Government agrees to slash road user charges for plug-in hybrids

Owners of plug-in hybrids like the popular Outlander plug-in will pay less in road user charges after a change of heart by the government.

Transport Minister Simeon Brown on Tuesday announced owners of plug-in hybrids would pay $38 per 1000km driven under the taxes to pay for road upkeep.

The vehicles can be charged up from mains power like an electric vehicle, but can also use fuel.

Owners of plug-in hybrids had argued they would end up paying more than others because they used both electric batteries and petrol, which particularly affected older vehicles with less battery power.

Brown originally proposed a rate of $53 per 1000km - a 30 percent discount on what a diesel vehicle would pay - but Labour and the Greens proposed lowering the fee to $38 after the feedback at the select committee.

The committee then voted the change through unanimously - a change the government had not apparently intended with committee chair Andy Foster, of NZ First, seeking to have the vote taken again.

Foster's request was denied, and the government's decision now means the lower rate will be applied when the law is passed.

"Having a reduced RUC rate for PHEVs recognises that these vehicles use both petrol and have a battery to power the vehicle. This change seeks to balance the need for these vehicles to fairly pay for the use of the road and the variable range of fuel efficiencies within PHEVs," Brown's statement said.

He acknowledged that not having a reduced rate would have meant owners of the vehicles would be required to pay a full RUC, and claim back on any petrol tax paid, which would be "administratively difficult and open to fraud".

He said it was temporary, with broader changes to be made to bring all vehicles into the RUC scheme instead of paying petrol excise tax.

"The reduced RUC rate for PHEVs is a temporary measure to lessen distortions while we get to work on transitioning the entire vehicle fleet to the road user charges system and away from fuel excise.

"Increased fuel efficiency of vehicles, and the rise of electric vehicles, hybrids, and PHEVs, has created variances in what motorists pay for use of the road. This has meant that less fuel efficient vehicles, often owned by low-income households, end up paying more in fuel excise duty than owners of later model, more fuel efficient, vehicles."

Labour leader Chris Hipkins said the decision on plug-in hybrids was a good thing.

"It's quite a difficult area to make a good evidence-based decision because some plug-in hybrids you could operate almost exclusively on electric without using fuel. Others will be using a much higher prporotion of fuel and will therefore be paying fuel tax on that.

"The decision is going to be somewhat arbitrary but I think leaning in favour of a regime that gives a bigger discount is proabbly better at this point."

Labour's Transport spokesperson Tangi Utikere said the news of cheaper RUC charges for plug-in hybrids is a win for owners of the cars, and the climate.

He said the fact the government voted the amendment through in the first place shows it was "shambolic", but the decision now was "absolutely" a win for Labour.

"It's very clear, the government had a 30 percent as their rate but that's alongside no other incentives, no other initiatives. What we were looking at previously was that we had the clean car discount in place so ... in response to submissions we felt a 50 percent discount was appropriate.

"We put that forward and it's wonderful to hear that that's what's going to be in place ... this is just another example really of a govenrment that's shambolic. End of the day, the winners are going to be the climate and also those who have plug-in hybrids."