The Government has announced it will draw down an emergency reserve of $450 million and provide more than $1 billion additional funding to cover the shortfall created by postponing planned increases to petrol excise and equivalent road user charges.
Prime Minister Christopher Luxon and Transport Minister Chris Bishop revealed the decision in a joint announcement, saying a previously scheduled 12 cents per litre uplift set for 1 January 2027 has been cancelled. Road user charges, which move in step with fuel excise, will likewise avoid the planned rise on that date.
What the new timetable means
The Government now expects the next increase to be 5 cents per litre on 1 January 2028. That will be followed by three further 5 cent increases spaced at six-month intervals. From 1 January 2030, the plan returns to annual 5 cent increases.
Transport officials say road user charges will be adjusted on the same schedule, so operators of light diesel vehicles and heavier vehicles subject to RUC will see matching changes when the excise adjustments occur.
Luxon framed the delay as a measure to give households and businesses more breathing room, citing sustained post-pandemic economic pressure and ongoing global energy uncertainty as reasons to postpone a larger, immediate hike.
How the shortfall will be funded
The Government confirmed it will add $1.47 billion to the National Land Transport Fund over four years. Part of that amount will come from the Budget contingency established earlier this year to help manage shocks from volatile fuel prices arising from the Middle East conflict. Finance Minister Nicola Willis had described that pot as an "emergency savings account" when it was created.
Officials said the emergency fund will be emptied to contribute toward the transport revenue gap. The remaining roughly of the announced top-up has not been specifically allocated in public comments. Bishop said details on how that portion will be financed would be disclosed in the Pre-Election Economic and Fiscal Update on 29 September.
