.

“To ensure we get good value for money from these investments, we need to include the impacts of disruptive technologies on returns from road and rail investments over the next 40 years,” says NZIER principal economist Nick Allison.

Crash avoidance systems that make travel safer, car sensors which smooth traffic flows to ease congestion, and apps that help people share car commuting costs instead of taking public transport are all technological changes which will erode government revenue streams, which means the funding of infrastructure needs to be revisited. Hybrid plug-in vehicles that cost as little as a $1 a day to run and falling oil prices are also dramatically reducing the cost of car travel.

Auckland Council is already looking at road pricing as one option to plug a funding gap. Logic points to replacing Road User Charges for heavy and diesel vehicles with electronic distance-based charging for all vehicles in the future.

“Consumers win from these disruptive technologies but the pace of change presents major headaches for government,” says Allison.

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