It has always been legal for local authorities to raise tolls on local roads and bridges in order to releive the burden on ratepayers. Between the passing of the Main Highways Act in 1924 and the passing of the Land Transport Management Act in 2004 it had always been illegal for the government to raise tolls on State Highways because the government's highways have always been fully funded from road user fees rather than being a burden on taxpayers. Eighty years ago politicians beleived it was unethical to charge twice for a single service. Unfortunately this aspect of political ethics has been crumbling ever since :

In 1924 the Main Highways Board was established with funding from a 25% excise duty on tyres and inner tubes, motor vehicle annual registration fees and grants from the Public Works Fund. This provided half the cost of maintaining and improving the busiest 10,000 km of main roads, with ratepayers providing the other half of the cost. This was a reasonable split for the volume of through traffic at that time.

In 1927 the motor spirits excise duty was introduced at the rate of 30cents per litre (in todays money). This made it possible to reduce the ratepayers contribution to one quarter. This was still within the bounds of reasonableness considering the rapid growth in traffic volumes.

By 1929 the increase in traffic allowed a further 6,000 km of main roads to be declared as "secondary" Main Highways, using the original 50/50 funding arrangement.

In 1930 the petrol tax was increased to 45cents per litre. This allowed the ratepayers contribution to be reduced to zero on the original 10,000km of Main Highways. Now the government had begun abusing motor taxation to provide rates relief.

Worse still, the Minister of Finance decided the Public Works grants were actually loans and demanded immediate payment of overdue interest for the previous six years. No Public Works Funds have been available for Highways since then.

In 1932 half of the Highway Fund was taken to help finance the governments deficit. This money has never been repaid. A 15cents per litre Unemployment Relief petrol tax was introduced. The government continued to collect this tax until 1948!

In 1933 the government again took half of the Highway Fund to help finance the governments deficit. Again, this money has never been repaid. A second 15cents per litre Unemployment Relief petrol tax was introduced. The government continued to collect this tax until 1953!

In 1937 the original 10,000 km of Main Highways were renamed State Highways

In 1939, one month before the outbreak of World War II the government added a further 30cents petrol tax to fund 60% of the governments deficit. This was popularly believed to be a defence tax. The governement continued to collect this tax until 1953.

In 1950 the National government claimed in Parliament that it needed these extra petrol taxes to properly fund health and welfare.

Also in 1950 the Auckland Harbour Bridge Act was passed to create the Auckland Harbour Bridge Authority and to give this new local authority the power to borrow beyond the limits of the Local Government Loans Act provided that these loans were secured against toll revenues rather than regional rates. Under this Act the schedule of tolls was to be approved by the Minister of Finance whereas under the Public Works Act and local government acts the schedules of tolls were to be approved by the Governor General in Council. If the Auckland Regional Authority had existed at this time this special legislation would not have been necessary.

In 1953 the Roading Investigation Committee persuaded the government to replace the Main Highways Fund with a National Road Fund providing a 50% subsidy for local roads in addition to the 100% subsidy for the government's State Highways, and to pay all of the petrol tax (30cents in todays money) into this new fund. However, because inflation had halved the purchasing power of the pound it was necessary to increase the petrol tax by an additional 15cents per litre and to double registration fees (to $80 for cars and $160 for trucks) and heavy vehicle fees. This led to twenty-five years of huge improvements to the nations roads and highways. Contrary to the governments earlier claims, this loss of the government's share of the petrol tax did not result in any reduction in spending on health or welfare. It was probably just coincidence that the government railways halved their capital spending at this time, a reduction almost exactly matching the increase in capital spending on roads and highways.

In 1958 the petrol tax was doubled to help fund the governments deficit. This was phased out by 1963.

In 1967 motor vehicle license fees were diverted into the consolidated fund.

In 1974 the petrol tax was doubled to help fund the governments deficit. This is still in place despite the government running record surpluses.

In 1989 motor vehicle license fees were returned to the road fund. At the same time the cost of traffic policing, road safety education and public transport subsidies were transfered from the Consolidated Fund to the National Road Fund. The responsibility for deciding how much to spend on road safety enforcement was transferred from Cabinet to the National Road Safety Committee.

In 1997 3cents per litre was transferred from the consolidated fund to the road fund.

In 2001 the government amended Transfunds performance agreement to make the road fund subsidise public transport infrastructure capital costs and other alternatives to roads. The successful 1995 Road Safety strategy was abandoned. The final stage of ALPURT suddenly lost its funding.

In 2003 the road fund petrol tax was increased by 4cents per litre to return the money taken away from roads when "efficient" was dropped from Efficient Alternatives to Roading.

In 2004 the Land Transport Management Act raised the environmental high jump that major roading projects (including Black Route road safety projects) have to get over. This increased costs by an average of approximately 20% but in the case of the final stage of ALPURT the cost jumped by 80% due to the need to replace a simple cut-and-fill with a tunnel and viaduct. This Act abolished the prohibition on raising tolls on State Highways.

In 2005 the Treasury agreed to lend Trasnsit $130 million to pay for the ALPURT State Highway environmental cost blowout. Transit will use tolls to repay this loan. Treasury will receive $550 million in petrol taxes this year.

In 2005 the petrol tax was increased by 5cents per litre. Because this is to be distributed according to population rather than traffic volumes many tourist regions such as the West Coast will only receive enough money to cover inflation and the costs of the Land Transport Management Act with over half their money going to urban areas particularly to those north of Cook Straight.

In essence, with the introduction of tolls on State Highways the government has introduced the worst aspect of privatisation without actually privatising the highways. Because the governemnt is lending itself the money to build these toll highways from the profits that it is making from existing highways it is making these highways produce a commercial rate of return exactly as a private roading company would do. This commercial imperitive is not being applied to TrackCo. Worse, the profits that Governments have been making from State Highways since 1974 are so exhorbitant that any private owner would have been threatened with regulation or nationalisation if only in the interests of public safety. When the LTSA got tough with speed limits for trains it provided TransRail with a major financial incentive to fix the engineering problems that made parts of the rail netwok unsafe at higher speeds whereas applying the same approach to highways actually provides the government with a further financial incentive to underinvest in its State Highways.