It’s extraordinarily rare for politicians leading transport policy to understand road pricing beyond one dimension. Either they think it is a great way of raising money they can spend on projects that they can sell to the public, or it is a great way of reducing traffic, it’s rare to see an understanding of economics.
In New Zealand it is seen with the current Minister of Transport, Hon. Chris Bishop. For context, New Zealand has recently passed legislation to allow for time-of-use road charging, the term used in New Zealand for congestion pricing. It will allow local authorities, in partnership with central government, to set up road pricing schemes specifically targeted to reduce congestion. Auckland is already some way ahead in developing recommendations for congestion pricing and is expected to advance proposals in the coming year.
The primary purpose of congestion pricing in New Zealand will be to reduce congestion, noting that such pricing will also generate net revenues, which will be used subject to agreement between central and local government. This will likely see net revenues directed towards a range of transport projects in the city or district where the pricing scheme operates.
However, there is another feature that road pricing enables, beyond raising money and getting better use of existing road infrastructure, which is to provide information on where better to direct future road capital spending.
Bishop hinted at this in February 2026 when the National Infrastructure Plan was released by the Infrastructure Commission. It noted that road pricing could “defer the need for expensive capacity expansions”.
Radio New Zealand reported on 18 February 2026:
Asked whether time of use charging should be used first before committing funds to two tunnels, Bishop said it was an option under consideration and he would have more to say soon.
"I'm not cancelling the tunnel, but we are giving active consideration to what time-of-use pricing might do to our transport projects. You have to factor these things in, because thay are a mechanism for demand management and making more efficient use of our infrastructure, which is exactly what the commission says."
The project referred to is to duplicate two tunnels in Wellington city (known as the SH1 Wellington Improvements project), both of which are subject to significant congestion at peak times (and frequently off-peak times). It's a project primarily about congestion, but also resilience (the Terrace Tunnel has one-lane southbound, and Mt Victoria Tunnel is 95 years old with only one-lane in each direction) and helping to move traffic from the waterfront highway (which acts as a backup to the network, but separates the waterfront from the central business district).
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| Wellington State Highway 1 network issues |
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| Proposed second Wellington Terrace Tunnel (northern end) |
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| Proposed second Mt Victoria Tunnel (western end) |
Both tunnels are part of State Highway 1, which is the main highway into the city, but also bypassing the city centre towards the airport, eastern and southern suburbs. Congestion pricing would be likely to reduce traffic on this route, particular traffic using the tunnels to drive into the central city.
The current New Zealand Government went to the previous election promising to build the project. That may still happen. Finance Minister, the Hon. Nicola Willis, has said it will proceed.
Of course the simplest, and possibly least controversial option, would be to proceed with the project, and introduce time of use road charging to help pay for it, but also manage demand from the additional capacity, by placing a cordon within the boundaries of State Highway 1. This would mitigate fears that the new capacity would induce demand away from public transport for trips into the central city, ensure that the new capacity worked efficiently.
Yet the most economically efficient option is to introduce pricing in advance, to determine if it would sufficiently reduce demand to defer the need for the new tunnel capacity. That is certainly worth investigating. There are two key elements to this approach:
- What sort of road pricing scheme should be proposed in Wellington, that would optimise network use?
- Can that proposed be sufficiently publicly acceptable to proceed?
I've doodled on a map of Wellington suggest a basic cordon concept that might work (inbound AM peak, outbound PM peak) that puts most of the central city behind it, which is also the area with the most intense public transport service (and is accessible on foot and cycle for inner city suburbs as well).
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| Wellington Time of Use Road Charging cordon concept |
Leaving aside a lot of details (e.g. keeping Oriental Bay and Mt Victoria outside the cordon, where to draw the line in Te Aro), the idea is the through route of SH1 isn't priced, because use of it is much less amenable to modal shift, so the first priority should be to encourage modal and time of use travel shift to and from the central city, with a second priority being to encourage time of use shifting predominantly through traffic (see below with lines on the main routes towards the central city from the north and the east). Again the details on whether someone pays twice or just once, whether it be through the cordon or on State Highway 1 is a moot point, and the timing of operation might vary to manage demand, but this is only conceptual at this stage.
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| Second stage Wellington time of use road pricing, tunnels in addition to cordon |
What matters more fundamentally is that a Transport Minister is talking about it. Demand and traffic assignment modelling would identify whether a reasonable price for a downtown cordon would sufficiently reduce traffic numbers to relieve congestion at the two tunnels, or whether by pricing the waterfront route, the 15-20% of traffic on that route that is bypassing the city relocates onto the unpriced tunnels, effectively leaving congestion at those tunnels where it was before. Although some routes into the city would be relieved, and traffic flow within the city would improve, if it meant no net improvement to traffic along the route the SH1 Wellington Improvements project was intended to fix, then it would be likely to generate some public and political opposition. Moreover, it would not dissipate calls to build the highway improvements.
However, if pricing was also placed on the tunnels, as well as the downtown, then it might make a difference if there was sufficient traffic with enough demand elasticity to be priced away from driving in the peaks.
What next?
The New Zealand Government has a fiscal problem, in that it (like so many governments) has ambitions for capital spending on transport projects that it is struggling to fund. The temptation to delay or defer a project like the SH1 Wellington Improvements project is significant. I expect there to be considerable analysis on the potential for tolling the project (as is the policy of the government), but just tolling the tunnels is problematic, as there are alternative routes (which are inferior, and which analysis has indicated it is preferable to attract traffic from as it is an urban setting, rather than encourage traffic onto). I very much doubt tolling is suitable for this project given tolls are likely to worse congestion on key bus routes rather than improve them.
Time of use road pricing in Wellington is likely to have merit regardless of the SH1 Wellington Improvements project, so should proceed, but there will be a political debate about use of the net revenues. I expect the Mayor and City Council to want to use net revenues to further their preferred projects, but the Minister will likely prefer supporting the tunnels project.
One option could be to use pricing to phase the SH1 Wellington Improvements project, so that the elements with the highest net benefit are advanced first (e.g. around the Basin Reserve, which is a troublesome bottleneck only partly related to tunnel capacity), and tunnels are built in a sequence reflecting demand impacts from pricing.
Whatever happens, it's a great illustration of the key benefit that road pricing can bring, which is a reassessment of the merits of transport capital projects in the light of pricing. For example, it is also possible that road pricing could improve traffic flow for buses, that the need for additional bus priority measures erodes. That has its own political implications for those advocating taking road space from general traffic to give to other modes. It makes it easier to do it, but also reduces the case to do it. What helps is there is the political will to be rational about this, hopefully this will persist regardless of the outcome of the New Zealand General Election later this year.
For the sake of my many overseas readers, some might note that Bishop is from the centre-right National Party, which is in coalition with the free-market liberal ACT Party and the nationalist-conservative NZ First Party. New Zealand's Parliament passed the Land Transport Management (Time of Use Charging) Amendment Bill unanimously, including the three opposition parties. I am unaware of any national Parliament anywhere in the world which showed unanimous support for enabling road pricing by time of use.
