Private companies will need to keep the costs of running the Government’s new road user charges scheme as low as possible, the AA says.

The Government is inching closer to replacing petrol tax with electronic road user charges on all light vehicles, in what Transport Minister Chris Bishop calls the biggest shake-up of road funding in half a century.

He says it’ll be fairer and will be like paying a power bill or Netflix each month and will be in place by 2027.

The changes will put an end to the existing two-tier system, where petrol users pay a fuel excise duty of about 70 cents a litre at the pump, while diesel, electric and heavy vehicles pay paper-based road user charges (RUCs) based on distance travelled.

However, Labour says the timing of the coalition’s transition to a universal road user charges system risks “clobbering” motorists with more costs.

AA’s policy director Martin Glynn said his organisation is also worried about how much motorists would have to pay under the new scheme.

He told Morning Report he was unsure if it would be more expensive.

At present the minimum road user charge kicked in once a light vehicle had travelled 1000km.

That was $76 and $12-$13 for an administration fee.

With private providers being brought in to run the revised scheme, they would need to be making money, Glynn said.

“We really want to see the administration costs be as low as possible.”

He agreed with the minister that with more vehicles becoming more fuel-efficient, the current petrol tax penalised those with older vehicles.

“It’s become more unfair over time and it’s going to become more unfair if we don’t change.”

The current system of buying RUCs was “a bit clunky”, he said.

Those using diesel or a heavy vehicle purchased RUCs online from NZ Transport Agency or they could go to an agent.

Motorists needed to keep an eye on their odometer to ensure they stayed up to date.

The other problem was the RUC certification came in the mail and needed to be displayed on the dashboard.

AA supported Bishop’s plan to make the system fully electronic.

Annual warrant of fitness checks were the main way to ensure compliance at present.

“But it’s fair to say it’s difficult to enforce, being an annual system, so there’s a fair degree of evasion and avoidance and that’s something that will have to be addressed in the transition.”

Heavy vehicles already have an ERUC, a device in the trucks that monitors kilometres and location.

-By Morning Report of RNZ