This is a popular misconception and one which helps to massage the egos of politicians. The government pays for our roads in the same way they pay for our electricity, with three crucial differences:

1. Electricity SOEs are free to set their own user charges, the roading SOE is at the mercy of Parliament to do this and Parliament has proven hopeless at doing this properly, at great cost to the standard of roads and road safety.

2. The fees paid by electricity users go directly to the electricity SOEs whereas, for historical reasons, the fees paid by road users pass through the Consolidated Account on their way to the road funding SOE.

3. The proportion of these fees paid to the government is substantially less for the electricity SOEs than for the road funding SOE.

This State Owned Enterprise is currently known as Land Transport New Zealand. Between 1995 and 2004 it was known as Transfund. Between 1989 and 1995 it was part of Transit New Zealand, however Transit is now only responsible for managing the Crown's State Highways. From the introduction of motor taxation in 1924 until the state sector reforms in 1989 roading revenue had been administered by QANGOs (quasi-autonomous, non-governmental organisations): the Main Highways Board between 1924 and 1953, the National Roads Board between 1954 and 1989.

The legislation under which each of these agencies operated contained three vital clauses limiting political involvement with roading revenue:

1. Because the funds were originally collected by the Post and Telegraph Department and the Customs Department the funds had to be paid into the Consolidated Account. The legislation stated that these funds had to be separately accounted for and were to be appropriated to the road fund by sole authority of the legislation. This means that funding for roads (and, since 1989, traffic policing and road safety advertising) is included in the Finance minister's budget only for looks and not for any practical reason as it does not require a vote from the current Parliament to appropriate this money.

2. All decisions on how to spend the money in the Road Fund are to be made by the Board acting independently of the Minister. Unfortunately the current government has discovered a loophole that allows the government to override this independence by specifying minimum sums for each output category in the Boards performance agreement "negotiated" with the Minister of Transport. The government is able to do this because of the erosion of the third point.

3. Originally the Board members were appointed by the Governor General, now they are appointed by the Minister of Transport.